CQP

Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE American: CQP) today announced its financial results for fourth quarter and full year 2022.

HIGHLIGHTS

• For the three and twelve months ended December 31, 2022, Cheniere Partners generated revenues of $4.7 billion and $17.2 billion, respectively, net income of $2.5 billion and $2.5 billion, respectively, and Adjusted EBITDA1 of $1.6 billion and $5.1 billion, respectively.
• Declared a cash distribution of $1.07 per common unit to unitholders of record as of February 6, 2023, comprised of a base amount equal to $0.775 and a variable amount equal to $0.295. The common unit distribution and the related general partner distribution was paid on February 14, 2023.
• Introducing full year 2023 distribution guidance of $4.00 - $4.25 per common unit.
• In February and October 2022, respectively, substantial completion was achieved on Train 6 of the SPL Project (defined below) and the third marine berth at the Sabine Pass LNG Terminal.
• In November 2022, Cheniere Partners achieved its second investment grade issuer rating from S&P Global Ratings as a result of an upgrade from BB+ to BBB with a stable outlook.
• In February 2023, certain subsidiaries of Cheniere Partners initiated the pre-filing review process with the Federal Energy Regulatory Commission (“FERC”) under the National Environmental Policy Act for the SPL Expansion Project (defined below).

2023 FULL YEAR DISTRIBUTION GUIDANCE

 

 

2023

Distribution per Unit

$

4.00

-

$

4.25

SUMMARY AND REVIEW OF FINANCIAL RESULTS

 

(in millions, except LNG data)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2022

 

 

2021

 

% Change

 

 

2022

 

 

2021

 

% Change

Revenues

$

4,721

 

$

3,257

 

45

%

 

$

17,206

 

$

9,434

 

82

%

Net income

$

2,511

 

$

506

 

396

%

 

$

2,498

 

$

1,630

 

53

%

Adjusted EBITDA1

$

1,591

 

$

868

 

83

%

 

$

5,071

 

$

3,076

 

65

%

LNG exported:

 

 

 

 

 

 

 

 

 

 

 

Number of cargoes

 

112

 

 

97

 

15

%

 

 

423

 

 

359

 

18

%

Volumes (TBtu)

 

407

 

 

345

 

18

%

 

 

1,531

 

 

1,284

 

19

%

LNG volumes loaded (TBtu)

 

410

 

 

342

 

20

%

 

 

1,533

 

 

1,280

 

20

%

Adjusted EBITDA1 increased $0.7 billion and $2.0 billion during the three and twelve months ended December 31, 2022, respectively, as compared to the three and twelve months ended December 31, 2021. The increase in Adjusted EBITDA was primarily due to increased margins per MMBtu of LNG and increased volumes of LNG delivered. Adjusted EBITDA was also positively impacted by the recognition of the $765 million lump-sum payment made by Chevron U.S.A. Inc. (“Chevron”) throughout the six months ended December 31, 2022 related to the previously announced early termination of the Terminal Use Agreement (“TUA”) between Sabine Pass LNG, L.P. and Chevron.

Net income increased $2.0 billion and $0.9 billion during the three and twelve months ended December 31, 2022, respectively, as compared to the three and twelve months ended December 31, 2021. The increase during the three months ended December 31, 2022 was primarily due to non-cash favorable changes in fair value of commodity derivatives, increased margins per MMBtu of LNG, increased volumes of LNG delivered and the recognition of the remaining proceeds of the lump-sum payment related to the early termination of the TUA with Chevron. The increase during the twelve months ended December 31, 2022 was primarily due to increased margins per MMBtu of LNG and increased volumes of LNG delivered, the Chevron TUA payment, and was partially offset by non-cash unfavorable changes in fair value of commodity derivatives.

Substantially all derivative gains (losses) are attributable to the recognition at fair value of our long-term Integrated Production Marketing (“IPM”) agreement with Tourmaline Oil Marketing Corp. (“Tourmaline”), a natural gas supply contract with pricing indexed to the Platts Japan Korea Marker (“JKM”). Our IPM agreement is structured to provide stable margins on purchases of natural gas and sales of LNG over the life of the agreement and has a fixed fee component, similar to that of LNG sold under our long-term, fixed fee LNG SPAs. However, the long-term duration and international price basis of our IPM agreement makes it particularly susceptible to fluctuations in fair market value from period to period. In addition, accounting requirements prescribe recognition of this long-term gas supply agreement at fair value, but does not currently permit fair value recognition of the associated sale of LNG, resulting in a mismatch of accounting recognition for the purchase of natural gas and sale of LNG. As a result of the significant volatility in the forward JKM curves during the three and twelve months ended December 31, 2022, we recognized approximately $1.4 billion and $(0.8) billion, respectively, of non-cash favorable (unfavorable) changes in fair value attributable to the Tourmaline IPM agreement.

During the three and twelve months ended December 31, 2022, we recognized in income 410 TBtu and 1,520 TBtu, respectively, of LNG loaded from the SPL Project. Additionally, in the year ended December 31, 2022, approximately 13 TBtu of commissioning LNG was exported from the SPL Project.

BALANCE SHEET MANAGEMENT

Capital Resources

As of December 31, 2022, our total available liquidity was approximately $2.6 billion. We had cash and cash equivalents of approximately $0.9 billion. In addition, we had current restricted cash and cash equivalents of $92 million, $750 million of available commitments under our CQP Credit Facilities, and $872 million of available commitments under the Sabine Pass Liquefaction, LLC (“SPL”) Working Capital Facility.

Recent Key Financial Transactions and Updates

In November and December 2022, SPL issued an aggregate principal amount of $500 million of Senior Secured Amortizing Notes due 2037, the proceeds of which, together with cash on hand, were used to redeem the remaining outstanding amount of SPL’s 5.625% Senior Secured Notes, subsequent to the $300 million redemption in October 2022.

SABINE PASS OVERVIEW

We own natural gas liquefaction facilities consisting of six liquefaction Trains, with a total production capacity of approximately 30 million tonnes per annum (“mtpa”) of LNG at the Sabine Pass LNG terminal in Cameron Parish, Louisiana (the “SPL Project”).

As of February 17, 2023, approximately 1,990 cumulative LNG cargoes totaling over 135 million tonnes of LNG have been produced, loaded, and exported from the SPL Project.

SPL Expansion Project

We are developing an expansion adjacent to the SPL Project consisting of up to three natural gas liquefaction trains with an expected total production capacity of approximately 20 mtpa of LNG (the “SPL Expansion Project”). In February 2023, certain of our subsidiaries initiated the pre-filing review process with the FERC.

DISTRIBUTIONS TO UNITHOLDERS

In January 2023, we declared a cash distribution of $1.07 per common unit to unitholders of record as of February 6, 2023, comprised of a base amount equal to $0.775 ($3.10 annualized) and a variable amount equal to $0.295, which takes into consideration, among other things, amounts reserved for annual debt repayment and capital allocation goals, anticipated capital expenditures to be funded with cash, and cash reserves to provide for the proper conduct of the business. The common unit distribution and the related general partner distribution was paid on February 14, 2023.

INVESTOR CONFERENCE CALL AND WEBCAST

Cheniere Energy, Inc. will host a conference call to discuss its financial and operating results for fourth quarter and full year 2022 on Thursday, February 23, 2023, at 11 a.m. Eastern time / 10 a.m. Central time. A listen-only webcast of the call and an accompanying slide presentation may be accessed through our website at www.cheniere.com. Following the call, an archived recording will be made available on our website. The call and accompanying slide presentation may include financial and operating results or other information regarding Cheniere Partners.

_________________

1 Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for further details.

About Cheniere Partners

Cheniere Partners owns the Sabine Pass LNG terminal located in Cameron Parish, Louisiana, which has natural gas liquefaction facilities consisting of six liquefaction Trains with a total production capacity of approximately 30 mtpa of LNG. The Sabine Pass LNG terminal also has operational regasification facilities that include five LNG storage tanks, vaporizers, and three marine berths. Cheniere Partners also owns the Creole Trail Pipeline, which interconnects the Sabine Pass LNG terminal with a number of large interstate and intrastate pipelines.

For additional information, please refer to the Cheniere Partners website at www.cheniere.com and Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission.

Use of Non-GAAP Financial Measures

In addition to disclosing financial results in accordance with U.S. GAAP, the accompanying news release contains a non-GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure that is used to facilitate comparisons of operating performance across periods. This non-GAAP measure should be viewed as a supplement to and not a substitute for our U.S. GAAP measures of performance and the financial results calculated in accordance with U.S. GAAP, and the reconciliation from these results should be carefully evaluated.

Forward-Looking Statements

This press release contains certain statements that may include “forward-looking statements.” All statements, other than statements of historical or present facts or conditions, included herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things, (i) statements regarding Cheniere Partners’ financial and operational guidance, business strategy, plans and objectives, including the development, construction and operation of liquefaction facilities, (ii) statements regarding Cheniere Partners’ anticipated quarterly distributions and ability to make quarterly distributions at the base amount or any amount, (iii) statements regarding regulatory authorization and approval expectations, (iv) statements expressing beliefs and expectations regarding the development of Cheniere Partners’ LNG terminal and liquefaction business, (v) statements regarding the business operations and prospects of third-parties, (vi) statements regarding potential financing arrangements, and (vii) statements regarding future discussions and entry into contracts. Although Cheniere Partners believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Cheniere Partners’ actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Cheniere Partners’ periodic reports that are filed with and available from the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Cheniere Partners does not assume a duty to update these forward-looking statements.

(Financial Tables Follow)

Cheniere Energy Partners, L.P.

Consolidated Statements of Income

(in millions, except per unit data)(1)

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

 

 

 

 

 

 

LNG revenues

$

2,926

 

 

$

2,582

 

 

$

11,507

 

 

$

7,639

 

LNG revenues—affiliate

 

1,300

 

 

 

594

 

 

 

4,568

 

 

 

1,472

 

LNG revenues—related party

 

—

 

 

 

—

 

 

 

—

 

 

 

1

 

Regasification revenues

 

477

 

 

 

67

 

 

 

1,068

 

 

 

269

 

Other revenues

 

18

 

 

 

14

 

 

 

63

 

 

 

53

 

Total revenues

 

4,721

 

 

 

3,257

 

 

 

17,206

 

 

 

9,434

 

 

 

 

 

 

 

 

 

Operating costs and expenses

 

 

 

 

 

 

 

Cost of sales (excluding items shown separately below)

 

1,441

 

 

 

2,112

 

 

 

11,887

 

 

 

5,290

 

Cost of sales—affiliate

 

47

 

 

 

22

 

 

 

213

 

 

 

84

 

Cost of sales—related party

 

—

 

 

 

16

 

 

 

—

 

 

 

17

 

Operating and maintenance expense

 

207

 

 

 

170

 

 

 

757

 

 

 

635

 

Operating and maintenance expense—affiliate

 

48

 

 

 

39

 

 

 

166

 

 

 

142

 

Operating and maintenance expense—related party

 

27

 

 

 

12

 

 

 

72

 

 

 

46

 

General and administrative expense

 

2

 

 

 

2

 

 

 

5

 

 

 

9

 

General and administrative expense—affiliate

 

22

 

 

 

21

 

 

 

92

 

 

 

85

 

Depreciation and amortization expense

 

165

 

 

 

140

 

 

 

634

 

 

 

557

 

Other

 

—

 

 

 

4

 

 

 

—

 

 

 

11

 

Other—affiliate

 

—

 

 

 

1

 

 

 

—

 

 

 

1

 

Total operating costs and expenses

 

1,959

 

 

 

2,539

 

 

 

13,826

 

 

 

6,877

 

 

 

 

 

 

 

 

 

Income from operations

 

2,762

 

 

 

718

 

 

 

3,380

 

 

 

2,557

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

Interest expense, net of capitalized interest

 

(229

)

 

 

(195

)

 

 

(870

)

 

 

(831

)

Loss on modification or extinguishment of debt

 

(33

)

 

 

(20

)

 

 

(33

)

 

 

(101

)

Other income, net

 

11

 

 

 

1

 

 

 

21

 

 

 

3

 

Other income—affiliate

 

—

 

 

 

2

 

 

 

—

 

 

 

2

 

Total other expense

 

(251

)

 

 

(212

)

 

 

(882

)

 

 

(927

)

 

 

 

 

 

 

 

 

Net income

$

2,511

 

 

$

506

 

 

$

2,498

 

 

$

1,630

 

 

 

 

 

 

 

 

 

Basic and diluted net income per common unit (1)

$

4.63

 

 

$

0.93

 

 

$

3.27

 

 

$

3.00

 

 

 

 

 

 

 

 

 

Weighted average basic and diluted number of common units outstanding

 

484.0

 

 

 

484.0

 

 

 

484.0

 

 

 

484.0

 

_________________________

(1)

Please refer to the Cheniere Energy Partners, L.P. Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission.

Cheniere Energy Partners, L.P.

Consolidated Balance Sheets

(in millions, except unit data) (1)

 

 

December 31,

 

 

2022

 

 

 

2021

 

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

904

 

 

$

876

 

Restricted cash and cash equivalents

 

92

 

 

 

98

 

Trade and other receivables, net of current expected credit losses

 

627

 

 

 

580

 

Accounts receivable—affiliate

 

551

 

 

 

232

 

Accounts receivable—related party

 

—

 

 

 

1

 

Advances to affiliate

 

177

 

 

 

141

 

Inventory

 

160

 

 

 

176

 

Current derivative assets

 

24

 

 

 

21

 

Margin deposits

 

35

 

 

 

7

 

Other current assets

 

50

 

 

 

80

 

Total current assets

 

2,620

 

 

 

2,212

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation

 

16,725

 

 

 

16,830

 

Operating lease assets

 

89

 

 

 

98

 

Debt issuance costs, net of accumulated amortization

 

8

 

 

 

12

 

Derivative assets

 

28

 

 

 

33

 

Other non-current assets, net

 

163

 

 

 

173

 

Total assets

$

19,633

 

 

$

19,358

 

 

 

 

 

LIABILITIES AND PARTNERS’ EQUITY (DEFICIT)

 

 

 

Current liabilities

 

 

 

Accounts payable

$

32

 

 

$

21

 

Accrued liabilities

 

1,378

 

 

 

1,073

 

Accrued liabilities—related party

 

6

 

 

 

4

 

Due to affiliates

 

74

 

 

 

67

 

Deferred revenue

 

144

 

 

 

155

 

Deferred revenue—affiliate

 

3

 

 

 

1

 

Current operating lease liabilities

 

10

 

 

 

8

 

Current derivative liabilities

 

769

 

 

 

16

 

Other current liabilities

 

5

 

 

 

—

 

Total current liabilities

 

2,421

 

 

 

1,345

 

 

 

 

 

Long-term debt, net of premium, discount and debt issuance costs

 

16,198

 

 

 

17,177

 

Operating lease liabilities

 

80

 

 

 

89

 

Finance lease liabilities

 

18

 

 

 

—

 

Derivative liabilities

 

3,024

 

 

 

11

 

Other non-current liabilities—affiliate

 

23

 

 

 

18

 

 

 

 

 

Commitments and contingencies    

Partners’ equity (deficit)

 

 

 

Common unitholders’ interest (484.0 million units issued and outstanding at both December 31, 2022 and 2021)

 

(1,118

)

 

 

1,024

 

General partner’s interest (2% interest with 9.9 million units issued and outstanding at both December 31, 2022 and 2021)

 

(1,013

)

 

 

(306

)

Total partners’ equity (deficit)

 

(2,131

)

 

 

718

 

Total liabilities and partners’ equity (deficit)

$

19,633

 

 

$

19,358

 

_________________________

(1)

Please refer to the Cheniere Energy Partners, L.P. Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission.

Reconciliation of Non-GAAP Measures Regulation G Reconciliations

Adjusted EBITDA

The following table reconciles our Adjusted EBITDA to U.S. GAAP results for the three and twelve months ended December 31, 2022 and 2021 (in millions):

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income

$

2,511

 

 

$

506

 

 

$

2,498

 

 

$

1,630

 

Interest expense, net of capitalized interest

 

229

 

 

 

195

 

 

 

870

 

 

 

831

 

Loss on modification or extinguishment of debt

 

33

 

 

 

20

 

 

 

33

 

 

 

101

 

Other income, net

 

(11

)

 

 

(1

)

 

 

(21

)

 

 

(3

)

Other income—affiliate

 

—

 

 

 

(2

)

 

 

—

 

 

 

(2

)

Income from operations

$

2,762

 

 

$

718

 

 

$

3,380

 

 

$

2,557

 

Adjustments to reconcile income from operations to Adjusted EBITDA:

 

 

 

 

 

 

 

Depreciation and amortization expense

 

165

 

 

 

140

 

 

 

634

 

 

 

557

 

Loss (gain) from changes in fair value of commodity derivatives, net (1)

 

(1,336

)

 

 

5

 

 

 

1,057

 

 

 

(49

)

Other

 

—

 

 

 

5

 

 

 

—

 

 

 

11

 

Adjusted EBITDA

$

1,591

 

 

$

868

 

 

$

5,071

 

 

$

3,076

 

_________________________

(1)

Change in fair value of commodity derivatives prior to contractual delivery or termination

Adjusted EBITDA is commonly used as a supplemental financial measure by our management and external users of our Consolidated Financial Statements to assess the financial performance of our assets without regard to financing methods, capital structures, or historical cost basis. Adjusted EBITDA is not intended to represent cash flows from operations or net income as defined by U.S. GAAP and is not necessarily comparable to similarly titled measures reported by other companies.

We believe Adjusted EBITDA provides relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operating performance in a manner that is consistent with management’s evaluation of financial and operating performance.

Adjusted EBITDA is calculated by taking net income before interest expense, net of capitalized interest, depreciation and amortization, and adjusting for the effects of certain non-cash items, other non-operating income or expense items and other items not otherwise predictive or indicative of ongoing operating performance, including the effects of modification or extinguishment of debt, impairment expense and loss on disposal of assets, and changes in the fair value of our commodity derivatives prior to contractual delivery or termination. The change in fair value of commodity derivatives is considered in determining Adjusted EBITDA given that the timing of recognizing gains and losses on these derivative contracts differs from the recognition of the related item economically hedged. We believe the exclusion of these items enables investors and other users of our financial information to assess our sequential and year-over-year performance and operating trends on a more comparable basis and is consistent with management’s own evaluation of performance.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230222005711/en/

Cheniere Partners Investors Randy Bhatia, 713-375-5479 Frances Smith, 713-375-5753

Media Relations Eben Burnham-Snyder, 713-375-5764