Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE American: CQP) today announced its financial results for first quarter 2023.

HIGHLIGHTS

  • For the three months ended March 31, 2023, Cheniere Partners generated revenues of $2.9 billion, net income of $1.9 billion, and Adjusted EBITDA1 of $1.0 billion.
  • Declared a cash distribution of $1.03 per common unit to unitholders of record as of May 8, 2023, comprised of a base amount equal to $0.775 and a variable amount equal to $0.255. The common unit distribution and the related general partner distribution will be paid on May 15, 2023.
  • Reconfirming full year 2023 distribution guidance of $4.00 - $4.25 per common unit.
  • 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 (“NEPA”) for the SPL Expansion Project (defined below). In April 2023, certain of our subsidiaries executed a contract with Bechtel Energy Inc. (“Bechtel”) to provide the Front End Engineering and Design (“FEED”) for the SPL Expansion Project.
  • In February 2023, S&P Global Ratings upgraded its credit rating of Sabine Pass Liquefaction, LLC (“SPL”) from BBB to BBB+ with a stable outlook.

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 March 31,

 

 

2023

 

 

2022

 

% Change

Revenues

$

2,917

 

$

3,328

 

(12

) %

Net income

$

1,935

 

$

159

 

1,117

%

Adjusted EBITDA1

$

1,026

 

$

1,031

 

%

LNG exported:

 

 

 

 

 

Number of cargoes

 

112

 

 

105

 

7

%

Volumes (TBtu)

 

403

 

 

384

 

5

%

LNG volumes loaded (TBtu)

 

403

 

 

385

 

5

%

Net income increased by approximately $1.8 billion during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. The increase was primarily due to non-cash favorable changes in fair value of commodity derivatives (further described below) and increased volumes of LNG delivered, partially offset by lower regasification revenues related to the previously announced early termination of the Terminal Use Agreement (“TUA”) between Sabine Pass LNG, L.P. and Chevron.

1

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

Adjusted EBITDA1 decreased by approximately $5 million during the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. The decrease in Adjusted EBITDA was primarily due to lower regasification revenues related to the early termination of the Chevron TUA, partially offset by increased volumes of LNG delivered.

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 months ended March 31, 2023, we recognized approximately $1.0 billion of non-cash favorable changes in fair value attributable to the Tourmaline IPM agreement.

During the three months ended March 31, 2023, we recognized in income 403 TBtu of LNG loaded from the SPL Project, none of which was related to commissioning activities.

Capital Resources

As of March 31, 2023, our total available liquidity was approximately $2.6 billion. We had cash and cash equivalents of approximately $834 million. In addition, we had current restricted cash and cash equivalents of $160 million, $750 million of available commitments under our CQP Credit Facilities, and $871 million of available commitments under the SPL Working Capital Facility.

SABINE PASS OVERVIEW

We own natural gas liquefaction facilities consisting of 6 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 April 26, 2023, approximately 2,070 cumulative LNG cargoes totaling approximately 142 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 3 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 under the NEPA, and in April 2023, executed a contract with Bechtel to provide the FEED for the SPL Expansion Project.

DISTRIBUTIONS TO UNITHOLDERS

In April 2023, we declared a cash distribution of $1.03 per common unit to unitholders of record as of May 8, 2023, comprised of a base amount equal to $0.775 ($3.10 annualized) and a variable amount equal to $0.255, 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 will be paid on May 15, 2023.

INVESTOR CONFERENCE CALL AND WEBCAST

Cheniere Energy, Inc. will host a conference call to discuss its financial and operating results for first quarter 2023 on Tuesday, May 2, 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.

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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, 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)

(unaudited)

 

 

Three Months Ended

 

March 31,

 

 

2023

 

 

 

2022

 

Revenues

 

 

 

LNG revenues

$

2,106

 

 

$

2,488

 

LNG revenues—affiliate

 

761

 

 

 

757

 

Regasification revenues

 

34

 

 

 

68

 

Other revenues

 

16

 

 

 

15

 

Total revenues

 

2,917

 

 

 

3,328

 

 

 

 

 

Operating costs and expenses

 

 

 

Cost of sales (excluding items shown separately below)

 

313

 

 

 

2,562

 

Cost of sales—affiliate

 

17

 

 

 

5

 

Operating and maintenance expense

 

206

 

 

 

170

 

Operating and maintenance expense—affiliate

 

44

 

 

 

38

 

Operating and maintenance expense—related party

 

16

 

 

 

12

 

General and administrative expense

 

3

 

 

 

3

 

General and administrative expense—affiliate

 

22

 

 

 

23

 

Depreciation and amortization expense

 

167

 

 

 

153

 

Total operating costs and expenses

 

788

 

 

 

2,966

 

 

 

 

 

Income from operations

 

2,129

 

 

 

362

 

 

 

 

 

Other income (expense)

 

 

 

Interest expense, net of capitalized interest

 

(208

)

 

 

(203

)

Other income, net

 

14

 

 

 

 

Total other expense

 

(194

)

 

 

(203

)

 

 

 

 

Net income

$

1,935

 

 

$

159

 

 

 

 

 

Basic and diluted net income (loss) per common unit(1)

$

3.50

 

 

$

(0.11

)

 

 

 

 

Weighted average basic and diluted number of common units outstanding

 

484.0

 

 

 

484.0

 

 (1)

Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the Securities and Exchange Commission.

 

Cheniere Energy Partners, L.P.

Consolidated Balance Sheets

(in millions, except unit data) (1)

 

 

March 31,

 

December 31,

 

 

2023

 

 

 

2022

 

ASSETS

(unaudited)

 

 

Current assets

 

 

 

Cash and cash equivalents

$

834

 

 

$

904

 

Restricted cash and cash equivalents

 

160

 

 

 

92

 

Trade and other receivables, net of current expected credit losses

 

269

 

 

 

627

 

Trade receivables—affiliate

 

263

 

 

 

551

 

Advances to affiliate

 

157

 

 

 

177

 

Inventory

 

150

 

 

 

160

 

Current derivative assets

 

55

 

 

 

24

 

Margin deposits

 

 

 

 

35

 

Other current assets

 

44

 

 

 

50

 

Other current assets—affiliate

 

1

 

 

 

 

Total current assets

 

1,933

 

 

 

2,620

 

 

 

 

 

Property, plant and equipment, net of accumulated depreciation

 

16,587

 

 

 

16,725

 

Operating lease assets

 

87

 

 

 

89

 

Debt issuance costs, net of accumulated amortization

 

7

 

 

 

8

 

Derivative assets

 

32

 

 

 

28

 

Other non-current assets, net

 

171

 

 

 

163

 

Total assets

$

18,817

 

 

$

19,633

 

 

 

 

 

LIABILITIES AND PARTNERS’ DEFICIT

 

 

 

Current liabilities

 

 

 

Accounts payable

$

70

 

 

$

32

 

Accrued liabilities

 

674

 

 

 

1,378

 

Accrued liabilities—related party

 

5

 

 

 

6

 

Current debt, net of discount and debt issuance costs

 

60

 

 

 

 

Due to affiliates

 

32

 

 

 

74

 

Deferred revenue

 

83

 

 

 

144

 

Deferred revenue—affiliate

 

 

 

 

3

 

Current operating lease liabilities

 

11

 

 

 

10

 

Current derivative liabilities

 

400

 

 

 

769

 

Other current liabilities

 

13

 

 

 

5

 

Total current liabilities

 

1,348

 

 

 

2,421

 

 

 

 

 

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

 

16,145

 

 

 

16,198

 

Operating lease liabilities

 

78

 

 

 

80

 

Finance lease liabilities

 

17

 

 

 

18

 

Derivative liabilities

 

2,157

 

 

 

3,024

 

Other non-current liabilities—affiliate

 

22

 

 

 

23

 

 

 

 

 

Partners’ deficit

 

 

 

Common unitholders’ interest (484.0 million units issued and outstanding at both March 31, 2023 and December 31, 2022)

 

261

 

 

 

(1,118

)

General partner’s interest (2% interest with 9.9 million units issued and outstanding at both March 31, 2023 and December 31, 2022)

 

(1,211

)

 

 

(1,013

)

Total partners’ deficit

 

(950

)

 

 

(2,131

)

Total liabilities and partners’ deficit

$

18,817

 

 

$

19,633

 

 (1)

Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, 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 months ended March 31, 2023 and 2022 (in millions):

 

Three Months Ended March 31,

 

 

2023

 

 

 

2022

Net income

$

1,935

 

 

$

159

Interest expense, net of capitalized interest

 

208

 

 

 

203

Other income, net

 

(14

)

 

 

Income from operations

$

2,129

 

 

$

362

Adjustments to reconcile income from operations to Adjusted EBITDA:

 

 

 

Depreciation and amortization expense

 

167

 

 

 

153

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

 

(1,270

)

 

 

516

Adjusted EBITDA

$

1,026

 

 

$

1,031

(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.

 

Cheniere Partners Investors Randy Bhatia, 713-375-5479 Frances Smith, 713-375-5753 Media Relations Eben Burnham-Snyder, 713-375-5764

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