Cheniere Energy Partners LP

10/31/2024 | Press release | Distributed by Public on 10/31/2024 05:33

Cheniere Partners Reports Third Quarter 2024 Results and Reconfirms Full Year 2024 Distribution Guidance

Cheniere Partners Reports Third Quarter 2024 Results and Reconfirms Full Year 2024 Distribution Guidance

Download as PDF October 31, 2024 7:30am EDT

HOUSTON--(BUSINESS WIRE)-- Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE: CQP) today announced its financial results for third quarter 2024.

HIGHLIGHTS

  • During the three and nine months ended September 30, 2024, Cheniere Partners generated revenues of $2.1 billion and $6.2 billion, net income of $635 million and $1.9 billion, and Adjusted EBITDA1 of $852 million and $2.7 billion, respectively.
  • With respect to the third quarter of 2024, Cheniere Partners declared a cash distribution of $0.810 per common unit to unitholders of record as of November 4, 2024, comprised of a base amount equal to $0.775 and a variable amount equal to $0.035. The common unit distribution and the related general partner distribution will be paid on November 14, 2024.
  • Reconfirming full year 2024 distribution guidance of $3.15 - $3.35 per common unit, maintaining a base distribution of $3.10 per common unit.

2024 FULL YEAR DISTRIBUTION GUIDANCE

2024

Distribution per Unit

$

3.15

-

$

3.35

SUMMARY AND REVIEW OF FINANCIAL RESULTS

(in millions, except LNG data)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

% Change

2024

2023

% Change

Revenues

$

2,055

$

2,128

(3

)%

$

6,244

$

6,978

(11

)%

Net income

$

635

$

791

(20

)%

$

1,887

$

3,348

(44

)%

Adjusted EBITDA1

$

852

$

793

7

%

$

2,684

$

2,576

4

%

LNG exported:

Number of cargoes

104

100

4

%

321

310

4

%

Volumes (TBtu)

377

359

5

%

1,168

1,117

5

%

LNG volumes loaded (TBtu)

377

362

4

%

1,166

1,118

4

%

Net income decreased approximately $156 million and $1.5 billion during the three and nine months ended September 30, 2024, respectively, as compared to the corresponding 2023 periods. The decreases were primarily attributable to approximately $215 million and $1.6 billion of unfavorable variances related to changes in fair value of our derivative instruments (further described below) for the three and nine months ended September 30, 2024, respectively, as compared to the corresponding 2023 periods.

Adjusted EBITDA1 increased by approximately $59 million and $108 million during the three and nine months ended September 30, 2024, respectively, as compared to the corresponding 2023 periods. The increases were primarily due to higher volumes delivered, and were partially offset by lower gross margins per MMBtu of liquefied natural gas ("LNG") delivered compared to the prior periods.

A significant portion of the derivative gains are attributable to the recognition at fair value of our long-term Integrated Production Marketing ("IPM") agreements, natural gas supply contracts with pricing indexed to international gas and LNG prices. Our IPM agreements are structured to provide stable margins on purchases of natural gas and sales of LNG over the life of the agreements and have a fixed fee component, similar to that of LNG sold under our long-term, fixed fee LNG sale and purchase agreements. However, the long-term duration and international price basis of our IPM agreements make them particularly susceptible to fluctuations in fair market value from period to period. In addition, accounting requirements prescribe recognition of these long-term gas supply agreements at fair value each reporting period on a mark-to-market basis, but do not currently permit mark-to-market recognition of the corresponding sale of LNG, resulting in a mismatch of accounting recognition for the purchase of natural gas and sale of LNG. As a result of continued moderation of international gas price volatility and changes in international forward commodity curves during the three and nine months ended September 30, 2024, we recognized approximately $32 million and $238 million, respectively, of non-cash favorable changes in fair value attributable to these IPM agreements, as compared to approximately $217 million and $1.5 billion of non-cash favorable changes in fair value in the corresponding 2023 periods.

During the three and nine months ended September 30, 2024, we recognized in income 377 and 1,166 TBtu of LNG loaded from the SPL Project (defined below).

Capital Resources

As of September 30, 2024, our total available liquidity was approximately $2.2 billion. We had cash and cash equivalents of approximately $331 million, restricted cash and cash equivalents of $80 million, $1.0 billion of available commitments under the Cheniere Partners Revolving Credit Facility, and $766 million of available commitments under the Sabine Pass Liquefaction, LLC ("SPL") Revolving Credit Facility.

Recent Key Financial Transactions and Updates

During the three months ended September 30, 2024, SPL repaid $150 million in principal amount of its 5.625% Senior Secured Notes due 2025 with cash on hand.

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 October 25, 2024, approximately 2,700 cumulative LNG cargoes totaling over 185 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 with an expected total production capacity of up to approximately 20 mtpa of LNG (the "SPL Expansion Project"), inclusive of estimated debottlenecking opportunities. In February 2024, certain of our subsidiaries submitted an application to the Federal Energy Regulatory Commission for authorization to site, construct and operate the SPL Expansion Project, as well as an application to the Department of Energy requesting authorization to export LNG to Free-Trade Agreement ("FTA") and non-FTA countries, both of which applications exclude debottlenecking. In October 2024, we received authorization from the DOE to export LNG to FTA countries.

DISTRIBUTIONS TO UNITHOLDERS

In October 2024, we declared a cash distribution of $0.810 per common unit to unitholders of record as of November 4, 2024, comprised of a base amount equal to $0.775 ($3.10 annualized) and a variable amount equal to $0.035, 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 November 14, 2024.

INVESTOR CONFERENCE CALL AND WEBCAST

Cheniere Energy, Inc. will host a conference call to discuss its financial and operating results for third quarter 2024 on Thursday, October 31, 2024, 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 will 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, 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, (vii) statements regarding future discussions and entry into contracts, and (viii) statements relating to our goals, commitments and strategies in relation to environmental matters. 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 Operations

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

(unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2024

2023

2024

2023

Revenues

LNG revenues

$

1,479

$

1,564

$

4,653

$

5,085

LNG revenues-affiliate

526

515

1,441

1,745

Regasification revenues

34

34

102

101

Other revenues

16

15

48

47

Total revenues

2,055

2,128

6,244

6,978

Operating costs and expenses

Cost of sales (excluding items shown separately below)

773

682

2,398

1,598

Cost of sales-affiliate

-

2

4

20

Operating and maintenance expense

200

211

610

680

Operating and maintenance expense-affiliate

41

38

123

120

Operating and maintenance expense-related party

15

14

44

44

General and administrative expense

2

2

8

8

General and administrative expense-affiliate

23

20

68

66

Depreciation and amortization expense

171

166

509

500

Other operating costs and expenses

2

4

10

6

Other operating costs and expenses-affiliate

1

1

2

1

Total operating costs and expenses

1,228

1,140

3,776

3,043

Income from operations

827

988

2,468

3,935

Other income (expense)

Interest expense, net of capitalized interest

(199

)

(205

)

(603

)

(620

)

Loss on modification or extinguishment of debt

-

(4

)

(3

)

(6

)

Interest and dividend income

7

12

25

39

Total other expense

(192

)

(197

)

(581

)

(587

)

Net income

$

635

$

791

$

1,887

$

3,348

Basic and diluted net income per common unit(1)

$

1.08

$

1.19

$

3.21

$

5.53

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. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the Securities and Exchange Commission.

Cheniere Energy Partners, L.P.

Consolidated Balance Sheets

(in millions, except unit data) (1)

September 30,

December 31,

2024

2023

ASSETS

(unaudited)

Current assets

Cash and cash equivalents

$

331

$

575

Restricted cash and cash equivalents

80

56

Trade and other receivables, net of current expected credit losses

239

373

Trade receivables-affiliate

199

278

Advances to affiliate

82

84

Inventory

135

142

Current derivative assets

50

30

Prepaid expenses

53

42

Other current assets, net

17

1

Total current assets

1,186

1,581

Property, plant and equipment, net of accumulated depreciation

15,868

16,212

Operating lease assets

79

81

Derivative assets

64

40

Other non-current assets, net

188

188

Total assets

$

17,385

$

18,102

LIABILITIES AND PARTNERS' DEFICIT

Current liabilities

Accounts payable

$

51

$

69

Accrued liabilities

564

806

Accrued liabilities-related party

5

5

Current debt, net of unamortized discount and debt issuance costs

700

300

Due to affiliates

42

55

Deferred revenue

136

114

Deferred revenue-affiliate

1

3

Current derivative liabilities

222

196

Other current liabilities

8

18

Total current liabilities

1,729

1,566

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

14,756

15,606

Operating lease liabilities

77

71

Finance lease liabilities

69

14

Derivative liabilities

1,256

1,531

Other non-current liabilities

101

75

Other non-current liabilities-affiliate

23

23

Total liabilities

18,011

18,886

Partners' deficit

Common unitholders' interest (484.0 million units issued and outstanding at both September 30, 2024 and December 31, 2023)

1,602

1,038

General partner's interest (2% interest with 9.9 million units issued and outstanding at both September 30, 2024 and December 31, 2023)

(2,228

)

(1,822

)

Total partners' deficit

(626

)

(784

)

Total liabilities and partners' deficit

$

17,385

$

18,102

(1)

Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, 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 nine months ended September 30, 2024 and 2023 (in millions):

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Net income

$

635

$

791

$

1,887

$

3,348

Interest expense, net of capitalized interest

199

205

603

620

Loss on modification or extinguishment of debt

-

4

3

6

Interest and dividend income

(7

)

(12

)

(25

)

(39

)

Income from operations

$

827

$

988

$

2,468

$

3,935

Adjustments to reconcile income from operations to Adjusted EBITDA:

Depreciation and amortization expense

171

166

509

500

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

(146

)

(361

)

(293

)

(1,861

)

Other

-

-

-

2

Adjusted EBITDA

$

852

$

793

$

2,684

$

2,576

(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/20241030852444/en/

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

Media Relations
Eben Burnham-Snyder, 713-375-5764
Bernardo Fallas, 713-375-5593

Source: Cheniere Energy Partners, L.P.

Released October 31, 2024