Cheniere Energy, Inc. Q3 FY2024 earnings call

• Addressed the U.S. Presidential election, encouraging employees to vote and expressing readiness to work with the next administration on energy-related policies.
• Highlighted third quarter financial results including consolidated adjusted EBITDA, distributable cash flow and net income, and mentioned repurchasing stock, paying down debt, funding CapEx, and increasing the third quarter dividend by 15%.
• Discussed Corpus Christi Stage 3 project progress, with pre-commissioning activities on Train 1 and expectation of first gas in coming weeks and first LNG production from Train 1 at Stage 3 by the end of the year remaining within reach.
• Announced establishment of a voluntary Scope 1 methane emissions intensity target for liquefaction assets, aiming for a 0.03% annual measured methane emissions intensity by 2027, and MSCI upgraded Cheniere's ESG rating to AAA.

In the third quarter, Cheniere generated consolidated adjusted EBITDA of approximately $1.5 billion, distributable cash flow of approximately $820 million and net income of approximately $900 million. During the quarter, 158 LNG cargoes were produced and exported from facilities, including the production and export of the 1,000th LNG Cargo from Corpus Christi. Corpus Christi Stage 3 project was approximately 68% complete as of September 30th. Cheniere expects to have three trains from Stage 3 achieve substantial completion during 2025, and 2025 will have more open volumes than 2024, driven by the substantial completion of those trains. In terms of revenue contribution, the LNG business segments contributed significantly to the overall financial results.

• Raised and tightened 2024 full year guidance to $6 billion to $6.3 billion in consolidated adjusted EBITDA and $3.4 billion to $3.7 billion in distributable cash flow, driven by better-than-expected production, incremental margin and portfolio optimization activities.
• For 2025, expects to produce approximately 47 million to 48 million tons of LNG in total across two sites, inclusive of Stage 3 volumes and a major maintenance plan at Sabine Pass. Forecasts over 46 million to over 47 million tons of volume after commissioning supporting 2025 EBITDA, and expects over 3 million to over 4 million tons of spot volume available for CMI, with a $1 change in market margin impacting EBITDA by approximately $100 million to $150 million for the full year. Intends to provide official 2025 financial guidance on the February call.

• Global LNG market is sensitive to potential disruptions in supply or demand, such as geopolitical tensions, supply outages, weather changes. European gas fundamentals face risks like lower power demand, uncertain storage levels exiting winter, potential reductions in Russian flows and LNG supply disruptions.
• Uncertainty in the commissioning process of Stage 3 trains as it involves new technology, which may impact the timing and contribution of new volumes to financial results.

Q: How does the commissioning process of Stage 3 trains impact the cost and funding?

A: Zach Davis said around 1 million tons or 50 TBtu of commissioning volumes will help offset CapEx and be another funding source, with hundreds of millions of dollars involved.

Q: With the FTA authorization, how does it impact discussions with customers on the SPL expansion project and the outlook for the project?

A: Anatol Feygin said they've got order of magnitude 10,000,000 tons, with 3 counterparties for Midscale eight, nine and balance for Train 7, taking time to optimize and pursuing efforts with select counterparties, in good shape with great engagement.

Q: What are your views on the regas outlook in Asia, particularly China's regas capacity coming online?

A: Anatol Feygin said China is going to be a 250 million ton regas capacity market, expecting to get to about 140 million, 150 million tons of imports over the next five to seven years and Asia's growth to continue at robust rates Q: How do you think about the timeline for the three Stage 3 trains completing in 2025 and the possibility of a fourth train?

A: Jack Fusco said guiding to three trains is the focus for now, and Zach Davis mentioned on the high-end, Trains 1, 2 and 3 would need to reach substantial completion by end of Q1, Q2 and Q3 respectively, and on the lower end, closer to 47 million, Train 1 may come online in late Q1 or early Q2, and Trains 2 and 3 later in the second half, with four trains being a bit much to accomplish Q: What are your expectations for European demand into next year and over the medium-term?

A: Anatol Feygin said European gas demand has good stabilization in larger economies, natural gas demand and hence LNG demand to remain fairly stable through the middle of next decade and then decline modestly