Capital allocation framework prioritizes
reinvestment of available cash in growth capital projects,
achievement of investment-grade credit metrics, and return of
excess capital to shareholders
$1.0 billion share repurchase authorization
approved by Board of Directors
Final Investment Decision reached on Sabine
Pass Train 6 and Full Notice to Proceed issued to Bechtel
Run-rate production guidance increased to 4.7 –
5.0 mtpa per Train
Run-rate Consolidated Adjusted EBITDA guidance
raised to $5.2 - $5.6 billion
Run-rate Distributable Cash Flow per share
guidance raised to $8.40 - $9.60
Cheniere Energy, Inc. (“Cheniere” or the “Company”) (NYSE
American: LNG) announced today that its Board of Directors has
approved a comprehensive capital allocation framework for the
Company that prioritizes reinvestment of cash flows to grow
Cheniere’s world-class LNG platform, achievement of improved credit
metrics for the Company’s liquefaction project entities and on a
consolidated basis, and return of excess capital to shareholders
through a framework that provides the Company flexibility to adapt
to changes in growth opportunities and market conditions.
Cheniere expects to generate over $9 billion of available cash
through the first half of 2024. The capital allocation framework
provides for the following allocation through the forecast period
of approximately five years:
- Growth
Investments – Reinvest cash flows to fund accretive projects
using at least 50% equity funding
- Sabine Pass Train 6 – Over 50% equity
investment
- Corpus Christi Stage 3 – At least 50%
equity investment for expansion project adjacent to the Corpus
Christi Liquefaction Project (“CCL Project”) with total expected
nominal production of approximately 9.5 million tonnes per annum
(“mtpa”), for which a positive Final Investment Decision (“FID”) is
expected as early as 2020.
- Debottlenecking Projects – capital
investments to increase production of existing liquefaction
platform
- Balance
Sheet – Ensure resiliency of investment grade ratings at
liquefaction project entities and move toward an investment grade
corporate rating for Cheniere
- Leverage – proactively reduce
consolidated debt and achieve an investment grade debt to
Consolidated Adjusted EBITDA ratio
- Capital
Return – Platform that enables meaningful capital return to
shareholders while maintaining flexibility for Cheniere
- Share Repurchase Authorization –
3-year, $1.0 billion share repurchase authorization approved by
Cheniere’s Board of Directors
“The capital allocation framework we announced today prioritizes
continued investment in our LNG platform through new high-return
growth projects, beginning with Sabine Pass Train 6, on which we
have made a positive FID and have issued full notice to proceed to
Bechtel. We believe the framework will also strengthen the balance
sheets across our corporate structure, which is vital to our
sustained growth, and enables us to return excess capital to
shareholders through share repurchases,” said Jack Fusco,
Cheniere’s President and Chief Executive Officer. “The
market-leading execution we have achieved across our world-class
LNG platform has provided stable and growing cash flow, which forms
the foundation for this capital allocation framework, and we remain
committed to delivering long-term shareholder value through
growth.”
Sabine Pass Train 6 Final Investment
Decision
Cheniere’s subsidiary Cheniere Energy Partners, L.P. (“Cheniere
Partners”) (NYSE American: CQP) announced today that the Board of
Directors of its general partner has made a positive FID with
respect to Train 6 of the Sabine Pass Liquefaction Project (“SPL
Project”) in Cameron Parish, Louisiana, and Cheniere Partners has
issued full notice to proceed with construction to Bechtel Oil, Gas
and Chemicals, Inc. (“Bechtel”).
To fund a portion of the construction of Train 6 and a third LNG
berth and required supporting infrastructure at the SPL Project,
Cheniere Partners has entered into 5-year, $1.5 billion senior
secured credit facilities with 29 banks and financial institutions
in a transaction that closed on May 29, 2019. The facilities
include a $750 million delayed draw term loan, and a $750 million
revolving credit facility. SG Americas Securities, LLC acted as
Financial Advisor to Cheniere Partners for the transaction, and
MUFG Bank, Ltd acted as Sole Coordinating Lead Arranger.
Increased Run-Rate Production and
Financial Guidance
Cheniere has also raised its run-rate production guidance to 4.7
– 5.0 mtpa per Train, up from 4.4 – 4.9 mtpa per Train. The
increase in run-rate production is based on the impact of
production optimization, maintenance optimization, and
debottlenecking projects at both the SPL Project and CCL
Project.
Incorporating the impact of Sabine Pass Train 6 and increased
run-rate production guidance, Cheniere has revised its run-rate
financial guidance as follows:
• Consolidated Adjusted EBITDA
$5.2 – $5.6 billion
• Distributable Cash Flow per share
$8.40 – $9.60
Cheniere has provided a presentation for investors which
includes additional details about the capital allocation framework,
the upwardly revised financial guidance, and additional updates on
strategic priorities at the Company. The presentation is available
on the Company’s website at www.cheniere.com.
Share Repurchase Authorization
Under the share repurchase authorization, repurchases can be
made from time to time using a variety of methods, which may
include open market purchases, privately negotiated transactions or
otherwise, all in accordance with the rules of the Securities and
Exchange Commission and other applicable legal requirements. The
timing and amount of any shares of the Company’s common stock that
are repurchased under the share repurchase authorization will be
determined by the Company’s management based on market conditions
and other factors. The share repurchase authorization does not
obligate the Company to acquire any particular amount of common
stock, and may be modified, suspended or discontinued at any time
or from time to time at the Company’s discretion.
About Cheniere
Cheniere Energy, Inc. is the leading producer and exporter of
liquefied natural gas (LNG) in the United States, reliably
providing a clean, secure, and affordable solution to the growing
global need for natural gas. Cheniere is a full-service LNG
provider, with capabilities that include gas procurement and
transportation, liquefaction, vessel chartering, and LNG delivery.
Cheniere has one of the largest liquefaction platforms in the
world, consisting of the Sabine Pass and Corpus Christi
liquefaction facilities on the U.S. Gulf Coast, with expected
aggregate adjusted nominal production capacity of up to 45 million
tonnes per annum of LNG operating or under construction. Cheniere
is also pursuing liquefaction expansion opportunities and other
projects along the LNG value chain. Cheniere is headquartered in
Houston, Texas, and has additional offices in London, Singapore,
Beijing, Tokyo, and Washington, D.C.
For additional information, please refer to the Cheniere website
at www.cheniere.com and Quarterly Report on Form 10-Q for the
quarter ended March 31, 2019, filed with the Securities and
Exchange Commission.
Forward-Looking Statements
This press release contains certain statements that may include
“forward-looking statements” within the meanings of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. 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’s financial and operational guidance, business strategy,
plans and objectives, including the development, construction and
operation of liquefaction facilities, (ii) statements regarding
expectations regarding regulatory authorizations and approvals,
(iii) statements expressing beliefs and expectations regarding the
development of Cheniere’s LNG terminal and pipeline businesses,
including liquefaction facilities, (iv) statements regarding the
business operations and prospects of third parties, (v) statements
regarding potential financing arrangements, (vi) statements
regarding future discussions and entry into contracts, and (vii)
statements relating to the amount and timing of share repurchases.
Although Cheniere 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’s 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’s 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 does not assume a duty
to update these forward-looking statements.
Reconciliation of Non-GAAP Measures
Regulation G Reconciliations
The accompanying news release contains non-GAAP financial
measures. Consolidated Adjusted EBITDA, Distributable Cash Flow,
and Distributable Cash Flow per share are non-GAAP financial
measures that we use to facilitate comparisons of operating
performance across periods. These non-GAAP measures 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 reconciliations from these results
should be carefully evaluated.
Consolidated Adjusted EBITDA represents net income attributable
to Cheniere before net income attributable to the non-controlling
interest, interest, taxes, depreciation and amortization, adjusted
for certain non-cash items, other non-operating income or expense
items, and other items not otherwise predictive or indicative of
ongoing operating performance, as detailed in the following
reconciliation. Consolidated 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 Consolidated 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 business performance. We believe
Consolidated Adjusted EBITDA is widely used by investors to measure
a company’s operating performance without regard to items such as
interest expense, taxes, depreciation and amortization which vary
substantially from company to company depending on capital
structure, the method by which assets were acquired and
depreciation policies. Further, the exclusion of certain non-cash
items, other non-operating income or expense items, and items not
otherwise predictive or indicative of ongoing operating performance
enables comparability to prior period performance and trend
analysis.
Consolidated Adjusted EBITDA is calculated by taking net income
attributable to common stockholders before net income attributable
to non-controlling interest, interest expense, net of capitalized
interest, changes in the fair value and settlement of our interest
rate derivatives, taxes, 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, changes in the fair value of our commodity and foreign
currency exchange derivatives and non-cash compensation expense. 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.
Distributable Cash Flow is defined as cash received, or expected
to be received, from Cheniere’s ownership and interests in Cheniere
Partners and Cheniere Corpus Christi Holdings, LLC, cash received
(used) by Cheniere’s integrated marketing function (other than cash
for capital expenditures) less interest, taxes and maintenance
capital expenditures associated with Cheniere and not the
underlying entities. Management uses this measure and believes it
provides users of our financial statements a useful measure
reflective of our business’s ability to generate cash earnings to
supplement the comparable GAAP measure.
Distributable Cash Flow per share is calculated by dividing
Distributable Cash Flow by the weighted average number of common
shares or units outstanding.
We believe Distributable Cash Flow is a useful performance
measure for management, investors and other users of our financial
information to evaluate our performance and to measure and estimate
the ability of our assets to generate cash earnings after servicing
our debt, paying cash taxes and expending sustaining capital, that
could be used for discretionary purposes such as common stock
dividends, stock repurchases, retirement of debt, or expansion
capital expenditures. Management uses this measure and believes it
provides users of our financial statements a useful measure
reflective of our business’s ability to generate cash earnings to
supplement the comparable GAAP measure. Distributable Cash Flow 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.
Non-GAAP measures have limitations as an analytical tool and
should not be considered in isolation or in lieu of an analysis of
our results as reported under GAAP and should be evaluated only on
a supplementary basis.
We have not made any forecast of net income on a run rate basis,
which would be the most directly comparable financial measure under
GAAP, and we are unable to reconcile differences between run rate
Consolidated Adjusted EBITDA and Distributable Cash Flow and net
income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190603005217/en/
Cheniere Energy, Inc.InvestorsRandy
Bhatia, 713-375-5479Megan Light, 713-375-5492OrMedia RelationsEben Burnham-Snyder,
713-375-5764Jenna Palfrey, 713-375-5491
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