Reconfirms 2020 Guidance and Provides 2021
Guidance
Increases Run Rate Production and Financial
Guidance
Cheniere Energy Partners, L.P. (NYSE American: CQP):
Summary of Third Quarter 2020 Results (in millions, except
LNG data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Revenues
$
982
$
1,476
$
4,170
$
4,930
Net income (loss)
$
(67
)
$
110
$
774
$
727
Adjusted EBITDA1
$
352
$
543
$
1,990
$
1,741
LNG exported:
Number of cargoes
36
79
186
241
Volumes (TBtu)
126
280
656
856
LNG volumes loaded (TBtu)
122
277
656
855
Summary Guidance
2020 Full Year
Distribution Guidance
2020
Distribution per Unit
$
2.55
-
$
2.65
2021 Full Year
Distribution Guidance
2021
Distribution per Unit
$
2.60
-
$
2.70
Run Rate
Guidance
Previous Run Rate
Current Run Rate2
Distributable Cash Flow1 per Unit
$
3.70
-
$
3.90
$
3.75
-
$
3.95
Production Capacity per Train3 (mtpa)
4.8
-
4.9
4.9
-
5.1
Recent Highlights
Strategic
- In August 2020, Sabine Pass Liquefaction, LLC (“SPL”) entered
into an agreement with certain Cheniere Energy, Inc. (“Cheniere”)
subsidiaries to provide the ability, in limited circumstances, to
fulfill commitments to LNG buyers in the event operational
conditions impact operations at either the SPL Project (defined
below) or Cheniere’s Corpus Christi liquefaction facility. The
purchase price for such cargoes would be (i) 115% of the applicable
natural gas feedstock purchase price or (ii) a free-on-board U.S.
Gulf Coast LNG market price, whichever is greater.
Operational
- As of October 31, 2020, more than 1,075 cumulative LNG cargoes
totaling approximately 75 million tonnes of LNG have been produced,
loaded, and exported from the SPL Project.
- In August and September 2020, we coordinated with Cheniere’s
Corpus Christi liquefaction facility and with our counterparties to
fulfill all of our commercial obligations despite the operational
impacts of Hurricane Laura, which included a temporary suspension
of operations at the SPL Project.
Financial
- In July 2020, the board of directors of our general partner
confirmed and approved that, following the distribution with
respect to the three months ended June 30, 2020, the financial
tests required for conversion of our subordinated units were met
under the terms of the partnership agreement. Accordingly,
effective August 17, 2020, the first business day following the
payment of the distribution, all of our subordinated units were
automatically converted into common units on a one-for-one basis
and the subordination period was terminated.
Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE
American: CQP) reported net loss of $67 million for the three
months ended September 30, 2020, compared to net income of $110
million for the comparable 2019 period. The increase in net loss
for the three months ended September 30, 2020 was primarily due to
decreased total margins4, partially offset by decreased costs
related to certain maintenance and related activities at the SPL
Project which occurred in the 2019 period. Total margins decreased
during the three months ended September 30, 2020 primarily due to
the accelerated recognition of revenues in prior periods related to
elections by our long-term SPA customers to not take delivery of
LNG cargoes that were scheduled for delivery during the current
period, partially offset by an increase in margins per MMBtu of LNG
delivered to customers and recognized in income.
Cheniere Partners reported net income of $774 million for the
nine months ended September 30, 2020, compared to $727 million for
the comparable 2019 period. The increase in net income for the nine
months ended September 30, 2020 was primarily due to increased
total margins, partially offset by increases in interest expense,
loss on modification or extinguishment of debt, and costs incurred
in response to the COVID-19 pandemic. Total margins increased
during the nine months ended September 30, 2020 primarily due to
increased LNG revenues including both cargoes delivered to
customers and cargoes for which customers notified us that they
would not take delivery, primarily as a result of an additional
Train in operation and slightly increased margins per MMBtu of LNG
delivered to customers and recognized in income, partially offset
by an increase in net losses from changes in fair value of
commodity derivatives.
Margins per MMBtu of LNG delivered to customers and recognized
in income increased during the three and nine months ended
September 30, 2020 primarily due to a higher proportion of total
volumes sold under higher-margin long-term contracts.
Adjusted EBITDA1 was $352 million for the three months ended
September 30, 2020, compared to $543 million for the comparable
2019 period. The decrease in Adjusted EBITDA during the three
months ended September 30, 2020 was primarily due to a decrease in
total margins as detailed above, partially offset by decreased
costs related to certain maintenance and related activities at the
SPL Project which occurred in the 2019 period.
Adjusted EBITDA was $1.99 billion for the nine months ended
September 30, 2020, compared to $1.74 billion for the comparable
2019 period. The increase in Adjusted EBITDA during the nine months
ended September 30, 2020 was primarily due to increased LNG
revenues including both cargoes delivered to customers and cargoes
for which customers notified us that they would not take delivery,
primarily as a result of an additional Train in operation and
slightly increased margins per MMBtu of LNG delivered to customers
and recognized in income as detailed above, partially offset by
costs incurred in response to the COVID-19 pandemic.
During the three and nine months ended September 30, 2020, we
recognized $109 million and $513 million, respectively, in revenues
recognized from LNG cargoes for which customers have notified us
that they will not take delivery, of which $21 million would have
otherwise been recognized subsequent to September 30, 2020, if the
cargoes were lifted pursuant to the delivery schedules with the
customers. LNG revenues during the three months ended September 30,
2020 excluded $244 million that would have otherwise been
recognized during the quarter if the cargoes were lifted pursuant
to the delivery schedules with the customers, as these revenues
were recognized during the three months ended June 30, 2020.
Excluding the impact of cargo cancellations related to periods
subsequent to September 30, 2020 and those received in prior
periods for the current periods, our total revenues would have been
$1.21 billion and $4.15 billion for the three and nine months ended
September 30, 2020, respectively.
During the three and nine months ended September 30, 2020, 36
and 186 LNG cargoes, respectively, were exported from the SPL
Project and recognized in income. Additionally, during the three
and nine months ended September 30, 2020, SPL recognized in income
three cargoes totaling approximately 11 TBtu of LNG which were
procured from Cheniere’s Corpus Christi liquefaction facility due
to the operational impact of Hurricane Laura.
Cargo Cancellation Revenue
Summary
The following table summarizes the timing impacts of revenue
recognition related to cargoes for which customers elected to not
take delivery on our revenues for the three and nine months ended
September 30, 2020 (in millions):
Three Months Ended
Nine Months Ended
September 30, 2020
September 30, 2020
Total revenues
$
982
$
4,170
Impact of cargo cancellations recognized
in the prior period for deliveries scheduled in the current
period
244
—
Impact of cargo cancellations recognized
in the current period for deliveries scheduled in subsequent
periods
(21
)
(21
)
Total revenues excluding the timing impact
of cargo cancellations
$
1,205
$
4,149
Liquefaction Project
Update
SPL Project
Train 6
Project Status
Under Construction
Project Completion Percentage (1)
70.9% (2)
Expected Substantial Completion
2H 2022
Note: Project update excludes Trains in
operation
(1) Project completion percentage as of
September 30, 2020
(2) Engineering 97.8% complete,
procurement 98.2% complete, and construction 34.6% complete
SPL Project
We operate five natural gas liquefaction Trains and are
constructing one additional Train for a total production capacity
of approximately 30 million tonnes per annum (“mtpa”) of LNG at the
Sabine Pass LNG terminal (the “SPL Project”).
Distributions to
Unitholders
We will pay a cash distribution of $0.650 per common unit to
unitholders of record as of November 6, 2020 and the related
general partner distribution on November 13, 2020.
Investor Conference Call and
Webcast
Cheniere will host a conference call to discuss its financial
and operating results for the third quarter 2020 on Friday,
November 6, 2020, 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.
2
Run rate assumes full operations of six
Trains.
3
Run rate average annual production
capacity which includes expected impacts of planned maintenance,
production reliability, potential overdesign, and debottlenecking
opportunities.
4
Total margins as used herein refers to
total revenues less cost of sales.
About Cheniere Partners
Cheniere Partners is developing, constructing and operating
natural gas liquefaction facilities at the Sabine Pass LNG terminal
located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway
less than four miles from the Gulf Coast. Cheniere Partners is
currently operating five natural gas liquefaction Trains and is
constructing one additional Train for a total production capacity
of approximately 30 mtpa of LNG at the Sabine Pass terminal. The
Sabine Pass LNG terminal has operational regasification facilities
that include five LNG storage tanks, two marine berths and
vaporizers and an additional marine berth that is under
construction. Cheniere Partners also owns the Creole Trail
Pipeline, a 94-mile pipeline that interconnects the Sabine Pass LNG
terminal with a number of large interstate 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, 2020, filed with the
Securities and Exchange Commission.
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 expectations regarding regulatory
authorizations and approvals, (iii) statements expressing beliefs
and expectations regarding the development of Cheniere Partners’
LNG terminal and liquefaction business, (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 regarding the COVID-19 pandemic and its impact
on our business and operating results. 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,
2020
2019
2020
2019
Revenues
LNG revenues
$
807
$
1,140
$
3,588
$
3,678
LNG revenues—affiliate
103
257
352
1,017
Regasification revenues
67
66
202
199
Other revenues
5
13
28
36
Total revenues
982
1,476
4,170
4,930
Operating costs and expenses
Cost of sales (excluding items shown
separately below)
454
742
1,551
2,501
Cost of sales—affiliate
33
6
38
6
Operating and maintenance expense
146
172
463
472
Operating and maintenance
expense—affiliate
34
34
115
100
General and administrative expense
2
3
12
9
General and administrative
expense—affiliate
24
34
73
82
Depreciation and amortization expense
137
138
413
390
Impairment expense and loss on disposal of
assets
—
1
5
6
Total operating costs and expenses
830
1,130
2,670
3,566
Income from operations
152
346
1,500
1,364
Other income (expense)
Interest expense, net of capitalized
interest
(221
)
(231
)
(691
)
(648
)
Loss on modification or extinguishment of
debt
—
(13
)
(43
)
(13
)
Other income, net
2
8
8
24
Total other expense
(219
)
(236
)
(726
)
(637
)
Net income (loss)
$
(67
)
$
110
$
774
$
727
Basic and diluted net income (loss) per
common unit
$
(0.08
)
$
0.19
$
1.55
$
1.38
Weighted average number of common units
outstanding used for basic and diluted net income (loss) per common
unit calculation
414.8
348.6
370.9
348.6
______________
(1)
Please refer to the Cheniere Energy
Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020, 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,
2020
2019
ASSETS
(unaudited)
Current assets
Cash and cash equivalents
$
1,254
$
1,781
Restricted cash
157
181
Accounts and other receivables, net
204
297
Accounts receivable—affiliate
82
105
Advances to affiliate
120
158
Inventory
113
116
Derivative assets
14
17
Other current assets
117
51
Other current assets—affiliate
—
1
Total current assets
2,061
2,707
Property, plant and equipment, net
16,666
16,368
Operating lease assets, net
100
94
Debt issuance costs, net
18
15
Non-current derivative assets
30
32
Other non-current assets, net
155
168
Total assets
$
19,030
$
19,384
LIABILITIES AND PARTNERS’
EQUITY
Current liabilities
Accounts payable
$
17
$
40
Accrued liabilities
564
709
Accrued liabilities—related party
2
—
Due to affiliates
42
46
Deferred revenue
179
155
Deferred revenue—affiliate
—
1
Current operating lease liabilities
7
6
Derivative liabilities
31
9
Total current liabilities
842
966
Long-term debt, net
17,573
17,579
Non-current operating lease
liabilities
92
87
Non-current derivative liabilities
25
16
Other non-current liabilities
2
1
Other non-current
liabilities—affiliate
18
20
Partners’ equity
Common unitholders’ interest (484.0
million and 348.6 million units issued and outstanding at September
30, 2020 and December 31, 2019, respectively)
627
1,792
Subordinated unitholders’ interest (zero
and 135.4 million units issued and outstanding at September 30,
2020 and December 31, 2019, respectively)
—
(996
)
General partner’s interest (2% interest
with 9.9 million units issued and outstanding at September 30, 2020
and December 31, 2019)
(149
)
(81
)
Total partners’ equity
478
715
Total liabilities and partners’ equity
$
19,030
$
19,384
______________
(1)
Please refer to the Cheniere Energy
Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended
September 30, 2020, filed with the Securities and Exchange
Commission.
Reconciliation of Non-GAAP Measures
Regulation G Reconciliation
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.
Adjusted EBITDA is calculated by taking net income (loss) before
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, changes in the fair value of our commodity
derivatives, impairment expense and loss on disposal of assets, and
non-recurring costs related to our response to the COVID-19
outbreak which are incremental to and separable from normal
operations. 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 business performance. Management
believes 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 other items
not otherwise predictive or indicative of ongoing operating
performance enables comparability to prior period performance and
trend analysis.
Distributable Cash Flow is defined as Adjusted EBITDA adjusted
for taxes, maintenance capital expenditures, interest expense net
of capitalized interest, interest income, and changes in the fair
value and non-recurring settlement of interest rate
derivatives.
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 unit
distributions, unit 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
(loss) as defined by U.S. GAAP and is not necessarily comparable to
similarly titled measures reported by other companies.
Adjusted EBITDA
The following table reconciles our Adjusted EBITDA to U.S. GAAP
results for the three and nine months ended September 30, 2020 and
2019 (in millions):
Three Months Ended
Nine Months Ended
September 30,
September 30,
2020
2019
2020
2019
Net income (loss)
$
(67
)
$
110
$
774
$
727
Interest expense, net of capitalized
interest
221
231
691
648
Loss on modification or extinguishment of
debt
—
13
43
13
Other income, net
(2
)
(8
)
(8
)
(24
)
Income from operations
$
152
$
346
$
1,500
$
1,364
Adjustments to reconcile income from
operations to Adjusted EBITDA:
Depreciation and amortization expense
137
138
413
390
Loss (gain) from changes in fair value of
commodity derivatives, net
62
58
36
(19
)
Impairment expense and loss on disposal of
assets
—
1
5
6
Incremental costs associated with COVID-19
response
1
—
36
—
Adjusted EBITDA
$
352
$
543
$
1,990
$
1,741
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, in part because net income includes the impact of derivative
transactions, which cannot be determined at this time, and we are
unable to reconcile differences between run rate Distributable Cash
Flow and income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201106005065/en/
Cheniere Energy Partners, L.P. Investors Randy Bhatia,
713-375-5479 Megan Light, 713-375-5492 or Media Relations Eben
Burnham-Snyder, 713-375-5764 Jenna Palfrey, 713-375-5491
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