Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE
American: CQP) today announced its financial results for third
quarter 2022.
HIGHLIGHTS
- Adjusted EBITDA1 of $1.5 billion and $3.5 billion for the three
and nine months ended September 30, 2022, respectively. Net loss of
$514 million and $13 million for the three and nine months ended
September 30, 2022, respectively.
- Declared a cash distribution of $1.070 per common unit to
unitholders of record as of November 3, 2022, comprised of a base
amount equal to $0.775 and a variable amount equal to $0.295. The
common unit distribution and the related general partner
distribution will be paid on November 14, 2022.
- Reconfirming full year 2022 distribution guidance of $4.00 -
$4.25 per common unit.
- In September 2022, Moody’s Corporation upgraded its issuer
credit ratings of Cheniere Partners and Sabine Pass Liquefaction,
LLC (“SPL”) from Ba2 and Baa3, respectively, to Ba1 and Baa2,
respectively, with a stable outlook. Additionally, in September
2022, Fitch Ratings upgraded its issuer credit ratings of Cheniere
Partners and SPL from BB+ and BBB-, respectively, to BBB- and BBB,
respectively, with a stable outlook.
- In October 2022, substantial completion of the third marine
berth at the Sabine Pass LNG Terminal was achieved.
2022 FULL YEAR DISTRIBUTION
GUIDANCE
2022
Distribution per Unit
$
4.00
-
$
4.25
SUMMARY AND REVIEW OF FINANCIAL
RESULTS
(in millions, except LNG data)
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
% Change
2022
2021
% Change
Revenues
$
4,976
$
2,324
114
%
$
12,485
$
6,176
102
%
Net income (loss)
$
(514
)
$
381
nm
$
(13
)
$
1,123
nm
Adjusted EBITDA1
$
1,471
$
738
99
%
$
3,480
$
2,207
58
%
LNG exported:
Number of cargoes
103
86
20
%
311
262
19
%
Volumes (TBtu)
366
307
19
%
1,124
939
20
%
LNG volumes loaded (TBtu)
363
308
18
%
1,123
938
20
%
Adjusted EBITDA1 increased $733 million and $1.3 billion during
the three and nine months ended September 30, 2022, respectively,
as compared to the three and nine months ended September 30, 2021.
The increase in Adjusted EBITDA was primarily due to increased
margins per MMBtu of LNG, and to a lesser extent from increased
volumes of LNG delivered. Adjusted EBITDA was also positively
impacted by the recognition of a portion of the $765 million
lump-sum payment to be made by Chevron U.S.A. Inc. (“Chevron”)
during calendar year 2022 related to the early termination of the
Terminal Use Agreement (“TUA”) between Sabine Pass LNG, L.P. and
Chevron.
Net loss was $514 million and $13 million for the three and nine
months ended September 30, 2022, respectively, as compared to net
income of $381 million and $1.1 billion for the comparable 2021
periods. This unfavorable change was primarily due to non-cash
unfavorable changes in fair value of commodity derivatives,
partially offset by increased margins per MMBtu of LNG and
increased volumes of LNG delivered. The unfavorable change was also
partially offset by the recognition of a portion of the lump-sum
payment related to the early termination of the TUA with
Chevron.
Substantially all derivative losses are attributable to the
recognition at fair value of our long-term Integrated Production
Marketing (“IPM”) agreement with Tourmaline, a natural gas supply
contract with pricing indexed to the Platts Japan Korea Marker
(“JKM”). While operationally we seek to eliminate commodity risk by
utilizing derivatives to mitigate price volatility for commodities
procured or sold over a period of time, as a result of the
significant appreciation in the forward JKM curves during the three
and nine months ended September 30, 2022, we recognized
approximately $1.3 billion and $2.2 billion, respectively, of
non-cash unfavorable changes in fair value attributable to the
Tourmaline IPM agreement.
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
incompatibility of accounting recognition for the purchase of
natural gas and sale of LNG.
During the three and nine months ended September 30, 2022, we
recognized in income 363 TBtu and 1,110 TBtu, respectively, of LNG
loaded from the SPL Project (defined below). Additionally, in the
nine months ended September 30, 2022, approximately 13 TBtu of
commissioning LNG was exported from the SPL Project.
BALANCE SHEET MANAGEMENT
Capital Resources
As of September 30, 2022, our total liquidity position was
approximately $2.8 billion. We had cash and cash equivalents of
approximately $1.0 billion. In addition, we had current restricted
cash and cash equivalents of $195 million, $750 million of
available commitments under our CQP Credit Facilities, and $837
million of available commitments under the SPL Working Capital
Facility.
Key Financial Transactions and Updates
In October 2022, SPL redeemed $300 million in outstanding
borrowings under its 5.625% Senior Secured Notes due 2023 pursuant
to a notice of redemption issued in September 2022.
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 31, 2022, approximately 1,850 cumulative LNG
cargoes totaling over 125 million tonnes of LNG have been produced,
loaded, and exported from the SPL Project.
DISTRIBUTIONS TO UNITHOLDERS
We declared a cash distribution of $1.070 per common unit to
unitholders of record as of November 3, 2022, comprised of a base
amount equal to $0.775 ($3.10 annualized) and a variable amount
equal to $0.295, 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, 2022.
INVESTOR CONFERENCE CALL AND WEBCAST
Cheniere will host a conference call to discuss its financial
and operating results for third quarter 2022 on Thursday, November
3, 2022, 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.
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 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, 2022, 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
Operations
(in millions, except per unit
data)(1)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenues
LNG revenues
$
3,130
$
1,791
$
8,577
$
5,057
LNG revenues—affiliate
1,376
453
3,268
878
LNG revenues—related party
—
—
4
—
Regasification revenues
455
68
591
202
Other revenues
15
12
45
39
Total revenues
4,976
2,324
12,485
6,176
Operating costs and expenses
Cost of sales (excluding items shown
separately below)
4,739
1,342
10,445
3,178
Cost of sales—affiliate
104
8
166
62
Cost of sales—related party
—
—
1
1
Operating and maintenance expense
189
148
550
465
Operating and maintenance
expense—affiliate
39
34
118
103
Operating and maintenance expense—related
party
18
12
45
34
General and administrative expense
3
2
3
7
General and administrative
expense—affiliate
23
22
70
64
Depreciation and amortization expense
160
140
469
417
Other
—
—
—
7
Total operating costs and expenses
5,275
1,708
11,867
4,338
Income (loss) from operations
(299
)
616
618
1,838
Other income (expense)
Interest expense, net of capitalized
interest
(222
)
(210
)
(641
)
(636
)
Loss on modification or extinguishment of
debt
—
(27
)
—
(81
)
Other income, net
7
2
10
2
Total other expense
(215
)
(235
)
(631
)
(715
)
Net income (loss)
$
(514
)
$
381
$
(13
)
$
1,123
Basic and diluted net income (loss) per
common unit (1)
$
(1.49
)
$
0.69
$
(1.36
)
$
2.07
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, 2022, 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,
2022
2021
ASSETS
(unaudited)
Current assets
Cash and cash equivalents
$
988
$
876
Restricted cash and cash equivalents
195
98
Trade and other receivables, net of
current expected credit losses
805
580
Accounts receivable—affiliate
447
232
Accounts receivable—related party
—
1
Advances to affiliate
150
141
Inventory
241
176
Current derivative assets
27
21
Margin deposits
59
7
Contract assets
387
—
Other current assets
74
80
Total current assets
3,373
2,212
Property, plant and equipment, net of
accumulated depreciation
16,827
16,830
Operating lease assets
91
98
Debt issuance costs, net of accumulated
amortization
9
12
Derivative assets
33
33
Other non-current assets, net
167
173
Total assets
$
20,500
$
19,358
LIABILITIES AND PARTNERS’ EQUITY
(DEFICIT)
Current liabilities
Accounts payable
$
31
$
21
Accrued liabilities
1,657
1,073
Accrued liabilities—related party
8
4
Current debt, net of discount and debt
issuance costs
1,498
—
Due to affiliates
56
67
Deferred revenue
162
155
Deferred revenue—affiliate
1
1
Current operating lease liabilities
9
8
Current derivative liabilities
1,157
16
Other current liabilities
4
—
Total current liabilities
4,583
1,345
Long-term debt, net of premium, discount
and debt issuance costs
15,699
17,177
Operating lease liabilities
82
89
Finance lease liabilities
18
—
Derivative liabilities
3,981
11
Other non-current
liabilities—affiliate
21
18
Partners’ equity (deficit)
Common unitholders’ interest (484.0
million units issued and outstanding at both September 30, 2022 and
December 31, 2021)
(3,059
)
1,024
General partner’s interest (2% interest
with 9.9 million units issued and outstanding at September 30, 2022
and December 31, 2021)
(825
)
(306
)
Total partners’ equity (deficit)
(3,884
)
718
Total liabilities and partners’ equity
(deficit)
$
20,500
$
19,358
_________________________
(1) Please refer to the Cheniere Energy
Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended
September 30, 2022, 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, 2022 and 2021 (in millions):
Three Months Ended September
30,
Nine Months Ended September
30,
2022
2021
2022
2021
Net income (loss)
$
(514
)
$
381
$
(13
)
$
1,123
Interest expense, net of capitalized
interest
222
210
641
636
Loss on modification or extinguishment of
debt
—
27
—
81
Other income, net
(7
)
(2
)
(10
)
(2
)
Income (loss) from operations
$
(299
)
$
616
$
618
$
1,838
Adjustments to reconcile income from
operations to Adjusted EBITDA:
Depreciation and amortization expense
160
140
469
417
Loss (gain) from changes in fair value of
commodity derivatives, net (1)
1,610
(18
)
2,393
(54
)
Other
—
—
—
6
Adjusted EBITDA
$
1,471
$
738
$
3,480
$
2,207
________________________
(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 (loss) 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/20221102005908/en/
Cheniere Partners Investors Randy
Bhatia, 713-375-5479 Frances Smith, 713-375-5753 Media Relations Eben Burnham-Snyder, 713-375-5764
Phil West, 713-375-5586
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