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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cheniere Energy Inc | AMEX:LNG | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 161.81 | 0 | 01:00:00 |
Cheniere Energy, Inc. (“Cheniere”) (NYSE American: LNG) today announced its financial results for the second quarter 2022.
RECENT HIGHLIGHTS
CEO COMMENT
“The second quarter was marked by many successes, including excellent safety and operating performance at both of our facilities, as well as seamless execution of our strategy throughout the LNG value chain. We secured meaningful growth of our LNG platform with the FID of Corpus Christi Stage 3, maintained significant commercial momentum, and commenced providing our Cargo Emission Tags - all of which demonstrate the reliability and the durability of the Cheniere platform,” said Jack Fusco, Cheniere’s President and Chief Executive Officer. “Our achievements across our operations, execution, capital allocation and sustainability efforts continue to position Cheniere as a leader in the global LNG market for decades to come.”
“Today we are once again raising our 2022 financial guidance, which is driven by the improved margin environment in the LNG market - underscoring the need for additional investment in natural gas infrastructure globally. I am proud of what our team has accomplished to heed the call for cleaner-burning, reliable energy supply and look forward to further expanding upon our existing platform with future growth at both of our sites.”
2022 REVISED FULL YEAR FINANCIAL GUIDANCE
(in billions)
2022 Previous
2022 Revised
Consolidated Adjusted EBITDA1
$
8.2
-
$
8.7
$
9.8
-
$
10.3
Distributable Cash Flow1
$
5.5
-
$
6.0
$
6.9
-
$
7.4
SUMMARY AND REVIEW OF FINANCIAL RESULTS
(in millions, except LNG data)
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
% Change
2022
2021
% Change
Revenues
$
8,007
$
3,017
165
%
$
15,491
$
6,107
154
%
Net income (loss)2
$
741
$
(329
)
nm
$
(124
)
$
64
nm
Consolidated Adjusted EBITDA1
$
2,529
$
1,023
147
%
$
5,682
$
2,475
130
%
LNG exported:
Number of cargoes
156
139
12
%
316
272
16
%
Volumes (TBtu)
563
496
14
%
1,147
976
18
%
LNG volumes loaded (TBtu)
564
499
13
%
1,149
975
18
%
Consolidated Adjusted EBITDA increased $1.5 billion and $3.2 billion for the three and six months ended June 30, 2022, respectively, as compared to the three and six months ended June 30, 2021, primarily due to increased margins per MMBtu of LNG and to a lesser extent from increased volumes of LNG delivered.
Net income (loss) was $0.7 billion and $(0.1) billion for the three and six months ended June 30, 2022, respectively, as compared to $(0.3) billion and $0.1 billion in the corresponding 2021 periods. The favorable change for the three months ended June 30, 2022 was primarily due to increased margins per MMBtu of LNG and to a lesser extent from increased volumes of LNG delivered. This favorable change was partially offset by increased tax expense as well as an increase in derivative losses from changes in fair value and settlements of approximately $0.3 billion (pre-tax and excluding the impact of non-controlling interests). The unfavorable change for the six months ended June 30, 2022 was primarily due to an increase in derivative losses from changes in fair value and settlements of approximately $3.8 billion (pre-tax and excluding the impact of non-controlling interests) and a decrease in gains from sales of physical gas. This decrease was partially offset by increased margins per MMBtu of LNG and increased volumes of LNG delivered.
Substantially all derivative losses relate to the use of commodity derivative instruments indexed to international LNG prices, primarily related to our long-term IPM agreements. 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 forward international LNG commodity curves during the three and six months ended June 30, 2022, we recognized $1.1 billion and $4.2 billion, respectively, of non-cash unfavorable changes in fair value attributable to such positions (pre-tax and excluding the impact of non-controlling interest).
Our IPM agreements are structured to provide stable margins on purchases of natural gas and sales of LNG over the life of the agreement and have 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 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, but does not currently permit fair value recognition of the associated sale of LNG, resulting in a mismatch of accounting recognition for the purchase of natural gas and sale of LNG.
Share-based compensation expenses included in net income (loss) totaled $36 million and $79 million for the three and six months ended June 30, 2022, respectively, compared to $31 million and $63 million for the three and six months ended June 30, 2021, respectively.
Our financial results are reported on a consolidated basis. Our ownership interest in Cheniere Partners as of June 30, 2022 consisted of 100% ownership of the general partner and a 48.6% limited partner interest.
BALANCE SHEET MANAGEMENT
Capital Resources
As of June 30, 2022, our total consolidated liquidity position was approximately $10.3 billion. We had cash and cash equivalents of $2.6 billion on a consolidated basis, of which $1.1 billion was held by Cheniere Partners. In addition, we had restricted cash and cash equivalents of $335 million, $1.25 billion of available commitments under the Cheniere Revolving Credit Facility, $1.2 billion of available commitments under the CCH Working Capital Facility, $3.3 billion of available commitments under CCH’s term loan credit facility (the “CCH Credit Facility”), $750 million of available commitments under Cheniere Partners’ credit facilities, and $837 million of available commitments under the SPL Working Capital Facility.
Key Financial Transactions and Updates
During the three months ended June 30, 2022, we prepaid $1.1 billion of the outstanding borrowings under the CCH Credit Facility.
In June 2022, CCH amended and restated the CCH Credit Facility and the CCH Working Capital Facility to, among other things, (1) increase the commitments to approximately $4.0 billion and $1.5 billion for the CCH Credit Facility and the CCH Working Capital Facility, respectively, which are intended to fund a portion of the cost of developing, constructing and operating the CCL Stage 3 Project, (2) extend the maturity of the CCH Credit Facility and the CCH Working Capital Facility, (3) update the indexed interest rate to the Secured Overnight Financing Rate (“SOFR”) and (4) make certain other changes to the terms and conditions of each existing facilities.
Liquefaction Projects Overview
SPL Project
Through Cheniere Partners, we operate six natural gas liquefaction Trains for a total production capacity of approximately 30 mtpa of LNG at the Sabine Pass LNG terminal in Cameron Parish, Louisiana (the “SPL Project”).
CCL Project
We operate three natural gas liquefaction Trains for a total production capacity of approximately 15 mtpa of LNG at the Corpus Christi LNG terminal near Corpus Christi, Texas (the “CCL Project”).
Corpus Christi Stage 3 Project
We are constructing an expansion adjacent to the CCL Project consisting of seven midscale Trains with an expected total production capacity of over 10 mtpa of LNG (the “CCL Stage 3 Project”). On June 15, 2022, our Board of Directors made a positive FID with respect to the CCL Stage 3 Project and issued full notice to proceed with construction to Bechtel effective June 16, 2022.
INVESTOR CONFERENCE CALL AND WEBCAST
We will host a conference call to discuss our financial and operating results for the second quarter 2022 on Thursday, August 4, 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.
------------------------------------------
1 Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for further details.
2 Net income (loss) as used herein refers to Net income (loss) attributable to common stockholders on our Consolidated Statements of Operations.
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 total production capacity of approximately 45 mtpa of LNG in operation and an additional 10+ mtpa of expected production capacity 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 June 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 non-GAAP financial measures. Consolidated Adjusted EBITDA and Distributable Cash Flow 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.
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.
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 regulatory authorization and approval expectations, (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, (vii) statements relating to Cheniere’s capital deployment, including intent, ability, extent, and timing of capital expenditures, debt repayment, dividends, and share repurchases, and (viii) statements regarding the COVID-19 pandemic and its impact on our business and operating results. 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.
(Financial Tables and Supplementary Information Follow)
LNG VOLUME SUMMARY
As of July 30, 2022, approximately 2,300 cumulative LNG cargoes totaling over 155 million tonnes of LNG have been produced, loaded and exported from our liquefaction projects.
During the three and six months ended June 30, 2022, we exported 563 and 1,147 TBtu of LNG, respectively, from our liquefaction projects. 34 TBtu of LNG exported from our liquefaction projects and sold on a delivered basis was in transit as of June 30, 2022, none of which was related to commissioning activities.
The following table summarizes the volumes of operational and commissioning LNG that were loaded from our liquefaction projects and for which the financial impact was recognized on our Consolidated Financial Statements during the three and six months ended June 30, 2022:
Three Months Ended June 30, 2022
Six Months Ended June 30, 2022
(in TBtu)
Operational
Commissioning
Operational
Commissioning
Volumes loaded during the current period
564
—
1,136
13
Volumes loaded during the prior period but recognized during the current period
40
—
49
1
Less: volumes loaded during the current period and in transit at the end of the period
(34)
—
(34)
—
Total volumes recognized in the current period
570
—
1,151
14
In addition, during the three and six months ended June 30, 2022, we recognized 4 TBtu and 15 TBtu of LNG on our Consolidated Financial Statements related to LNG cargoes sourced from third-parties.
Cheniere Energy, Inc.
Consolidated Statements of Operations
(in millions, except per share data)(1)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Revenues
LNG revenues
$
7,873
$
2,913
$
15,213
$
5,912
Regasification revenues
68
67
136
134
Other revenues
66
37
142
61
Total revenues
8,007
3,017
15,491
6,107
Operating costs and expenses
Cost of sales (excluding items shown separately below) (2)
5,752
2,154
13,088
3,540
Operating and maintenance expense
419
385
808
707
Development expense
3
2
8
3
Selling, general and administrative expense
77
73
173
154
Depreciation and amortization expense
276
258
547
494
Impairment expense and loss (gain) on disposal of assets
3
(1
)
3
(1
)
Total operating costs and expenses
6,530
2,871
14,627
4,897
Income from operations
1,477
146
864
1,210
Other expense (income)
Interest expense, net of capitalized interest
(357
)
(368
)
(706
)
(724
)
Loss on modification or extinguishment of debt
(28
)
(4
)
(46
)
(59
)
Derivative gain (loss), net
(1
)
(2
)
2
(1
)
Other income, net
3
4
8
10
Total other expense
(383
)
(370
)
(742
)
(774
)
Income before income taxes and non-controlling interest
1,094
(224
)
122
436
Less: income tax provision (benefit)
181
(93
)
(10
)
(4
)
Net income
913
(131
)
132
440
Less: net income attributable to non-controlling interest
172
198
256
376
Net income (loss) attributable to common stockholders
$
741
$
(329
)
$
(124
)
$
64
Net income (loss) per share attributable to common stockholders—basic (3)
$
2.92
$
(1.30
)
$
(0.49
)
$
0.25
Net income (loss) per share attributable to common stockholders—diluted (3)
$
2.90
$
(1.30
)
$
(0.49
)
$
0.25
Weighted average number of common shares outstanding—basic
253.6
253.5
253.8
253.2
Weighted average number of common shares outstanding—diluted
255.9
253.5
253.8
254.7
------------------------------------------
(1)
Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the Securities and Exchange Commission.
(2)
Cost of Sales includes approximately $1.0 billion and $4.4 billion of losses from changes in the fair value of commodity derivatives prior to contractual delivery or termination during the three and six months ended June 30, 2022, respectively, as compared to $0.3 billion and $0.4 billion of losses in the corresponding 2021 periods, respectively.
(3)
Earnings per share in the table may not recalculate exactly due to rounding because it is calculated based on whole numbers, not the rounded numbers presented.
Cheniere Energy, Inc.
Consolidated Balance Sheets
(in millions, except share data)(1)(2)
June 30,
December 31,
2022
2021
ASSETS
(unaudited)
Current assets
Cash and cash equivalents
$
2,631
$
1,404
Restricted cash and cash equivalents
335
413
Trade and other receivables, net of current expected credit losses
1,883
1,506
Inventory
746
706
Current derivative assets
273
55
Margin deposits
169
765
Other current assets
149
207
Total current assets
6,186
5,056
Property, plant and equipment, net of accumulated depreciation
30,659
30,288
Operating lease assets
2,255
2,102
Derivative assets
144
69
Goodwill
77
77
Deferred tax assets
1,276
1,204
Other non-current assets, net
716
462
Total assets
$
41,313
$
39,258
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable
$
141
$
155
Accrued liabilities
2,599
2,299
Current debt, net of discount and debt issuance costs
2,270
366
Deferred revenue
141
155
Current operating lease liabilities
598
535
Current derivative liabilities
1,793
1,089
Other current liabilities
14
94
Total current liabilities
7,556
4,693
Long-term debt, net of premium, discount and debt issuance costs
26,055
29,449
Operating lease liabilities
1,623
1,541
Finance lease liabilities
56
57
Derivative liabilities
7,133
3,501
Other non-current liabilities
85
50
Stockholders' deficit
Preferred stock: $0.0001 par value, 5.0 million shares authorized, none issued
—
—
Common stock: $0.003 par value, 480.0 million shares authorized; 276.6 million shares and 275.2 million shares issued at June 30, 2022 and December 31, 2021, respectively
1
1
Treasury stock: 26.2 million shares and 21.6 million shares at June 30, 2022 and December 31, 2021, respectively, at cost
(1,529
)
(928
)
Additional paid-in-capital
4,277
4,377
Accumulated deficit
(6,311
)
(6,021
)
Total Cheniere stockholders' deficit
(3,562
)
(2,571
)
Non-controlling interest
2,367
2,538
Total stockholders' deficit
(1,195
)
(33
)
Total liabilities and stockholders' deficit
$
41,313
$
39,258
------------------------------------------
(1)
Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the Securities and Exchange Commission.
(2)
Amounts presented include balances held by our consolidated variable interest entity, Cheniere Partners. As of June 30, 2022, total assets and liabilities of Cheniere Partners, which are included in our Consolidated Balance Sheets, were $19.5 billion and $22.7 billion, respectively, including $1.1 billion of cash and cash equivalents and $0.1 billion of restricted cash.
Reconciliation of Non-GAAP Measures Regulation G Reconciliations
Consolidated Adjusted EBITDA
The following table reconciles our Consolidated Adjusted EBITDA to U.S. GAAP results for the three and six months ended June 30, 2022 and 2021 (in millions):
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
Net income (loss) attributable to common stockholders
$
741
$
(329
)
$
(124
)
$
64
Net income attributable to non-controlling interest
172
198
256
376
Income tax provision (benefit)
181
(93
)
(10
)
(4
)
Interest expense, net of capitalized interest
357
368
706
724
Loss on modification or extinguishment of debt
28
4
46
59
Interest rate derivative gain (loss), net
1
2
(2
)
1
Other income (loss), net
(3
)
(4
)
(8
)
(10
)
Income from operations
$
1,477
$
146
$
864
$
1,210
Adjustments to reconcile income from operations to Consolidated Adjusted EBITDA:
Depreciation and amortization expense
276
258
547
494
Loss from changes in fair value of commodity and FX derivatives, net (1)
740
591
4,198
711
Total non-cash compensation expense
33
29
70
61
Impairment expense and loss (gain) on disposal of assets
3
(1
)
3
(1
)
Consolidated Adjusted EBITDA
$
2,529
$
1,023
$
5,682
$
2,475
------------------------------------------
(1)
Change in fair value of commodity and FX derivatives prior to contractual delivery or termination
Consolidated 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. Consolidated Adjusted EBITDA 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.
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 financial and operating performance.
Consolidated Adjusted EBITDA is calculated by taking net income (loss) attributable to common stockholders before net income (loss) 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 FX derivatives prior to contractual delivery or termination, and non-cash compensation expense. The change in fair value of commodity and FX derivatives is considered in determining Consolidated 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.
Consolidated Adjusted EBITDA and Distributable Cash Flow
The following table reconciles our actual Consolidated Adjusted EBITDA and Distributable Cash Flow to Net income (loss) attributable to common stockholders for the three and six months ended June 30, 2022 and forecast amounts for full year 2022 (in billions):
Three Months Ended June 30,
Six Months Ended June 30,
Full Year
2022
2022
2022
Net income (loss) attributable to common stockholders
$
0.74
$
(0.12
)
$
0.8
-
$
1.3
Net income attributable to non-controlling interest
0.17
0.26
1.2
-
1.3
Income tax provision (benefit)
0.18
(0.01
)
0.6
-
0.7
Interest expense, net of capitalized interest
0.36
0.71
1.4
-
1.4
Depreciation and amortization expense
0.28
0.55
1.1
-
1.1
Other expense (income), financing costs, and certain non-cash operating expenses
0.80
4.31
4.7
-
4.5
Consolidated Adjusted EBITDA
$
2.53
$
5.68
$
9.8
-
$
10.3
Interest expense (net of capitalized interest and amortization) and realized interest rate derivatives
(0.35
)
(0.71
)
(1.4
)
-
(1.4
)
Maintenance capital expenditures, income tax and other expense
(0.06
)
(0.08
)
(0.3
)
-
(0.2
)
Consolidated Distributable Cash Flow
$
2.12
$
4.89
$
8.1
-
$
8.7
CQP distributable cash flow attributable to non-controlling interest
(0.26
)
(0.54
)
(1.2
)
-
(1.3
)
Cheniere Distributable Cash Flow
$
1.86
$
4.35
$
6.9
-
$
7.4
Note: Totals may not sum due to rounding.
Distributable Cash Flow is defined as cash generated from the operations of Cheniere and its subsidiaries and adjusted for non-controlling interest. The Distributable Cash Flow of Cheniere’s subsidiaries is calculated by taking the subsidiaries’ EBITDA less interest expense, net of capitalized interest, interest rate derivatives, taxes, maintenance capital expenditures and other non-operating income or expense items, and adjusting for the effect of certain non-cash items and other items not otherwise predictive or indicative of ongoing operating performance, including the effects of modification or extinguishment of debt, amortization of debt issue costs, premiums or discounts, changes in fair value of interest rate derivatives, impairment of equity method investment and deferred taxes. Cheniere’s Distributable Cash Flow includes 100% of the Distributable Cash Flow of Cheniere’s wholly-owned subsidiaries. For subsidiaries with non-controlling investors, our share of Distributable Cash Flow is calculated as the Distributable Cash Flow of the subsidiary reduced by the economic interest of the non-controlling investors as if 100% of the Distributable Cash Flow were distributed in order to reflect our ownership interests and our incentive distribution rights, if applicable. The Distributable Cash Flow attributable to non-controlling interest is calculated in the same method as Distributions to non-controlling interest as presented on our Statements of Stockholders’ Equity in our Forms 10-Q and Forms 10-K filed with the Securities and Exchange Commission. This amount may differ from the actual distributions paid to non-controlling investors by the subsidiary for a particular period.
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. 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220803005797/en/
Cheniere Energy, Inc. 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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