LNG - Earnings call transcript Q2 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Cheniere Energy Inc.

Second Quarter 2021 Earnings Call and Webcast. Today’s conference is being recorded. At this time, I would turn the conference over to Randy Bhatia, Vice President of Investor Relations. Please, go ahead.

Randy Bhatia

operator. you, Thank and conference everyone, Cheniere’s quarter second Good welcome earnings call. XXXX morning, to presentation the The call access and slide to at are webcast cheniere.com. available today’s for

Anatol Fusco, Joining Officer; Commercial Davis, and President are this President Zach Vice Jack Vice me and and morning and CEO; CFO. Feygin, Senior Chief Executive President Cheniere’s

described including And begin, questions is may your associated I remind these actual Before from to could in like we materially all listeners statements risks. X presentation forward-looking statements. Slide answers to would that results differ of and our of remarks, a contains statements. contain those what our forward-looking discussion

addition, EBITDA to comparable GAAP In financial adjusted and non-GAAP distributable in certain measure can cash the most be reconciliation references appendix presentation. may measures slide we found to flow. the to these consolidated measures, such the as A include of

with Cheniere’s our operating an on will intend highlights, over Jack call the call from Energy selected LNG Cheniere now results The agenda information the Anatol of and discussion part and Energy will X. on those CQP. is I’ll turn update After As Zach do results Fusco, then Jack call today’s or CEO. of include also review results to Slide we Inc. market provide and and financial call and open separately will financial the financial our cover Cheniere’s guidance. begin CQP’s LP We Cheniere remarks, will may prepared for President Q&A. for of results, shown Partners to not

Jack Fusco

will of guidance second some our for review quarter. be this your you results our the X, I’m us good morning and today XXXX. you, key Cheniere. I to for where thank increased here Thanks review year to at support quarter second turn financial operational from and to joining Randy, the Thank highlights Slide Please pleased full continued for morning, everyone. from the financial and

us. for productive was The second extremely quarter one an

As engineering of LNG achieved we marketing, to contracts construction of of milestones liquefaction operations and be few. we and new fundamentals see begun have Global extremely return and enterprise the market to just origination, support construction in a and LNG long-term the capacity. continue across to the name constructive

in primarily is transactions, generated integrated loss to our second the due $X IPM of of treatment on unrealized of cash or EBITDA production $XXX we $XXX quarter, discuss hedges million the Zach revenue over We and consolidated million $X.XXX approximately adjusted generated accounting and which derivative For flow billion minutes. on net a billion. approximately required of a marketing few more detail will our in on distributable

billion. third guidance now $X.X factors. For forecast XXXX raising increase to to we’re adjusted flow $X.X EBITDA billion of year by $X.X number cash is $X.X We our guidance. billion the financial being driven of full billion distributable consolidated XXXX consecutive and in a quarter, This of

strengthening volumes. continued the the backs yielding market LNG is net of First, higher unopened

For optimization volumes. our context, doubled to that May margins first portfolio XXXX quarter been and our capitalize spot with our on able call in team earnings for has since open

production additional we And over some the Hub Henry with optimization, the contributed lifting lastly, primarily upwardly maintenance unlock year, for higher through an further past to forecast. has some production able half been to we’ve the revised moving second margin. quarter, additional addition, In of which make

a very I’ve time market at of detail in than strong LNG the balance since few fundamentals present operational So strong more at again very our The market has the as the good performance. XXXX a for Anatol outlook our will cover been improved Cheniere. any and or market LNG based are minutes. on in better in

worldwide. continue supply the our gas conviction long-term our growth for the demand in and side to both prospects in side on natural support move favor dynamics market Our and

support in the commercialization efforts after time a we macro Stage validate our Canada. Just quarter progresses third long-term Tourmaline, and of backdrop Christi transaction largest our on helps expansion agreement ended, for Stage shovel-ready in gas our constructive with This natural X, this contracts. producer of a IPM the view Corpus X signed project,

meet of addition, record it customers. executing In collaborative, Cheniere’s innovative reinforces of solutions needs the to our

We will our advantages platform infrastructure and Stage progress continue commercial to X to towards FID. leverage further

is During the strategy, various under increase contracted. quarter, our volumes percentage we volume meaningful success mid-term of in portfolio the the second our continue agreements in market under have to commercial total placing into that

addition fixed deal So in portfolio agreements the underscores advantage volumes XX customers We’ll solutions multiple meet today flexible in aggregating sales volumes. LNG The of these year LNG for the between and counterparties continue tons growing far this into in our strategy Tourmaline. XXXX, approximately this in IPM with fee mid-term volume we’ve volumes the million of competitive requirements to portfolio tailoring entered XXXX with place of to market LNG to the worldwide. and market the this of strength success strategic

Asia exported Asia, didn’t record cargoes Europe quarter exports broke as quarter by very the of side, with followed Year-to-date, second landed exported LNG record the of the first with roughly XX% having facilities. in set destination with On we we XX% XXX of XX%. cargoes for LNG stand in long that Latin in two Cheniere our the with about and production approximately from our America cargoes

over deliveries. year. two far And this South China accounts two countries of the quarter our Korea for importing alone top all LNG a and so those are cargo

increase continues XX over accelerated and us quickly Christi Christi to thus month in complete into train safely. an Our Pass of Corpus project the team to to commissioning At startup gas signaling Bechtel operating far forecast schedule. Turn availability Sabine addition recent our year. stable fuel systems same the project and and full the Corpus look early facilities, the and the maintenance early momentum rates managing forward our LNG our both turned of have X, as to progress Stage was overall Slide X X of we’re brief a I’ll the provide exceptional significant June maximize of Train July operations year another introduction Stage the at Pass site production this into operations milestone the review a of Sabine project to X with plans met job were Corpus focus next the constructive with asset performance against production to at start with approximately done XXXX, enabling a and the the X Christi XX and last in in Train with in commercial We an Train site X, comes now XX% activities. ramping to while Thinking in. market all for teams our

reminder, significant Christi capacity utilize tons will fully part trains addition. amount constructed over is a one of of and project fully Corpus Stage shared it X very per of constructed would As as cost infrastructure at capacity three, permitted X our which have brownfield through competitive LNG X Stage year. enjoys a XX as Stage economics, project makes LNG we a believe million

As in from we’ve for that remain before high this the project and of X risk our trains our the growth ensure the that on date. additional we and nine help parameters, front end, the capacity our we the the path consistent To is is and all investment lines will projects investment return meet to focused for We only we’re said contract. we Bechtel sanctioning set the ensure with and FID, working team have to first capital EPC which capital they committed when discipline FIDs our with discipline decisions on to built. profile standard closely origination that or to commercializing maintain help of have Stage

Stage Our excitement the X. the with Corpus at end around investment site potential doesn’t opportunities Christi

recall, this may we for site, developed already XXX acres infrastructure development maybe place the site, to just which our future Any future potential. provide adjacent a provides designed to platform at in advantages. cost to you acquired As substantial existing approximately have capacity with leverage major

emissions responsibility our participation into second analytical across and our to all the the analysis cross of last entitled gas LNG challenge. annual our natural bases. in our we be carbon to sustainability industry entire journey, we of announcement in the cargo And corporate ensure upstream items far as production performance climate company sites which arrow neutral And in the a estimate there of highlighted emissions progress LCA, proud quarter, this achievements for and are possesses benefits can the tags, the development. slide collaboration and announced time, our to the the several with beyond area built realize you all FID. through to the recent tool moves full emissions to Corpus lifecycle long-term actions we for emissions we Cheniere cargo our LNG XXXX provide by the an continuous institutions effort earlier carrier were helping more has included in taken the and example of position we will issues thus greenhouse over infrastructure study last month, I’ll turn our Stage leading CE at insight ever the among mission we reach into XXXX running This land seen additional steps X, and Christi, greenhouse is peer suppliers our closer deep published to our Turn call details see measure XXXX. specific of assessment substantial a transparency of to today on may first Highlights LNG gas the tremendous forward to Anatol Slide greenhouse customers. across data especially for from gas and methane environmental and now The latest LNG Stage LNG. in reviewed site report ESG supply ensure develop product publication milestone As of our well and gas on on key over the in natural market at greenhouse X on the to ESG related functional a and on leading growth our publish business to Built view beyond, we our value to a the gas which who room finally, several announced X, business provides path. helping report academic chain to participants of be building utilizes of latest resiliency provide in gas sustainability implement challenge With is included our our forward model. that first natural LNG we’re some look how or foundational tags that scenario of our will gas the QMRV

Anatol Feygin

Jack, turn pace over growth XXXX, meaningful fourth XXXX. the in Globally, especially continued quarter with good trend XXXX constructive the of markets well five-year the morning, notably supporting recovery the the when and the quarter most and first COVID-related demand XXXX subsequent also This only same exceeded to above of of years. lows X. in period growth from Slide expectations, range, on has LNG everyone. second at Thanks, Please looking the in in views quarter not our market but through

to rebounding LNG over with market the continue the seasonal demand a supply. trend years, for We even fundamentally breaking see next norms, tight several

by market. the being second the quarter, the period Europe As global a this demand both reflected levels, remain LNG quarter, tight prices demand X% markets LNG and slightly Asia winter surpassing with second historically quarter historically in growing through by the fourth the high in despite past shoulder in year-over-year

supply. Europe cold exited in LNG as Asia inter the colder Europe the intensified and storage in deficits the competition spring than and basin normal with for Asia sizable spring winter

compared the net rebounded in order year, Global and Europe’s the last in year-over-year in year-over-year, the approximately on to were surpassing XX% robust of production regions rights. European cancellation Through U.S. X% LNG million exercising LNG in is amid imports when Asia customers those half to up insufficient tons. attract Asia their QX, QX. XX LNG primarily between the spreads volume availability even to plus narrow, production demand backs supply year cargo growing U.S. XX% first two but

the year-over-year, for competed it of Asia outages levels producing were first U.S. of However, flow less lifted LNG in June. volumes XX North over during where compared America. impacted constraints XX% more the half XXXX. supported have demand for feed Latin Africa Please multiyear in exports dynamics Slide to and XX% with maintenance XX% U.S. LNG High further first non-U.S. percentage regions. in XXXX flows dropped wind in gas total and Europe natural and These non-U.S. and of to flows Asia Overall coinciding expected of XX, other generation in year-over-year by the generation. half the Trinidad the gas regional lag provide to as weather remain XX% most in volumes gas XXXX XXXX and increased injection Consequently demand Europe, inventories LNG Meanwhile to carbon gas storage than below so with cargoes far the power Europe In and again into insight June additional to market. of from points market at I’ll turn driven prices European well season. to XX% to lows. low into over

in dynamics during However, lower norms. the maintenance all was reflected LNG lower significant to of across second to volumes. the prices to LNG to Northwest gas five-year increase balances. ago imports and at European inventories at with nuclear Europe, were inventories XXX XX into by BCM deficit than cargoes. Jack over was imported increasing with over in and Asia, recovery satisfy as upstream supply Korea call the Russian relative demand a an settlement activity which JKM flows LNG Similarly, European demand in heavy year-to-date. of continued competed almost a market storage pipeline TTF to $X.XX/MMBtu and record natural equivalent roughly tight economic higher that by million low start moment This to maintenance the result basins tight year-over-year. alone supply or X% is deficit XX% were global summer, gas Korea. quarter stand along a a averages average mentioned a surge in flat Dutch LNG production kept early with LNG LNG for growing QX, as industrial levels import gas China X.X on and and currently historic in driven These the $X/MMBtu imports average, flows our Europe tons roughly the XXX% year-on-year China, in and

year-on-year. goal million despite an availability imported restarted or availability its operating a number over growth, second low quarter and the have note, July XXXX. million Asia contributed nuclear was nuclear Korea region XX% in XX XX as Japan offset disaster in over that Taiwan The XX% increase retire of higher units highest second of XX% XX, the JKT tons LNG a the since at X units in nuclear quarter, Fukushima Japan’s free the Taiwan. ago. become fleet Japan. A of by output in tons of nuclear particular nuclear decade of by and in has stated to nuclear of

support years in demand of China. surge growth the continue for majority largest quarter, second than China supported increased to XX% LNG to to were Asian demand harder industrial by come. on importer the South gas low weather So in surpassing this however, China, making a amid in tons sector levels. global The million should LNG from basis demand, hydro in market imports the normal region and power rising came the China Mainland Imports XX in LNG LNG Japan.

imports nearly conditions LNG America incremental volumes to notable increasing worldwide. to we capacity ideal possess uptick flexible demand Flows that cost from LNG the backdrop saw on needs the severe our market multiyear addition LNG to we’re meet a the Cheniere of medium Latin due origination available baking in highly period. we evolving both reached today over quarter, provide produced drought lack and us comparable of long-term constructive and platform total competitive With highs an for commercializing, portfolio the imports. of highly represented hydropower. short, and Europe, and a XXXX America’s long-term XX% in and growing brownfield U.S. actively into near-term imports customers execute to with the Clearly, dynamics strategies. of Brazil’s and as than American total In increased Asia up Latin Latin cargoes XX% XX% exports, second in year-on-year X% more resulting

XX. Now, turn to Slide

to place As natural global as part to fuel of Jack in transparency sources, performance consumers seeking the focused and a optimize value of lifecycle. take producers through gas to solidifies the the and chain. throughout strategy Cheniere LNG LNG steps, data the foundational as of carbon LNG energy which the will reviewed continue environmental its and transition lower taken some have a on broader recent are

maximize in reflected market quarter, and the efforts. decarbonisation the across €XX per abatement reaching higher performance be Union, carbon pricing European of ton over ton for reached and allowances offsets trading mechanics beginning emissions stewardship increased to second the and of during goal the emissions continuing in the grow order €XX quarter for or July. energy. equivalent view In the time enduring environmental climate to ultimate the focus is in roughly for per and The globe as growth our trend, be driven all $X.XX/MMBtu benefits highs LNG prices the on growing nearly early by commentators all. an With Industry to to in liquidity demand in

the carbon by markets While Europe allowances. traded of exchange is most far active for

parts buoy We’re other for market, is of in the progress world largest this and on continue increasing making as carbon especially a Asia. believe LNG and because the the is relevant its climate recently carbon neutral. market in other well, action trend, demand own market, burning fuels. Cheniere seeing China tool appetite activity national onset. the certifying for will markets offsets follow as cargoes world increased as carbon trading to its We launched at in carbon necessary This to LNG cleaner are will neutral it the emissions

emission prominent a among While progress our nascent the globally. expects LNG and and increased all neutral were regard XXXX our for results on QMRV performance time. size, of efforts, buyers. both highlighted. transparency turn Jack other in of and transparency in environmental some call given and our to this to this environmental buyers to-date, low the products our market interest financial I’ll emission in is we you Zach, significant collaboration, are will and offerings as aim competitively for your and scale mid-July, cargoes Thank today, There sellers, and play analysis carbon data-driven offer tags guidance. from there who while Cheniere over cycle structured providing leading role XX to the now solutions our and review cargo life these

Zach Davis

Anatol, second XXXX to Thanks, our our full everyone. I’m and and review today to increased good results pleased guidance. quarter year financial morning, be here

XX. Slide to Turning

$XXX approximately second a of $X revenue generated million. flow distributable cash of adjusted of million, approximately loss the EBITDA For quarter, $XXX and approximately consolidated billion, $X of billion and we net

the quarter which accounting Jack for IPM by our As results derivative for our agreements. includes negatively mentioned, our instruments, were treatment the impacted

movements duration have we our significant quarters, in our supply fair gains forward curves. agreements prior as and mark-to-market accounting, for and long-term period, accounting agreements, sales and in certain that period As and in to certain basis derivatives value with discussed IPM underlying IPM the qualify from period-of-period. in occur gas certain This forward price we of experience volumes, agreements, Most require losses commodity coupled as LNG will contracts. fluctuations will treatment notably, in result from market volatility meaning

eliminate and same While sales matching risk LNG operationally, gas we seek the to pricing on purchases our commodity by natural index.

quarter XXXX second and loss fair driver currently was impact the FX value financial our the but approximately that our in SPAs value the occurs. was meaning for until of pretax only changes recognized of the fair which of is LNG primary on our transaction often statements from commodity market sale do unfavorable net long-term of qualify Our recognized accounting, the The non-cash, quarter. Most from was mark-to-market impact not of LNG of one the during $XXX million. derivatives of side second

from We volumes LNG from For corresponding impact X had to in from timing to was first XXX recognized TBtu cancellations XXX in in sold the received $XX projects and including to and commissioning in under SPAs the quarter, TBtu related procured quarter. TBtu under IPM recognized third-parties. LNG, cancellations second end in XX% physical LNG, to income of second transit or revenue our the agreements. quarter second were LNG. cargo sales We cargoes at related which cargo these of received no Approximately quarter, the volumes of no recognition of TBtu million from long-term of XX income our we the

of As and associated amounts commissioning cargoes. Net are the reminder, cargoes a of delivery terminal LNG and construction sale offset against from received the production of process. with cost those

XXXX down of debt recall, As established an at debt. initial may pay you for least outstanding reduction to $XXX million we

repaid During about May notes remaining the and hand With of due the borrowings $XXX we million XXXX. cash term on revolver. fully loan CEI fully second remainder Cheniere’s borrowings under the $XXX outstanding repaid convertible under the and million quarter, from Cheniere’s

of the that already have million broadening year economically at So due during continue efforts This amortizing poised the amount rating placement the execution improving second fund a achieved private sheets with back of call, half and only balance full agencies plans. a long-term $XXX portion of With the goal delayed structure, this we SPL will the and capital by with Year-to-date, allocation profile on exceed was along as basis on of operational further our in Continue June XX, year, our debt the the minimum have in cash XXXX, quarter. of again management, fixed which we our have since locked locked of with in sheet Dutch, X.XX% on credit prudently basis will multiple through outstanding flow which recognized to progress million once last performance $XXX XXXX. our $XXX we year, near balance a with reduction. were hand-in-hand out we approximately rate in draw notes goes managing million on SPL notes in late refinance counterparties. our a

as deals terminally next successful on we XXXX the S&P Jack the of ratings As done and far million positive mentioned as of marketing credit have well discussed leverage both resulting the improvement the May negative, have as flow of stage in and commercial and with of trains, which always IPM execute the clearly stated XX sticks XX we and S&P out completion of in to mid-term of two cash midterm given the of expectation visibility Aggregating side CQP year-to-date, been our three deleveraging we’ve and million focus, call. our long-term priorities on the origination The on year now so also our we’ve that the integrator of the train fees significant $X only Anatol supports cash the over accelerated schedule in approximately XXXXs, bringing EBITDA tons from from success significantly outlook the into tons plans. Slide de-risked but Cheniere the these execution and management to levels transaction. flow the eight global XX. which brings had years, fixed change over ratings both balance on growth sheet strategy. have IPM as the of cash recent fixed increased term, transactions the our transactions bedrock not by sold completed next will generate LNG, decade, has we billion XX into flows further. fees Turn

backs $X.X billion by market on guidance net higher the billion EBITDA LNG largely billion the flow. Bringing million improvement today, are consolidated our total year to pricing we capture million is EBITDA in $XXX for increases respectively. we respectively. year, $XXX and our last ranges provided million As $XXX $XXX cash and guidance of previously Today’s distributable increasing $X.X by November $X.X flow portfolio revised to and ranges volume. mentioned, full guidance adjusted our and Above are open increase in continued ranges in to our XXXX in original adjusted ability distributed cash in consolidated driven million and $X.X global to

Sabine maintenance DCF margin have some forecast, primarily isn’t Henry due ahead moving revised at lifting And is we upward of guidance again incremental as X guidance, capital added due to spend at accelerated SPL, CQP Train to and lastly, production as due Hub quite up optimization. to we much EBITDA where Our prices. some have EBITDA schedule. accruing since higher

we benefits in updated operational. by where the the added by over to call, we in When the with was in forecast improvement although, that rest is the on packs coming an the well. as over financial margins impact is gone then, margin as years, time in fully guidance is market last another margin increased forecast approximately cargoes been forecast and February $X drivers in realize Since year has once it’s So one of less the from they production the XXXX. $X the as in in meaningful further number dollar expect and quarters. We CQP the DCF in single up that’s our to of quantity, increased for $X terms EBITDA fourth full May. And volume all approximately Incremental primary market production change third than on to the of of forecast are. $XX would net currently the impact million digit distributions

sold materially. As our that the almost if we of only update have the now all for another production were provide change we remainder would of year, to

ranges we As remaining full confident for we have, year. exposure well, market guidance revised to ability in results given a little the are our to deliver within the upwardly these

$X for year for so year. XXXX materializing our around flow free inflection for flow cash billion year. the don’t the described now, in the flow results and at guide free and point, this another a we we’ve far forecasted cash we balance year Cheniere’s the over to forecast certainly generated While XXXX, cash Entering of we’ve

Thank a has lockstep forecast up FCF with cash interest subsequent provide months prepared puts has our in the to in allocation look provide you up able call that in expect coming we ready process will in to With are Operator, completion, time the we Cheniere. DCF concludes and over moved first questions. from a perspective, at capital remarks. moved line XQ work the be to a XXXX to the months, and before six capital for that $XXX This position your strategy with comprehensive As guidance and to think million earnings for $X.X incremental we your open in guidance. especially, to finalize we it’s billion. nearing early great flow our allocation framework. you DCF, our as largely us reasonable where That in November, you so

Operator

question Please ahead. Sachs. [Operator Instructions] from Our comes from you. Michael Goldman go Thank Lapides first

Michael Lapides

of half Congrats year taking good guys. the Hey far. question. you for Thank on my first a really so

how maybe seeing priced announced American changes just basically that JKM. one meaning you in deals are about in some two we’ve players thinking One, Anatol, the that LNG you’re things. contract the structures other North scale market, Just sliding to tied at for are seen a

for you’re that type Just about kind your do of to for of to going it’s to it’s contracts, future market when fee you Or is is the variable type go driven thinking thought fixed fee curious structure more do still of a market. an SPA what going deals? think driven new

Anatol Feygin

growing to in Thanks, the market Michael. maturing greater see Good quantities. expect morning. we and Yes. all above In is short, of the

We’re in of our is are and we one of and IPM creativity the over commodity main for think our fee that’s is introduced that to We And fixed those resource. this camp where long-term commercial and business to business cards, that part commit a the calling right? exposure years two producer us, collect SPAs exposure ago, the the gets and traditional now that required capital. producer to allows underlying passes business international for example, we our for the indices, parcel their

of all forward. So is of going business this we think stuff the and parcel part

year launched we’ve more mentioned, You’ll see it traditional midterm SPAs and a that less you’ll with a us ago. see as so successful business than since been we lot from we

Michael Lapides

much contract you’re then up more how it. getting on Got to curious, just you FID? X, one you to think need close think quick And Stage do follow you before

Jack Fusco

talk add bit about then to a and X. Stage to answer we’ll wanted your question, just little I Anatol to Michael, Hey,

a catbird position. So we in would have the great I we’re say, seat,

business. contracts We’ve to for that been offer on that use offering We’re grow customers mid-term to want to successful those those don’t very able solutions customers. the short-term,

in not money the in we’re business, We’re making the business. FID

we in the our on Stage over first talk like have on financially I’ll to turn X. it project, But So we’re just more extremely next staying expansion specifics to disciplined Zach nine. on

Zach Davis

Sure. Hey, Michael.

that’s off last when start this done. all just work has contracted on I’ll at think that So point. we’re around ton, And at million Jack this ton XX November, the we you marketing contracted were the the that XX our million XX% a mentioned little and about saying book, XX% a XX% over team point with

that just doing X just levered close about discipline so unlevered So Jack as pretty we’re capital year. from about FID we’re a and not a contracted noted, major meaning on next But why flow. returns highly cash volume, Stage but basis to the actually as considering investments, all both the the it’s it’s darn our about mentioned, about to approach and confident of

course we when is and value let’s our a the cash. around, accretive all project, contracted so to investment of in it’s with ensure that are range, underpin Stage remains to that best contracting met. and parameters capacity very, FID. it four or thanks credit our mind, XX% XX% And all that run all mtpa very the X, So at in even use additional say, of of rate in of But

So again, us. could for a we’re pretty year XXXX be confident big a that

Michael Lapides

appreciate you Thank guys. Much it. Got it.

Operator

[indiscernible] The comes question from Please next from UBS. ahead. go

Unidentified Analyst

the Brian all Shneur. range. Hi, good is for Appreciate the on This $XXX everyone. color morning, guidance on million

just in much was curious and actually optimization a Just capacity was how between provide changes you and you it kind up more margin free the the dollar curious In about curious prepared able maintenance I if could XQ bit guidance. margins. know XQ on could range color to $XXX talked marketing at little these of your kind remarks, an Cheniere color drivers more even a you behind, all guidance bit XX and million. the a little about impact book equals just provide spot of you of Thanks. the in change attractive was if of talk

Jack Fusco

and have be of to it now. as what of Zach. the optimize operations Brian. Well, thanks, I over with a maintenance far pleased how LNG to schedules to seems advantage take details our But I’ll turn say as market that down, high ability our I’m And to our maintenance breaks price right and and very so personnel

Zach Davis

Hey, Brian.

it’s vast guidance million the guidance pretty simple. production in more $XXX open It’s production move where bit is margins net of the additional backs, a and higher three to things. the margin, majority higher some be upward and lifting on clear capacity So rage. better but the

$X so dramatic from million for the today raise. that rest that rest almost combine these lifting the maintenance expect open current as Hub So so. the three previously of or with to of of conditions. over Henry the CMI XXX advantage literally up market we LNG, another of managing added simply gets of $XXX CBQ with made netbacks rise just take to that of And year every just million. the the the the let’s to cargoes XX added And year, literally rest last that most four with for opportunistically or higher of lift the another, that rest early alone drop And from prices in Then $XXX margin rest. that say, for million since you And with year. bucks May under

Unidentified Analyst

and if impact to allocation the that the positive suggest things, X, with point? can around to this FID overall to of that appreciate to pivot on agencies. in credit and a desire recent necessary IgE the Great Maybe How to effectively growth the dividend leverage capital your close at and point, CCL just all you’re color. seems follow become at up reduction does buybacks just get definite contracts, this of Stage and the Thanks. initiation and outlooks with scheme desire you

Zach Davis

mean, put I this way. Sure. it

is BCF now to how billion per improved through of Stage the pro the have which for mid-$X debt the $XX $X around cash going whole improved rata the only around year, markets have like check it’s have XXXX. over curves X, for and equity with And of billion We’re range XX-XX billion available and about something equity, the once year, million say time. thing, and with per XXX funded let’s

the a of of and return also the we pretty capital X sheet balance our meeting life goals in where with results, undertake coming years. all our can the at see shareholder we’re you as not whatsoever from scale can project over point the So in limited cycle, be much Stage and

this back point. nothing’s So holding at us really

Unidentified Analyst

Great. on the color a quarter. day. Have congrats Appreciate good the and

Operator

comes JP Tonet Our ahead. Please next question go Jeremy Morgan. from from

Jeremy Tonet

morning. good Hi,

Jack Fusco

Jeremy. morning, Good

Jeremy Tonet

Just wanted to pick up with more. the market little outlook a bit

do you today, you I contracting? How has I shift. changed could Second demand now. on think just LNG, appetite a teens comfortably guess, structural rates last prices about, carbon us of or based spot and see spot trading cycle? for wondering where impact, and I guess, in for bucks contract high dynamic now LNG year, And guess, above winter And pricing how I’m prices the kind quarter do the right that high seasonally it of couple

Jack Fusco

just I’ll volatility start base. increased costs want to and customers Anatol. their Well, the energy hand lock their to to I’ll bring naturally customer more over in volatility The prices to higher and and it more and reduce the

much as it. and to of And So we meet climate and to fairly more our up the gas their know, for and but as air, demand turn on and of to world their was try Jeremy, Anatol. end models demand users, we and what countries, I’ll around these sell utilities for it LNG around in rise, you especially that of any greater they to most seeing Asia, you’re product need than more significantly selling our and the goals initially, clean in the focused over

Anatol Feygin

expected, Jeremy. of Jack. of in We’ve Thanks, transitioned this XXXX across on saw that the previous transition the than calls half first the board. Yes. fairly we Thanks, bullish a on we’ve markets as and kind touched decade been as year, faster

mentioned. this came demand And gas of market tight, last this the supply out and at the market. all and and dynamics phase volumes, And is for a We and long-term that higher. is that in storage level infrastructure this in which of XXXX else aggregate, commitments both this only time the the right. hard of why surprise little expected. mentioned online growth is market, as first rescue half everything result, are dynamics that demand right. as are the is this And a a is of the accelerating half to the comfort saw as saw faster. we mid-term is and that as possible and rebound cycle second first not to Cheniere bit we sellers it playing infrastructure year is we still and QX, but and the in obviously. of everyone is trying with year our but is now faster anyone you LNG the part tenure the Zach that the volume and are said, you arguably pricing than playing U.S. to this out, out entering additional Asia’s It’s on that exceeded investment with Demand much Jack playing And in to its bring

morning LCA other component get this on, the announced the that side, out this that on this The you product touched and so carbon important. journey why to was is we important that

profile that everywhere and our that major emissions Europe, a into. Asia, to confident in will We product that deliver product be very are reductions highly we have profile, low a contributor structurally we emissions low that,

And in a our mention product case that shows coal about a this study great there’s that that by emissions point So China. displacing a that that reduces on of when in starting there journey is morning. we’ve this XX% announced

these about the solutions optimistic and very our structure So market of ability both the environmentally. offer and economically to

Jeremy Tonet

it. Got

kind institutions building So and point announced of last to price there. more, LNG natural market gas just a it like seems bit carbon on And maybe the with improve that academic this suppliers monitoring. you lift of collaboration could maybe emissions

Just here. wondering what you’re learning

is have introduced to the looking you see are the Cheniere some in market’s other like with direction. kind just Do wondering, market any the compete fruit you think touched you but of that’s on think seems points here, it going Some for going I that Do here? you’ve strategies. where low-hanging overall? this CCUS of

Jack Fusco

– a a that industry as engineers, that that, ensuring provider has energy develop in society recently the the chemical on it’s spent lot with been over very world. cleaner that last and forward Look, road it’s a a XX lead we’re I of the going viewed three well think sustainable is we’re of thinking, company our today our the thoughtful years the very, need program but to into lifecycle specific and long very back and everything, product journey of now. in the can working some We American from very pathway We’ve not transition years to – upon analysis of embarked to for everything, XXXX. hoping we published LCA is we and energy that,

cargo per carbon that’s footprint our So or be our for our the cycle to life to it’s produce emission cargo all tags for important what to customers. leading is able analysis us extremely

those them whether type of offsets. So we to can would or the on like what and not they procure help quantity offsets, strategize

– on? but add Anatol – have So to anything you

Anatol Feygin

and baseline Jeremy, and developing in – role taking as from technologies creating this over mentioned, you improvements we’re the which No, collaborating made time. leading be we’re these will

facility. than point. at our and what been these average efforts – that We’re much course that’s of own assumed our our downstream partners, the with is better great and had That’s with what producer and all partners starting off national out at there a and of is

will said, profile. transition. we We emissions key continue in Jack to that’s factors compete be we continuing the As a energy to as on our think that success laser focused improve

Jeremy Tonet

That’s there. helpful. Thanks. it. I’ll leave it Got

Operator

go next Tudor, question Taylor ahead. & comes from Pickering, from Co. Please Holt Matt Our

Matt Taylor

the niche wanted – for market’s Thanks taking you just willing Yes. of on the a cost going? my to keep type My trend a BTU and And do wants a basis you sort question where more additional guys see Or What for here. of do on costs? this to seeing those for focus are tags. that you comment see from in this question offering to theme I customers on the where cost. are there. that, emissions these going cargo on pay LCA the offset follow being cargoes product of those premium being then

Jack Fusco

the of On lot a work the the cost, – doing the first one Matt. on so in-house, we’re

offsets. side, an to on our treatment the processing from more there’s of So influence to midstream validate, are data, that, folks that, and of and good on our data areas a customers most are on born doing both Corey it. for good think They’ve the been the report help And a overbuying slight side there’s sure auditable getting in-house through and and quantify, different applauded supplier I’m those supplier ability trail overall I actually that buying SG&A each that tags to then insignificant. counterparts. own feel amount emission stand costs of can behind at necessary the from our that but can bit most themselves. shipping European our offsets we we’re capital market. looking in And of cases do that we docs. dollars, monitor, they’re Grindal the for and first, that, make It’s it’s the and little our in the budgets, the of our with just – we liquefaction that us expertise carbon They’ve so

market So those a carbon every business it footprint just quantify one we paid of we of tankers what doing of those eventually part that base. that selling get having actually has clean with work for that of spade marketing we’ll done Right need be to how lot a a a develops. of premium product customer and we of for is to or work, our there’s and like a get see cargo, now, before to lot the able just – we each Whether a feel comfortable not that.

Matt Taylor

here commentary how activity you yet, become Thanks trending for commissioning you’re earnings July. starting margins, for to don’t XXXX those has run comments, just like Zack formal you I Jack. on see Did that’s you have preliminary here, in X rate Train the know And guidance? your versus some guys saying, then but how provide able in off guidance XXXX finish in be to attractive

Zach Davis

with X the in Sure. then where going in and the are next on with how $X really timing I’ll at plan November, present comes the the SPL we don’t and little move to XXXX going too commissioning for after $X likely we process, be give It’s above come really winter, right in through XXXX, year. much bit, next from winter the that you to a margins to along the rest over that should half for year, now, billion looking for rate but is the construction over going EBITDA XXXX and can of margins $X here. of first things the if for you be go call but to down the it’s to just budget Train but for

obviously getting to we’re So closer run rate. and closer

Matt Taylor

for That’s it Zach. Thanks, me.

Operator

Please go Next comes Webber Research. from question Mike ahead. Webber from

Mike Webber

morning, How you? Hey, good are guys.

Jack Fusco

how you? Michael, are

Mike Webber

which liked is in I money, you’re business, of your Jack, in earlier relatively not appropriate. that making the FID now business the quote Good.

how actually deals then deals some kind Anatol. sent that better of pricing those along a are curious for term net getting side is If a kind there’s I’m pricing and So and question lines, we there because term of of maybe any done. back term taking and just support dynamics any level you that, SPA given been pricing of ramp sits? COVID the that we’ve of lifts of seeing, out right actually in slippage now, of terms in supply terms kind long-term homogeneous getting where degree are the the

Anatol Feygin

Yes. Michael. say I would thanks,

there thinking – and it’s months have been I traction think And that relying We started industry when has market to a for quarter was was remaining is appetite of six, – cadre on ago strategy more is after of about nine requirements would a that say a I the only spot that. the forgotten. not a that open fade mean largely a I lot engagement that – sort fundamental where

And the side, Brent obviously now about an engaging a the levels. stabilizing that volumes. economics of out come well. it’s structuring that are where long-term conversations, one result portfolio that’s And the economics low as track, the relatively those And those firming. NYMEX slopes and as on for now So we’ve market are and in mid-term and commitments off you’ve of of a management, seen portfolio stabilizing to see openly you the easier that very term

Mike Webber

– about that I Got ahead. think to I’m were you. sorry, go If

Jack Fusco

It when depends on also. going to begin it’s

the steep And portfolio deed – marginal now expect contract higher investment cost at begin is matter. project next next can now. should the any it’s you – from that at if level, the So certainty. And or to be to that like like next begin going time if or year priced five term train, or more probably a years it for right you a priced think about if then on It’s greenfield at it’s a Cheniere more of a the for right.

Mike Webber

guess that is you follow-up how market. is over And broader the I you. uniform think Got my

with. six or not. more than time relatively this IG think have greenfields consistent net and wider seen more aggressive term than Do greenfield it year kind last versus business, the you was think we’ve maybe or that of back spread I maybe pricing guys if pricing you way So ago out pricing as between IG be about today months is price the some it term of

Anatol Feygin

was market, premium played I in record that in changes or in moved you years don’t to ago. spread that’s that certainty if I dramatic two track our for pay market but will around there and a as the out said three the think that tell a probably bit, precision enough honestly Jack have history.

well that that, that in as obviously can provide. volumes for greenfield early are As included

just a precision don’t I give have to you answer enough So on that. good

Mike Webber

back Zach, then And for the follow-up my talking lenders along deals, deals those we kinds enough. directs to do rate of what about about – in actually how actually makeup we of of should terms deals should a think really those the concentration guidance business get of a financeable? portfolio is And financeable a of kinds the of of think the kind of you you’re portfolio what portfolio? how that When deals market, just the lines Fair we’ve of or variable about of do some they that seen net your not? in more within

Zach Davis

I think what to here go Jack first we’re shareholders back I to create foremost, said, LNG for period. just maximum value and

FID just So FID win or or for price risk signing race contract sorry, the FID, the highest high risk lowest I’m about next some it’s not the FID a to for the of SPA. sake

that the will our So vast luckily to with team one going deals clipping all models. we’re can’t long it. fix be be business And we fees every mix of fees for counter-party other Anatol worthy with our with a our going that think fixed really the parameters. to meet and for time. a it’s of and and just and business long, investment volume We funnel and credit to has, sticking each of DS a majority we’re That’s IPM, FOB to a speak model

Mike Webber

I from Yes. around right. feedback It’s getting any And curious was All done. were your whether take I guys. that, but lenders Thanks, can you that offline.

Jack Fusco

Thanks, Mike.

Operator

ahead. Please Ben Next go comes from question Stifel. Nolan from

Ben Nolan

Yes, thanks.

wanted with So probably we’ll one. easy I an – start to

what talked Maybe that the is the next average for years the you mid-term we million duration a so. of tons about of contract get volume have sort XX over that sense You of or portion? XX committed

Jack Fusco

weighted. my volume easy it’s that five of be years say would just inside I would not guess. It’s

Ben Nolan

Okay. That’s helpful.

Sorry, go ahead.

Zach Davis

in going through didn’t all about We XXXXs. the just deals, mention talking mid-term when the over of that locked through much fees our just add, cash at past about now about have about in XXXX. has was is to quarter. we this fees year, billion I de-risking $X billion thinking for how XXXX million over flows we of deals just But we’re fixed $XXX just and the occurred those comfortably fixed $X.X early signed

locked of to Just much past so. quarter give the been has in you perspective how really or

Ben Nolan

And maybe, more well, one. We’ll That’s great Zach. I stick color. I appreciate wish had with than I one. boy, that this

you’re So prices, steel Stage Corpus as the looking place. all happening at X we Christi, have higher obviously inflation labor at is over

you X, good the As and starting up see margins that generate it to relates just to bit Corpus necessitate returns? and are in expansion projects maybe order might to cost else, and anybody Christi you in any of a inflation little pushing for of general

Jack Fusco

complete Thanks, and trains the already. Ben. completed have relationship capital nine project with tons million in manage to out And very confidence costs there. its having XX they of have to strong I lowest liquefaction a we I have say, Bechtel that can Bechtel

this and at I’ll to turn environments Zach point, but inflationary any it over seen haven’t We him. let

Zach Davis

Yes.

side we for give competitive let’s EBITDA really multiple six we or I’ll contracts parameters reiterate, take project. one actively really material is say – on investment Trains on this synergies possible. it and to we based all CapEx to with X, the see those make the seeing don’t to have as the end just of we’re X. year cost say really to the on opportunities full of and good through Corpus price But X, And approximately Just as feel times just the right the still the that pursuing risks all meet we’re

Ben Nolan

it. you. appreciate I Thank Perfect.

Operator

Dumoulin-Smith next America. question Julien from ahead. from Our go of Please comes Bank

Julien Dumoulin-Smith

And just and the a hour, you would to to specific top as bit Hey to advantage perspective the more back I then I’d of otherwise that gathered a carbon structuring separately, that opportunities we’re expansion I’ll to hear position, just to there. can I’ll there. some If about possible? it position you sensitivity, then relatively alternatives. the you on here, last And especially know question guys, of quick. do open-ended about you to make talk others, is geography come that. more from the it I on neutrality of on getting be credits might leave XX any But hedge how extent how amenable so vis-à-vis here. little than your the Again, the have that that’s here the but can the you think love to clarify advantage little the – speak the a can take I bit question, carbon

Jack Fusco

Okay.

of I – I think question me and XX… let your sequestration on Julien, So heard just was carbon part your and and carbon first carbon

Julien Dumoulin-Smith

Yes.

Jack Fusco

a I $XX post to weeks and going a I spent tell a ton not of to that to anybody be is offer a large good is not doing ago, make top carbon We sailing a technically do mustard whole for for happen. work looks it another sequestration. week to spent there’s the very that going to had challenge. will nothing – dioxide, and that to is that though a sit especially sequester I spot It’s be on that that, deep, $XX cut very yet combustion economical would carbon geologically

So it resources and doesn’t. putting we’re tag so that a possibly four, price can far see on everything of lot try a and to spending works time trying if five categorizing, to that and

molecules of know remiss price a ton. guess a uses So get if should me, if if I vehicle, be I a I reward consistent get I I able of say am but makes I else world carbon a why better $XX capture, to ton, Cheniere all, are they that it’s of if direct sense XXX EV of that in air ton. carbon, and an that so. in drive to someone those to a I’m – something it electric us sequester that of the ton XXX should a to put only can None Or and don’t do position,

Anatol Feygin

open guidance fields in November, in of to million in there year, the hedging you mid-term of giving with in our year, capacity margin that we’ll guys locked next XXXX of anticipation your already rest yes, can around that year. capacity some $XXX And point this $X you fix and something in the the those for full mentioned Then already at about besides hedging. the you XXXX and Yes. for $X expect

capital of We’re using some our to forward. the hedge out

Julien Dumoulin-Smith

I’ll right, a it very It’s all much. noon. there. you great. day. good All leave Have Thank

Jack Fusco

you, Thank Julien.

Operator

US The James go from Advisors. comes Please Carreker question from Capital next ahead.

James Carreker

$XX about to Henry thanks I guys, guess off, think guess, for quickly, really LNG I look Hi question. at the of think much to a wrong, and any at of than kind %X. there winter or to is the quick curve calculation a how at calculations I Hub level first about I $X, just useful gets a that potential margins? margin. I Am think $X higher margin When some doing guideline of high number

Jack Fusco

Well, up shipping curves have also, James. come way

to the add, add shipping or you can have You costs $XX. JKM to either your subtract either

or it, going is is this shipping insignificant Asia longer. margins get subtract add not to trip $X, the lot is everything a and it you when to that but high You

James Carreker

shipping So it’s just or minus plus $X costs.

Anatol Feygin

has themselves high, that yes, just seasonality. like and but the quite a shipping curves Not also

higher than winter So shipping. is shoulder shipping

James Carreker

Yes.

just seems it kind that moved wouldn’t $X versus It standard I of guess has. just like the to have Okay. much maybe estimates, it but

The other question…

Jack Fusco

about talking also through curve we’re year. James, next a Sorry.

about Bloomberg trader news a a talking but not on like cargo. We’re printing a like today, blurb

thing… of kind just So

James Carreker

in and Right. the XX But for winter margins balance of year. you the $X talked the about

Jack Fusco

That’s right.

James Carreker

Yes. to per was a additional I five question referring in Then found you the rate was about does that imply second just quarter mtpa just other winter the train the where anything upside with row run the maybe long-term? now to months. production,

Jack Fusco

to per X. a mtpa is right this outperformance one. Not really the up the at this of honestly, ramp And train lot a XX to point, year of that XX thanks is smooth Train

So still yes, XX to we’re that range. XX on

James Carreker

you. Thank

Operator

Morgan Evercore. Sean from go comes Please question Next from ahead.

Sean Morgan

Thanks, guys.

a with underpin – some of creativity signing SPAs Stage on those commercial IPMs appreciate aspects there? So IPM the up back-to-back traditional X. up creative possibility agreements to to with the double kind need I and of going the more the there for start fees in to sort fixed to of Is volumes terms – to of

Anatol Feygin

It’s are Sean, the number Anatol. Zack a managed mentioned tons a aggregate. positions Well, large it’s million now, there portfolio thanks. Look, and that over of are that, it’s in XX

that that have exposure a partners. on in the producer our exposure business is And on manage that there it So synergies clearly day-to-day behalf downstream basis. we we with are are of managing and we

its part answer parcel have. we and opportunity that short set the So is, the of

Sean Morgan

great. then. quick And really follow-up Okay, then just

those supply IPMs, with to totally you potentially that get, in to just So mtpa fine I with the X FID the deals. tend banks mentioned that guys you side remaining it mean, out theory, get filling be would

Zach Davis

it’s Technically we mix and in yet, have a to they contracts allocated few would, think going be a project sitting that are but we are not that CMI already and a DS. that, mind, to keep at

So gas, these pay and but again, and the like and a deliver sure, us capability will either counterparties for check percent comes us IPM fee it EBITDA the as of credit not be fix a Tourmaline boxes. LNG pick to fee, and or everything up those all the back fixed to worthiness, their that all

Sean Morgan

Okay. Thanks, Zach.

Operator

comes question Shere Craig Please Tuohy ahead. Brothers. go Next from from

Craig Shere

the fitting quarter mid-term the X.XX-ish. contracting fix thanks the looks contracts third second first the you’re agreement IPM X.XX Hi, combined in. more fees It like a quarter, little math Doing have with at over might for been in above their disclosed on me levels. for

agreements? could Given five approaching the market XX-year to tightness, that start for current $X.X

Anatol Feygin

have Thanks, pretty And to front even spreadsheet me a hard in of Craig. I in goes that front of that summarize. through with me, it’s that. spreadsheet

mentioned Jack that So right. the mid-term the economics. that look, these threes market And on that, obviously call mentioned sixes years, filter into as we’ve those this for of prices, in through it’s and next number prompt

that to and prompt then So us the for the capture long-term should you on that expect it the balance. volumes for but economics depends tenor, our or market contract better relatively

today. if those of relatively market a is the where can That’s course, above short sprint right. it’s X.X, deal, So tenor

Craig Shere

a rate the filling about the any be fixed understand talking new contracts. be everything, for not But years talking not of market, It starting new Do hey spot. to about see and I in used of XX seems new the market, long-term does I’m this can more? first take contracts? that they’ll quarter in expiring I’m some conversation that, open in of it’s Do to There’ll agree? new the demand starting up like terms been being see stuff going talking long-term of construction to Do support And and quarter. contracting, and maybe minority the you. SPAs, go or it’s bilateral, to is you finance, future that of we’ll clear some open Chinese up truly be that you amount more? to the real support project of significant capacity. medium that Got IPM thin. to the SPAs just Could it contracts, about see in in you yourself, it and pretty terms the you I’m the variable a new maybe guys,

Jack Fusco

to those I think your counterparties view contracts. skewed in is U.S.

think index almost contracts contracts Hub pretty are it’s been that and markets just strong. talking than looked been but U.S. Craig, if I style you’ll being are signed the daily, at has the globally, lively. you’re you see look link, Henry market market contracting But the less, in oil if still you very about

Anatol Feygin

XXXX that anomalous And a NYMEX years XXXX be to smaller that contracting. be And fair to is is market. on I of the even we’ve volumetrically an clearly the that you market market piece but then going engagement the just as just year, for big as open to percentage margin been grows, historically, it’ll obviously And similar I long-term it Yes. window what viewed we’ve the comments, the the saw amount total. follow-up discussed for of think XXXX, environment Jack’s now. and of more was of roughly has a obviously were

Craig Shere

you. Got

Okay. Thank much. very you

Operator

Okay.

have So that appears, for for time remarks. I additional back or turn closing we is any over management the questions that all call to for today.

Jack Fusco

It’s get safe to your in you, I of everybody out supportive there. an Cheniere. I to talk Bye-bye. guess, with just time been want Please pandemic. interesting Thanks. vaccinated. thank we’ll Please November. for be the And

Operator

you your Thank for concludes participation. today’s This call.

disconnect. now may You

Cheniere Energy (LNG) 5 Aug 212021 Q2 Earnings call transcript