Cheniere Partners Reports Second Quarter 2024 Results and Reconfirms Full Year 2024 Distribution Guidance

Rhea-AI Summary

Cheniere Energy Partners (NYSE: CQP) reported Q2 2024 financial results. Revenues were $1.9 billion, while net income was $570 million. Adjusted EBITDA increased to $832 million.

The company declared a cash distribution of $0.810 per common unit, with payment on August 14, 2024. Full-year 2024 distribution guidance remains at $3.15 - $3.35 per common unit.

Moody’s upgraded Cheniere's credit rating to investment grade. Liquidity stood at $2.2 billion, with significant reductions in debt due to recent financial transactions.

Despite a 2% revenue drop compared to Q2 2023 and an 8% decrease in net income, the company showed a 10% increase in Adjusted EBITDA and higher LNG export volumes.

Positive

• Adjusted EBITDA increased by 10% to $832 million.
• Declared cash distribution of $0.810 per common unit and reconfirmed full-year guidance.
• Credit rating upgraded to investment grade by Moody's.
• High liquidity of $2.2 billion.

Negative

• Net income decreased by 8% compared to Q2 2023.
• Revenues fell by 2% compared to Q2 2023.

Insights

Financial Analyst

Cheniere Partners' Q2 2024 results show a mixed performance. While revenues slightly decreased by 2% year-over-year to $1.9 billion, Adjusted EBITDA increased by 10% to $832 million. The company's LNG export volumes grew by 5%, indicating strong operational performance.

The reaffirmation of the full-year 2024 distribution guidance of $3.15 to $3.35 per common unit is a positive sign for investors, suggesting confidence in sustained cash flows. The recent credit rating upgrades from Moody's to investment grade status for both Cheniere Partners and Sabine Pass Liquefaction are significant, potentially leading to lower borrowing costs and improved financial flexibility.

However, investors should note the volatility in net income due to fair value changes in derivative instruments, particularly the IPM agreements. This accounting mismatch could lead to significant fluctuations in reported earnings, which may not reflect the underlying operational performance.

Energy Market Analyst

Cheniere Partners' performance reflects the evolving dynamics of the global LNG market. The 5% increase in LNG export volumes indicates robust demand, likely driven by Europe's continued efforts to diversify away from Russian gas and growing Asian consumption.

The company's focus on long-term contracts with fixed fees, as evidenced by the IPM agreements, provides stability in a volatile commodity market. However, the accounting treatment of these contracts creates significant non-cash impacts on reported earnings, which may obscure the underlying business performance.

The SPL Expansion Project, with its potential 20 mtpa capacity increase, positions Cheniere Partners well for future growth in global LNG demand. However, investors should monitor progress on regulatory approvals and potential offtake agreements to assess the project's viability and impact on future cash flows.

 

HOUSTON--(BUSINESS WIRE)-- Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE: CQP) today announced its financial results for second quarter 2024.

HIGHLIGHTS

• During the three and six months ended June 30, 2024, Cheniere Partners generated revenues of $1.9 billion and $4.2 billion, net income of $570 million and $1.3 billion, and Adjusted EBITDA¹ of $832 million and $1.8 billion, respectively.

• With respect to the second quarter of 2024, Cheniere Partners declared a cash distribution of $0.810 per common unit to unitholders of record as of August 7, 2024, comprised of a base amount equal to $0.775 and a variable amount equal to $0.035. The common unit distribution and the related general partner distribution will be paid on August 14, 2024.

• Reconfirming full year 2024 distribution guidance of $3.15 - $3.35 per common unit, maintaining a base distribution of $3.10 per common unit.

• In May 2024, Moody’s Corporation upgraded its issuer credit ratings of Cheniere Partners and Sabine Pass Liquefaction, LLC (“SPL”) from Ba1 and Baa2, respectively, to Baa2 and Baa1, respectively, each with a stable outlook. With these ratings upgrades, both entities are now investment grade rated by Moody’s Corporation, S&P Global Ratings and Fitch Ratings.

2024 FULL YEAR DISTRIBUTION GUIDANCE

	2024
Distribution per Unit	$	3.15	-	$	3.35

SUMMARY AND REVIEW OF FINANCIAL RESULTS

(in millions, except LNG data)	Three Months Ended June 30,									Six Months Ended June 30,
		2024			2023		% Change				2024			2023		% Change
Revenues	$	1,894		$	1,933		(2	)%		$	4,189		$	4,850		(14	)%
Net income	$	570		$	622		(8	)%		$	1,252		$	2,557		(51	)%
Adjusted EBITDA1	$	832		$	757		10	%		$	1,832		$	1,783		3	%
LNG exported:
Number of cargoes		103			98		5	%			217			210		3	%
Volumes (TBtu)		373			355		5	%			791			758		4	%
LNG volumes loaded (TBtu)		372			353		5	%			789			756		4	%

Net income decreased approximately $52 million and $1.3 billion during the three and six months ended June 30, 2024, respectively, as compared to the corresponding 2023 periods, respectively. The decreases were primarily attributable to approximately $126 million and $1.4 billion of unfavorable variances due to gains of $104 million and $147 million for the three and six months ended June 30, 2024, as compared to gains of $230 million and $1.5 billion in the corresponding 2023 periods, respectively, related to changes in fair value of our derivative instruments (further described below).

Adjusted EBITDA¹ increased by approximately $75 million and $49 million during the three and six months ended June 30, 2024, respectively, as compared to the corresponding 2023 periods. The increases were primarily due to higher volumes delivered, as well as lower operating and maintenance expenses, and were partially offset by lower gross margins per MMBtu of LNG delivered compared to the prior period.

A significant portion of the derivative gains (losses) are attributable to the recognition at fair value of our long-term Integrated Production Marketing (“IPM”) agreements, natural gas supply contracts with pricing indexed to international gas and LNG prices. Our IPM agreements are structured to provide stable margins on purchases of natural gas and sales of LNG over the life of the agreements and have a fixed fee component, similar to that of LNG sold under our long-term, fixed fee LNG sale and purchase agreements. 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 each reporting period on a mark-to-market basis, but do not currently permit mark-to-market recognition of the associated sale of LNG, resulting in a mismatch of accounting recognition for the purchase of natural gas and sale of LNG. As a result of continued moderation of international gas price volatility and changes in international forward commodity curves during the three and six months ended June 30, 2024, we recognized approximately $199 million and $205 million, respectively, of non-cash favorable changes in fair value attributable to these IPM agreements, as compared to approximately $187 million and $1.2 billion of non-cash favorable changes in fair value in the corresponding 2023 periods.

During the three and six months ended June 30, 2024, we recognized in income 372 and 789 TBtu of LNG loaded from the SPL Project (defined below).

Capital Resources

As of June 30, 2024, our total available liquidity was approximately $2.2 billion. We had cash and cash equivalents of approximately $351 million. In addition, we had current restricted cash and cash equivalents of $68 million, $1.0 billion of available commitments under the Cheniere Partners Revolving Credit Facility, and $762 million of available commitments under the SPL Revolving Credit Facility.

Recent Key Financial Transactions and Updates

In May 2024, Cheniere Partners issued $1.2 billion aggregate principal amount of 5.750% Senior Notes due 2034. In June 2024, the net proceeds, together with cash on hand, were used to retire $1.2 billion outstanding aggregate principal amount of SPL’s 5.625% Senior Secured Notes due 2025.

During the three and six months ended June 30, 2024 respectively, SPL repaid the remaining $150 million and $300 million in principal amount of its 5.750% Senior Secured Notes due 2024 with cash on hand.

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 August 2, 2024, approximately 2,600 cumulative LNG cargoes totaling approximately 180 million tonnes of LNG have been produced, loaded, and exported from the SPL Project.

SPL Expansion Project

We are developing an expansion adjacent to the SPL Project with an expected total production capacity of up to approximately 20 mtpa of LNG (the “SPL Expansion Project”), inclusive of estimated debottlenecking opportunities. In February 2024, certain of our subsidiaries submitted an application to the FERC for authorization to site, construct and operate the SPL Expansion Project, as well as an application to the DOE requesting authorization to export LNG to Free-Trade Agreement (“FTA”) and non-FTA countries, both of which applications exclude debottlenecking.

DISTRIBUTIONS TO UNITHOLDERS

In July 2024, we declared a cash distribution of $0.810 per common unit to unitholders of record as of August 7, 2024, comprised of a base amount equal to $0.775 ($3.10 annualized) and a variable amount equal to $0.035, 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 August 14, 2024.

INVESTOR CONFERENCE CALL AND WEBCAST

Cheniere Energy, Inc. will host a conference call to discuss its financial and operating results for second quarter 2024 on Thursday, August 8, 2024, 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 will 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 and intrastate 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 June 30, 2024, 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, (vii) statements regarding future discussions and entry into contracts, and (viii) statements relating to our goals, commitments and strategies in relation to environmental matters. 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								Six Months Ended
	June 30,								June 30,
		2024				2023				2024				2023
Revenues
LNG revenues	$	1,454			$	1,415			$	3,174			$	3,521
LNG revenues—affiliate		391				469				915				1,230
Regasification revenues		34				33				68				67
Other revenues		15				16				32				32
Total revenues		1,894				1,933				4,189				4,850
Operating costs and expenses
Cost of sales (excluding items shown separately below)		661				603				1,625				916
Cost of sales—affiliate		—				1				4				18
Operating and maintenance expense		210				263				410				469
Operating and maintenance expense—affiliate		39				38				82				82
Operating and maintenance expense—related party		16				14				29				30
General and administrative expense		3				3				6				6
General and administrative expense—affiliate		23				24				45				46
Depreciation and amortization expense		170				167				338				334
Other operating costs and expenses		5				2				8				2
Other operating costs and expenses—affiliate		1				—				1				—
Total operating costs and expenses		1,128				1,115				2,548				1,903
Income from operations		766				818				1,641				2,947
Other income (expense)
Interest expense, net of capitalized interest		(202	)			(207	)			(404	)			(415	)
Loss on modification or extinguishment of debt		(3	)			(2	)			(3	)			(2	)
Interest and dividend income		9				13				18				27
Total other expense		(196	)			(196	)			(389	)			(390	)
Net income	$	570			$	622			$	1,252			$	2,557
Basic and diluted net income per common unit(1)	$	0.95			$	0.84			$	2.13			$	4.35
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 June 30, 2024, filed with the Securities and Exchange Commission.

Cheniere Energy Partners, L.P.
Consolidated Balance Sheets
(in millions, except unit data) (1)
	June 30,				December 31,
		2024				2023
ASSETS	(unaudited)
Current assets
Cash and cash equivalents	$	351			$	575
Restricted cash and cash equivalents		68				56
Trade and other receivables, net of current expected credit losses		286				373
Trade receivables—affiliate		144				278
Advances to affiliate		122				84
Inventory		144				142
Current derivative assets		18				30
Other current assets, net		94				43
Other current assets—affiliate		1				—
Total current assets		1,228				1,581
Property, plant and equipment, net of accumulated depreciation		15,995				16,212
Operating lease assets		80				81
Derivative assets		26				40
Other non-current assets, net		186				188
Total assets	$	17,515			$	18,102
LIABILITIES AND PARTNERS’ DEFICIT
Current liabilities
Accounts payable	$	51			$	69
Accrued liabilities		673				806
Accrued liabilities—related party		4				5
Current debt, net of unamortized debt issuance costs		798				300
Due to affiliates		37				55
Deferred revenue		78				114
Deferred revenue—affiliate		—				3
Current derivative liabilities		235				196
Other current liabilities		10				18
Total current liabilities		1,886				1,566
Long-term debt, net of unamortized discount and debt issuance costs		14,803				15,606
Operating lease liabilities		78				71
Finance lease liabilities		70				14
Derivative liabilities		1,319				1,531
Other non-current liabilities		93				75
Other non-current liabilities—affiliate		22				23
Total liabilities		18,271				18,886
Partners’ deficit
Common unitholders’ interest (484.0 million units issued and outstanding at both June 30, 2024 and December 31, 2023)		1,372				1,038
General partner’s interest (2% interest with 9.9 million units issued and outstanding at both June 30, 2024 and December 31, 2023)		(2,128	)			(1,822	)
Total partners’ deficit		(756	)			(784	)
Total liabilities and partners’ deficit	$	17,515			$	18,102

_____________
(1)		Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, 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 six months ended June 30, 2024 and 2023 (in millions):

	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net income	$	570			$	622			$	1,252			$	2,557
Interest expense, net of capitalized interest		202				207				404				415
Loss on modification or extinguishment of debt		3				2				3				2
Interest and dividend income		(9	)			(13	)			(18	)			(27	)
Income from operations	$	766			$	818			$	1,641			$	2,947
Adjustments to reconcile income from operations to Adjusted EBITDA:
Depreciation and amortization expense		170				167				338				334
Gain from changes in fair value of commodity derivatives, net (1)		(104	)			(230	)			(147	)			(1,500	)
Other		—				2				—				2
Adjusted EBITDA	$	832			$	757			$	1,832			$	1,783

_____________

(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 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/20240807404766/en/

Cheniere Partners

Investors

Randy Bhatia, 713-375-5479

Frances Smith, 713-375-5753

Media Relations

Eben Burnham-Snyder, 713-375-5764

Bernardo Fallas, 713-375-5593

Source: Cheniere Energy Partners, L.P.

FAQ

What were Cheniere Partners' Q2 2024 revenues?

Cheniere Partners reported Q2 2024 revenues of $1.9 billion.

When will Cheniere Partners pay the declared cash distribution for Q2 2024?

The cash distribution will be paid on August 14, 2024.

What is the full-year 2024 distribution guidance for Cheniere Partners?

The full-year 2024 distribution guidance is $3.15 - $3.35 per common unit.

What is Cheniere Partners' adjusted EBITDA for Q2 2024?

Cheniere Partners' adjusted EBITDA for Q2 2024 is $832 million.

Has Cheniere Partners' credit rating been upgraded recently?

Yes, Moody's upgraded Cheniere's credit rating to investment grade in May 2024.