Cheniere Reports First Quarter 2023 Results and Raises 2023 Financial Guidance

HOUSTON--(BUSINESS WIRE)-- Cheniere Energy, Inc. (“Cheniere”) (NYSE American: LNG) today announced its financial results for the first quarter 2023.

FIRST QUARTER 2023 SUMMARY FINANCIAL RESULTS

2023 FULL YEAR FINANCIAL GUIDANCE

RECENT HIGHLIGHTS

• During the three months ended March 31, 2023, Cheniere generated revenues of approximately $7.3 billion, net income¹ of approximately $5.4 billion, Consolidated Adjusted EBITDA² of approximately $3.6 billion, and Distributable Cash Flow² of approximately $2.9 billion.

• Raising full year 2023 Consolidated Adjusted EBITDA² guidance to $8.2 - $8.7 billion and full year 2023 Distributable Cash Flow² guidance to $5.7 - $6.2 billion.

• Pursuant to Cheniere’s comprehensive capital allocation plan, during the three months ended March 31, 2023, Cheniere prepaid approximately $896 million of consolidated long-term indebtedness, repurchased an aggregate of approximately 3.1 million shares of common stock for approximately $450 million, and paid a quarterly dividend of $0.395 per share of common stock attributable to the fourth quarter 2022.

• In March 2023, certain subsidiaries of Cheniere filed an application with the Federal Energy Regulatory Commission (“FERC”) for authorization to site, construct and operate the CCL Midscale Trains 8 & 9 Project (defined below) under the Natural Gas Act.

• In February 2023, certain subsidiaries of Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE American: CQP) initiated the pre-filing review process with the FERC under the National Environmental Policy Act (“NEPA”) for the SPL Expansion Project (defined below), and in April 2023, executed a contract with Bechtel Energy Inc. (“Bechtel”) to provide the Front End Engineering and Design (“FEED”) for the SPL Expansion Project.

• In January 2023, Cheniere achieved its second investment grade issuer rating from Fitch Ratings of BBB- with a stable outlook. In February 2023, S&P Global Ratings upgraded its credit rating of Sabine Pass Liquefaction, LLC (“SPL”) from BBB to BBB+ with stable outlook.

CEO COMMENT

“2023 is off to a fast start thanks to the Cheniere team’s commitment to excellence in terms of operations, execution and financial discipline. On the back of a strong first quarter, we are raising our full year guidance for both EBITDA and Distributable Cash Flow,” said Jack Fusco, Cheniere’s President and Chief Executive Officer. “We set a new quarterly LNG production record in the first quarter, which is a testament to our steadfast commitment to safe and reliable operations across the Cheniere platform. Early construction activities at Corpus Christi Stage 3 are progressing ahead of schedule, and we look forward to reinforcing Cheniere’s market-leading execution track record and growing our LNG platform on a credit and cash flow accretive basis to supply reliable, cleaner-burning LNG to our worldwide customers.”

SUMMARY AND REVIEW OF FINANCIAL RESULTS

Net income (loss) was approximately $5.4 billion for the three months ended March 31, 2023 as compared to approximately $(865) million in the corresponding 2022 period. The favorable change was primarily due to changes in fair value of our derivative portfolio (further described below) of approximately $4.7 billion (before tax and non-controlling interests) as compared to the $(3.4) billion of changes in fair value in the prior period, as well as increased total margins per MMBtu of LNG delivered. The favorable changes were partially offset by a higher provision for income tax in the current period as well as a higher contribution to noncontrolling interests.

Consolidated Adjusted EBITDA increased approximately $446 million for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. The increase was due primarily to increased total margins per MMBtu of LNG delivered and a higher contribution from certain portfolio optimization activities, partially offset by lower volumes sold into short-term markets.

Substantially all derivative gains (losses) relate to the use of commodity derivative instruments indexed to international gas and LNG prices, primarily related to our long-term Integrated Production Marketing (“IPM”) agreements. Our IPM agreements are designed 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 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 do 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. As a result of the significant volatility in forward international gas and LNG price curves during the three months ended March 31, 2023, we recognized $4.0 billion of non-cash favorable changes in fair value attributable to such positions (before tax and non-controlling interests).

Share-based compensation expenses included in net income (loss) totaled $49 million for the three months ended March 31, 2023, compared to $43 million for the three months ended March 31, 2022.

Our financial results are reported on a consolidated basis. Our ownership interest in Cheniere Partners as of March 31, 2023 consisted of 100% ownership of the general partner and a 48.6% limited partner interest.

BALANCE SHEET MANAGEMENT

Capital Resources

As of March 31, 2023, our total consolidated available liquidity was approximately $10.9 billion. We had cash and cash equivalents of $2.9 billion, of which $834 million was held by Cheniere Partners. In addition, we had restricted cash and cash equivalents of $495 million, $1.3 billion of available commitments under the Cheniere Revolving Credit Facility, $1.3 billion of available commitments under the Cheniere Corpus Christi Holdings, LLC (“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 $871 million of available commitments under the SPL Working Capital Facility.

Recent Key Financial Transactions and Updates

During the three months ended March 31, 2023, Cheniere repurchased approximately $398 million in principal of outstanding senior notes at CCH in the open market, partially redeeming the 5.125% Senior Secured Notes due 2027, the 3.700% Senior Secured Notes Due 2029 and the Senior Secured Notes due 2039.

In January 2023, the remaining outstanding principal amount of $498 million of CCH’s 7.000% Senior Secured Notes due 2024 (“2024 CCH Senior Notes”) was redeemed with cash on hand.

LIQUEFACTION PROJECTS OVERVIEW

Construction Progress as of March 31, 2023:

SPL Project

Through Cheniere Partners, we operate 6 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”).

SPL Expansion Project

Through Cheniere Partners, we are developing an expansion adjacent to the SPL Project consisting of up to 3 natural gas liquefaction Trains with an expected total production capacity of approximately 20 mtpa of LNG (the “SPL Expansion Project”). In February 2023, certain subsidiaries of Cheniere Partners initiated the pre-filing review process with respect to the SPL Expansion Project with the FERC under the NEPA, and in April 2023, executed a contract with Bechtel to provide the FEED for the SPL Expansion Project.

CCL Project

We operate 3 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”).

CCL Stage 3 Project

We are constructing an expansion adjacent to the CCL Project consisting of 7 midscale Trains with an expected total production capacity of over 10 mtpa of LNG (the “CCL Stage 3 Project”).

CCL Midscale Trains 8 & 9 Project

We are developing 2 midscale Trains with an expected total production capacity of approximately 3 mtpa of LNG (the “CCL Midscale Trains 8 & 9 Project”) adjacent to the CCL Stage 3 Project. In March 2023, certain of our subsidiaries filed an application with the FERC for authorization to site, construct and operate the CCL Midscale Trains 8 & 9 Project under the Natural Gas Act.

INVESTOR CONFERENCE CALL AND WEBCAST

We will host a conference call to discuss our financial and operating results for the first quarter on Tuesday, May 2, 2023, 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.

About Cheniere

Cheniere Energy, Inc. is the leading producer and exporter of 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 March 31, 2023, 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, and (vii) statements relating to Cheniere’s capital deployment, including intent, ability, extent, and timing of capital expenditures, debt repayment, dividends, share repurchases and execution on the capital allocation plan. 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 April 26, 2023, over 2,770 cumulative LNG cargoes totaling approximately 190 million tonnes of LNG have been produced, loaded and exported from our liquefaction projects.

During the three months ended March 31, 2023, we exported 603 TBtu of LNG from our liquefaction projects. 39 TBtu of LNG exported from our liquefaction projects and sold on a delivered basis was in transit as of March 31, 2023, none of which was related to commissioning activities.

The following table summarizes the volumes of operational LNG that were loaded from our liquefaction projects and for which the financial impact was recognized on our Consolidated Financial Statements during the three months ended March 31, 2023:

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.

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 Consolidated 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.

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Investors
Randy Bhatia, 713-375-5479
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Media Relations
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Source: Cheniere Energy, Inc.

Released May 2, 2023