Cheniere Partners Reports Third Quarter 2020 Results and Provides Guidance Update
Reconfirms 2020 Guidance and Provides 2021 Guidance
Increases Run Rate Production and Financial Guidance
Summary of Third Quarter 2020 Results (in millions, except LNG data)
|
Three Months Ended |
|
Nine Months Ended |
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|
|
|
|||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||
Revenues |
$ |
982 |
|
|
$ |
1,476 |
|
$ |
4,170 |
|
$ |
4,930 |
Net income (loss) |
$ |
(67 |
) |
|
$ |
110 |
|
$ |
774 |
|
$ |
727 |
Adjusted EBITDA1 |
$ |
352 |
|
|
$ |
543 |
|
$ |
1,990 |
|
$ |
1,741 |
LNG exported: |
|
|
|
|
|
|
|
|||||
Number of cargoes |
|
36 |
|
|
|
79 |
|
|
186 |
|
|
241 |
Volumes (TBtu) |
|
126 |
|
|
|
280 |
|
|
656 |
|
|
856 |
LNG volumes loaded (TBtu) |
|
122 |
|
|
|
277 |
|
|
656 |
|
|
855 |
Summary Guidance |
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2020 Full Year Distribution Guidance |
||||||||||||
2020 |
||||||||||||
Distribution per Unit |
$ |
2.55 |
- |
$ |
2.65 |
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2021 Full Year Distribution Guidance |
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2021 |
||||||||||||
Distribution per Unit |
$ |
2.60 |
- |
$ |
2.70 |
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Run Rate Guidance |
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Previous |
Current |
|||||||||||
Distributable Cash Flow1 per Unit |
$ |
3.70 |
|
- |
$ |
3.90 |
$ |
3.75 |
- |
$ |
3.95 |
|
Production Capacity per Train3 (mtpa) |
|
4.8 |
|
- |
|
4.9 |
|
4.9 |
- |
|
5.1 |
Recent Highlights
Strategic
-
In
August 2020 ,Sabine Pass Liquefaction, LLC (“SPL”) entered into an agreement with certainCheniere Energy, Inc. (“Cheniere”) subsidiaries to provide the ability, in limited circumstances, to fulfill commitments to LNG buyers in the event operational conditions impact operations at either theSPL Project (defined below) or Cheniere’sCorpus Christi liquefaction facility. The purchase price for such cargoes would be (i) 115% of the applicable natural gas feedstock purchase price or (ii) a free-on-boardU.S. Gulf Coast LNG market price, whichever is greater.
Operational
-
As of
October 31, 2020 , more than 1,075 cumulative LNG cargoes totaling approximately 75 million tonnes of LNG have been produced, loaded, and exported from theSPL Project . -
In August and
September 2020 , we coordinated with Cheniere’sCorpus Christi liquefaction facility and with our counterparties to fulfill all of our commercial obligations despite the operational impacts of Hurricane Laura, which included a temporary suspension of operations at theSPL Project .
Financial
-
In
July 2020 , the board of directors of our general partner confirmed and approved that, following the distribution with respect to the three months endedJune 30, 2020 , the financial tests required for conversion of our subordinated units were met under the terms of the partnership agreement. Accordingly, effectiveAugust 17, 2020 , the first business day following the payment of the distribution, all of our subordinated units were automatically converted into common units on a one-for-one basis and the subordination period was terminated.
Margins per MMBtu of LNG delivered to customers and recognized in income increased during the three and nine months ended
Adjusted EBITDA1 was
Adjusted EBITDA was
During the three and nine months ended
During the three and nine months ended
Cargo Cancellation Revenue Summary
The following table summarizes the timing impacts of revenue recognition related to cargoes for which customers elected to not take delivery on our revenues for the three and nine months ended
|
Three Months Ended |
|
Nine Months Ended |
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|
|
|
|
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Total revenues |
$ |
982 |
|
|
$ |
4,170 |
|
Impact of cargo cancellations recognized in the prior period for deliveries scheduled in the current period |
244 |
|
|
— |
|
||
Impact of cargo cancellations recognized in the current period for deliveries scheduled in subsequent periods |
(21 |
) |
|
(21 |
) |
||
Total revenues excluding the timing impact of cargo cancellations |
$ |
1,205 |
|
|
$ |
4,149 |
|
Liquefaction Project Update
|
|
|
Train 6 |
Project Status |
Under Construction |
Project Completion Percentage (1) |
70.9% (2) |
Expected Substantial Completion |
2H 2022 |
Note: Project update excludes Trains in operation |
|
(1) Project completion percentage as of |
|
(2) Engineering 97.8% complete, procurement 98.2% complete, and construction 34.6% complete |
We operate five natural gas liquefaction Trains and are constructing one additional Train for a total production capacity of approximately 30 million tonnes per annum (“mtpa”) of LNG at the
Distributions to Unitholders
We will pay a cash distribution of
Investor Conference Call and Webcast
Cheniere will host a conference call to discuss its financial and operating results for the third quarter 2020 on
1 |
Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for further details. |
|
2 |
Run rate assumes full operations of six Trains. |
|
3 |
Run rate average annual production capacity which includes expected impacts of planned maintenance, production reliability, potential overdesign, and debottlenecking opportunities. |
|
4 |
Total margins as used herein refers to total revenues less cost of sales. |
About
For additional information, please refer to the
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 expectations regarding regulatory authorizations and approvals, (iii) statements expressing beliefs and expectations regarding the development of Cheniere Partners’ LNG terminal and liquefaction business, (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 regarding the COVID-19 pandemic and its impact on our business and operating results. Although
(Financial Tables Follow)
Consolidated Statements of Operations (in millions, except per unit data)(1) (unaudited) |
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|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Revenues |
|
|
|
|
|
|
|
||||||||
LNG revenues |
$ |
807 |
|
|
$ |
1,140 |
|
|
$ |
3,588 |
|
|
$ |
3,678 |
|
LNG revenues—affiliate |
103 |
|
|
257 |
|
|
352 |
|
|
1,017 |
|
||||
Regasification revenues |
67 |
|
|
66 |
|
|
202 |
|
|
199 |
|
||||
Other revenues |
5 |
|
|
13 |
|
|
28 |
|
|
36 |
|
||||
Total revenues |
982 |
|
|
1,476 |
|
|
4,170 |
|
|
4,930 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating costs and expenses |
|
|
|
|
|
|
|
||||||||
Cost of sales (excluding items shown separately below) |
454 |
|
|
742 |
|
|
1,551 |
|
|
2,501 |
|
||||
Cost of sales—affiliate |
33 |
|
|
6 |
|
|
38 |
|
|
6 |
|
||||
Operating and maintenance expense |
146 |
|
|
172 |
|
|
463 |
|
|
472 |
|
||||
Operating and maintenance expense—affiliate |
34 |
|
|
34 |
|
|
115 |
|
|
100 |
|
||||
General and administrative expense |
2 |
|
|
3 |
|
|
12 |
|
|
9 |
|
||||
General and administrative expense—affiliate |
24 |
|
|
34 |
|
|
73 |
|
|
82 |
|
||||
Depreciation and amortization expense |
137 |
|
|
138 |
|
|
413 |
|
|
390 |
|
||||
Impairment expense and loss on disposal of assets |
— |
|
|
1 |
|
|
5 |
|
|
6 |
|
||||
Total operating costs and expenses |
830 |
|
|
1,130 |
|
|
2,670 |
|
|
3,566 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from operations |
152 |
|
|
346 |
|
|
1,500 |
|
|
1,364 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
|
||||||||
Interest expense, net of capitalized interest |
(221 |
) |
|
(231 |
) |
|
(691 |
) |
|
(648 |
) |
||||
Loss on modification or extinguishment of debt |
— |
|
|
(13 |
) |
|
(43 |
) |
|
(13 |
) |
||||
Other income, net |
2 |
|
|
8 |
|
|
8 |
|
|
24 |
|
||||
Total other expense |
(219 |
) |
|
(236 |
) |
|
(726 |
) |
|
(637 |
) |
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss) |
$ |
(67 |
) |
|
$ |
110 |
|
|
$ |
774 |
|
|
$ |
727 |
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net income (loss) per common unit |
$ |
(0.08 |
) |
|
$ |
0.19 |
|
|
$ |
1.55 |
|
|
$ |
1.38 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common units outstanding used for basic and diluted net income (loss) per common unit calculation |
414.8 |
|
|
348.6 |
|
|
370.9 |
|
|
348.6 |
|
______________ |
||
(1) |
Please refer to the |
Consolidated Balance Sheets (in millions, except unit data) (1) |
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|
|
|
|
||||
|
2020 |
|
2019 |
||||
ASSETS |
(unaudited) |
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
1,254 |
|
|
$ |
1,781 |
|
Restricted cash |
157 |
|
|
181 |
|
||
Accounts and other receivables, net |
204 |
|
|
297 |
|
||
Accounts receivable—affiliate |
82 |
|
|
105 |
|
||
Advances to affiliate |
120 |
|
|
158 |
|
||
Inventory |
113 |
|
|
116 |
|
||
Derivative assets |
14 |
|
|
17 |
|
||
Other current assets |
117 |
|
|
51 |
|
||
Other current assets—affiliate |
— |
|
|
1 |
|
||
Total current assets |
2,061 |
|
|
2,707 |
|
||
|
|
|
|
||||
Property, plant and equipment, net |
16,666 |
|
|
16,368 |
|
||
Operating lease assets, net |
100 |
|
|
94 |
|
||
Debt issuance costs, net |
18 |
|
|
15 |
|
||
Non-current derivative assets |
30 |
|
|
32 |
|
||
Other non-current assets, net |
155 |
|
|
168 |
|
||
Total assets |
$ |
19,030 |
|
|
$ |
19,384 |
|
|
|
|
|
||||
LIABILITIES AND PARTNERS’ EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
17 |
|
|
$ |
40 |
|
Accrued liabilities |
564 |
|
|
709 |
|
||
Accrued liabilities—related party |
2 |
|
|
— |
|
||
Due to affiliates |
42 |
|
|
46 |
|
||
Deferred revenue |
179 |
|
|
155 |
|
||
Deferred revenue—affiliate |
— |
|
|
1 |
|
||
Current operating lease liabilities |
7 |
|
|
6 |
|
||
Derivative liabilities |
31 |
|
|
9 |
|
||
Total current liabilities |
842 |
|
|
966 |
|
||
|
|
|
|
||||
Long-term debt, net |
17,573 |
|
|
17,579 |
|
||
Non-current operating lease liabilities |
92 |
|
|
87 |
|
||
Non-current derivative liabilities |
25 |
|
|
16 |
|
||
Other non-current liabilities |
2 |
|
|
1 |
|
||
Other non-current liabilities—affiliate |
18 |
|
|
20 |
|
||
|
|
|
|
||||
Partners’ equity |
|
|
|
||||
Common unitholders’ interest (484.0 million and 348.6 million units issued and outstanding at |
627 |
|
|
1,792 |
|
||
Subordinated unitholders’ interest (zero and 135.4 million units issued and outstanding at |
— |
|
|
(996 |
) |
||
General partner’s interest (2% interest with 9.9 million units issued and outstanding at |
(149 |
) |
|
(81 |
) |
||
Total partners’ equity |
478 |
|
|
715 |
|
||
Total liabilities and partners’ equity |
$ |
19,030 |
|
|
$ |
19,384 |
|
______________ |
||
(1) |
Please refer to the |
Reconciliation of Non-GAAP Measures
Regulation G Reconciliation
In addition to disclosing financial results in accordance with
Adjusted EBITDA is calculated by taking net income (loss) before 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, changes in the fair value of our commodity derivatives, impairment expense and loss on disposal of assets, and non-recurring costs related to our response to the COVID-19 outbreak which are incremental to and separable from normal operations. Adjusted EBITDA is not intended to represent cash flows from operations or net income as defined by
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 business performance. Management believes Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization which vary substantially from company to company depending on capital structure, the method by which assets were acquired and depreciation policies. Further, the exclusion of certain non-cash items, other non-operating income or expense items and other items not otherwise predictive or indicative of ongoing operating performance enables comparability to prior period performance and trend analysis.
Distributable Cash Flow is defined as Adjusted EBITDA adjusted for taxes, maintenance capital expenditures, interest expense net of capitalized interest, interest income, and changes in the fair value and non-recurring settlement of interest rate derivatives.
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 unit distributions, unit repurchases, retirement of debt, or expansion capital expenditures. Management uses this measure and believes it provides users of our financial statements a useful measure reflective of our business’s ability to generate cash earnings to supplement the comparable GAAP measure. Distributable Cash Flow is not intended to represent cash flows from operations or net income (loss) as defined by
Adjusted EBITDA
The following table reconciles our Adjusted EBITDA to
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||||||
Net income (loss) |
$ |
(67 |
) |
|
$ |
110 |
|
|
$ |
774 |
|
|
$ |
727 |
|
Interest expense, net of capitalized interest |
221 |
|
|
231 |
|
|
691 |
|
|
648 |
|
||||
Loss on modification or extinguishment of debt |
— |
|
|
13 |
|
|
43 |
|
|
13 |
|
||||
Other income, net |
(2 |
) |
|
(8 |
) |
|
(8 |
) |
|
(24 |
) |
||||
Income from operations |
$ |
152 |
|
|
$ |
346 |
|
|
$ |
1,500 |
|
|
$ |
1,364 |
|
Adjustments to reconcile income from operations to Adjusted EBITDA: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization expense |
137 |
|
|
138 |
|
|
413 |
|
|
390 |
|
||||
Loss (gain) from changes in fair value of commodity derivatives, net |
62 |
|
|
58 |
|
|
36 |
|
|
(19 |
) |
||||
Impairment expense and loss on disposal of assets |
— |
|
|
1 |
|
|
5 |
|
|
6 |
|
||||
Incremental costs associated with COVID-19 response |
1 |
|
|
— |
|
|
36 |
|
|
— |
|
||||
Adjusted EBITDA |
$ |
352 |
|
|
$ |
543 |
|
|
$ |
1,990 |
|
|
$ |
1,741 |
|
We have not made any forecast of net income on a run rate basis, which would be the most directly comparable financial measure under GAAP, in part because net income includes the impact of derivative transactions, which cannot be determined at this time, and we are unable to reconcile differences between run rate Distributable Cash Flow and income.
View source version on businesswire.com: https://www.businesswire.com/news/home/20201106005065/en/
Investors
or
Media Relations
Source:
Cheniere Energy Partners, L.P.
Investors
Randy Bhatia, 713-375-5479
Megan Light, 713-375-5492
or
Media Relations
Eben Burnham-Snyder, 713-375-5764
Jenna Palfrey, 713-375-5491