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

(in billions)

Three Months Ended

March 31, 2023

Revenues

$7.3

Net Income1

$5.4

Consolidated Adjusted EBITDA2

$3.6

Distributable Cash Flow2

$2.9

2023 FULL YEAR FINANCIAL GUIDANCE

(in billions)

2023

Consolidated Adjusted EBITDA2

$8.2

$8.7

Distributable Cash Flow2

$5.7

$6.2

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.
___________________________

1

Net income (loss) as used herein refers to Net income (loss) attributable to common stockholders on our Consolidated Statements of Operations.

2

Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for further details.

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

(in millions, except LNG data)

Three Months Ended March 31,

2023

2022

% Change

Revenues

$

7,310

$

7,484

(2

)%

Net income (loss)1

$

5,434

$

(865

)

nm

Consolidated Adjusted EBITDA2

$

3,599

$

3,153

14

%

LNG exported:

Number of cargoes

167

160

4

%

Volumes (TBtu)

603

584

3

%

LNG volumes loaded (TBtu)

602

585

3

%

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:

CCL Stage 3 Project

Project Status

Under Construction

Project Completion Percentage

28.7%(1)

Expected Substantial Completion

2H 2025 – 1H 2027

(1) Engineering 49.5% complete, procurement 41.8% complete, subcontract work 37.1% complete and construction 3.4% complete.

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:

Three Months Ended

March 31, 2023

(in TBtu)

Operational

Volumes loaded during the current period

602

Volumes loaded during the prior period but recognized during the current period

56

Less: volumes loaded during the current period and in transit at the end of the period

(39

)

Total volumes recognized in the current period

619

Cheniere Energy, Inc.

Consolidated Statements of Operations

(in millions, except per share data)(1)

(unaudited)

Three Months Ended

March 31,

2023

2022

Revenues

LNG revenues

$

7,091

$

7,340

Regasification revenues

34

68

Other revenues

185

76

Total revenues

7,310

7,484

Operating costs and expenses (recovery)

Cost (recovery) of sales (excluding items shown separately below) (2)

(1,539

)

7,336

Operating and maintenance expense

444

389

Selling, general and administrative expense

107

96

Depreciation and amortization expense

297

271

Development expense

10

5

Total operating costs and expenses (recovery)

(681

)

8,097

Income (loss) from operations

7,991

(613

)

Other income (expense)

Interest expense, net of capitalized interest

(297

)

(349

)

Gain (loss) on modification or extinguishment of debt

20

(18

)

Interest rate derivative gain, net

3

Other income, net

37

5

Total other expense

(240

)

(359

)

Income (loss) before income taxes and non-controlling interest

7,751

(972

)

Less: income tax provision (benefit)

1,316

(191

)

Net income (loss)

6,435

(781

)

Less: net income attributable to non-controlling interest

1,001

84

Net income (loss) attributable to common stockholders

$

5,434

$

(865

)

Net income (loss) per share attributable to common stockholders—basic (3)

$

22.28

$

(3.41

)

Net income (loss) per share attributable to common stockholders—diluted (3)

$

22.10

$

(3.41

)

Weighted average number of common shares outstanding—basic

243.9

254.0

Weighted average number of common shares outstanding—diluted

245.8

254.0

___________________________

(1)

Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the Securities and Exchange Commission.

(2)

Cost of Sales includes approximately $4.7 billion of gains from changes in the fair value of commodity derivatives prior to contractual delivery or termination during the three months ended March 31, 2023 as compared to $3.4 billion of losses in the corresponding 2022 period.

(3)

Earnings per share in the table may not recalculate exactly due to rounding because it is calculated based on whole numbers, not the rounded numbers presented.

Cheniere Energy, Inc.

Consolidated Balance Sheets

(in millions, except share data)(1)(2)

March 31,

December 31,

2023

2022

ASSETS

(unaudited)

Current assets

Cash and cash equivalents

$

2,948

$

1,353

Restricted cash and cash equivalents

495

1,134

Trade and other receivables, net of current expected credit losses

929

1,944

Inventory

465

826

Current derivative assets

78

120

Margin deposits

63

134

Other current assets

70

97

Total current assets

5,048

5,608

Property, plant and equipment, net of accumulated depreciation

31,747

31,528

Operating lease assets

2,553

2,625

Derivative assets

200

35

Goodwill

77

77

Deferred tax assets

35

864

Other non-current assets, net

605

529

Total assets

$

40,265

$

41,266

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

Accounts payable

$

93

$

124

Accrued liabilities

1,328

2,679

Current debt, net of discount and debt issuance costs

61

813

Deferred revenue

108

234

Current operating lease liabilities

604

616

Current derivative liabilities

1,292

2,301

Other current liabilities

40

28

Total current liabilities

3,526

6,795

Long-term debt, net of premium, discount and debt issuance costs

23,928

24,055

Operating lease liabilities

1,919

1,971

Finance lease liabilities

487

494

Derivative liabilities

4,407

7,947

Deferred tax liabilities

388

Other non-current liabilities

170

175

Stockholders’ equity (deficit)

Preferred stock: $0.0001 par value, 5.0 million shares authorized, none issued

Common stock: $0.003 par value, 480.0 million shares authorized; 277.7 million shares and 276.7 million shares issued at March 31, 2023 and December 31, 2022, respectively

1

1

Treasury stock: 34.5 million shares and 31.2 million shares at March 31, 2023 and December 31, 2022, respectively, at cost

(2,821

)

(2,342

)

Additional paid-in-capital

4,328

4,314

Accumulated income (deficit)

394

(4,942

)

Total Cheniere stockholders’ equity (deficit)

1,902

(2,969

)

Non-controlling interest

3,538

2,798

Total stockholders’ equity (deficit)

5,440

(171

)

Total liabilities and stockholders’ equity (deficit)

$

40,265

$

41,266

___________________________

(1)

Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the Securities and Exchange Commission.

(2)

Amounts presented include balances held by our consolidated variable interest entity, Cheniere Partners. As of March 31, 2023, total assets and liabilities of Cheniere Partners, which are included in our Consolidated Balance Sheets, were $18.4 billion and $19.7 billion, respectively, including $0.8 billion of cash and cash equivalents and $0.2 billion of restricted cash and cash equivalents.

Reconciliation of Non-GAAP Measures

Regulation G Reconciliations

Consolidated Adjusted EBITDA

The following table reconciles our Consolidated Adjusted EBITDA to U.S. GAAP results for the three months ended March 31, 2023 and 2022 (in millions):

Three Months Ended March 31,

2023

2022

Net income (loss) attributable to common stockholders

$

5,434

$

(865

)

Net income attributable to non-controlling interest

1,001

84

Income tax provision (benefit)

1,316

(191

)

Interest expense, net of capitalized interest

297

349

Loss (gain) on modification or extinguishment of debt

(20

)

18

Interest rate derivative gain, net

(3

)

Other income, net

(37

)

(5

)

Income (loss) from operations

$

7,991

$

(613

)

Adjustments to reconcile loss from operations to Consolidated Adjusted EBITDA:

Depreciation and amortization expense

297

271

Loss (gain) from changes in fair value of commodity and FX derivatives, net (1)

(4,731

)

3,458

Total non-cash compensation expense

42

37

Consolidated Adjusted EBITDA

$

3,599

$

3,153

___________________________

(1)

Change in fair value of commodity and FX derivatives prior to contractual delivery or termination

Consolidated Adjusted EBITDA is commonly used as a supplemental financial measure by our management and external users of our Consolidated Financial Statements to assess the financial performance of our assets without regard to financing methods, capital structures, or historical cost basis. Consolidated Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) as defined by U.S. GAAP and is not necessarily comparable to similarly titled measures reported by other companies.

We believe Consolidated Adjusted EBITDA provides relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operating performance in a manner that is consistent with management’s evaluation of financial and operating performance.

Consolidated Adjusted EBITDA is calculated by taking net income (loss) attributable to common stockholders before net income (loss) attributable to non-controlling interest, interest expense, net of capitalized interest, changes in the fair value and settlement of our interest rate derivatives, taxes, depreciation and amortization, and adjusting for the effects of certain non-cash items, other non-operating income or expense items, and other items not otherwise predictive or indicative of ongoing operating performance, including the effects of modification or extinguishment of debt, impairment expense and loss on disposal of assets, changes in the fair value of our commodity and FX derivatives prior to contractual delivery or termination, and non-cash compensation expense. The change in fair value of commodity and FX derivatives is considered in determining Consolidated Adjusted EBITDA given that the timing of recognizing gains and losses on these derivative contracts differs from the recognition of the related item economically hedged.

Contacts

Investors
Randy Bhatia, 713-375-5479

Frances Smith, 713-375-5753

Media Relations
Eben Burnham-Snyder, 713-375-5764

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