With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

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The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

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The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

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F500-2021-328-Cheniere Energy

Producing a specialized liquid form of natural gas, the company became the first U.S.-based company to export liquefied natural gas in 2016.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-329-Cheniere-Energy

Headquartered in Houston, Cheniere is one of the leading producers of liquefied natural gas in the U.S.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

Key Financials (last Fiscal Year)

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Cheniere Energy is the largest producer of liquefied natural gas in the U.S. and the second-largest LNG operator in the world. The company buys natural gas, processes it into LNG, and then sells it. The company also owns and operates the Sabine Pass LNG terminal in Cameron Parish, La., and the Corpus Christi LNG terminal in south Texas, as well as key pipelines. Cheniere’s LNG has reached more than 40 markets in five continents.

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Q4 2024

Q3 2024

Cheniere Energy (LNG): Company Profile, Stock Price, News, Rankings

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Cheniere Energy

cheniere energy

Good day, and welcome to the Cheniere Energy Third Quarter 2024 Earnings Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Randy Bhatia, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Cheniere's Q3 2024 earnings conference call. The slide presentation and access to the webcast for today's call are available at cheniere.com. Joining me this morning are Jack Fusco, Cheniere's President and CEO Anatol Fagan, Executive Vice President and Chief Commercial Officer and Zach Davis, Executive Vice President and CFO. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward looking statements and actual results could differ materially from what is described in these statements.

Slide 2 of our presentation contains a discussion of those forward looking statements and associated risks. In addition, we may include references to certain non GAAP financial measures such as consolidated adjusted EBITDA and distributable cash flow. A reconciliation of these measures to the most comparable GAAP measure can be found in the appendix to the slide presentation. As part of our discussion of Cheniere's results, today's call may also include selected financial information and results for Cheniere Energy Partners LP or CQP. We do not intend to cover CQP's results separately from those of Cheniere Energy Inc.

The call agenda is shown on Slide 3. Jack will begin with operating and financial highlights, Anatol will then provide an update on the LNG market, and Zach will review our financial results, increased 2024 guidance and initial outlook for 2025. After prepared remarks, we will open the call for Q and A. I'll now turn the call over to Jack Fusco, Cheniere's President and CEO.

Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review our outstanding Q3 results, which reflect excellent performance and success achieved across the entire Cheniere platform. Before we get into the quarterly results and our full year guidance increase, I wanted to spend a brief moment addressing the U. S.

Presidential election taking place next week. The election is an important time for our country as we are reminded of the freedom we are afforded as Americans to choose our President every 4 years. I encourage all of my Cheniere colleagues in the U. S. To exercise the right to vote in order to have their voices heard.

As expected, emotions are running high given we're so proximate to Election Day. But no matter the outcome, in a few months' time, upon an operation day, this country will have a new President and a new administration. At Cheniere, we look forward to working with the next President since issues and policies impacting energy security and availability are so critical to economic interest worldwide. As I mentioned on our August call, we believe our business to be bipartisan. Across multiple administrations spanning the political spectrum, Cheniere has successfully permitted, commercialized, built and operated our platform.

We fully expect that to remain the case for decades to come. We maintain a significant presence and have excellent bipartisan engagement in Washington as well as the state and local level with elected and appointed officials given our business is heavily regulated and is a major source of direct and indirect economic output. I look forward to furthering the engagement in DC with the new administration in order to ensure our voice is heard on important policy matters that can affect our business both here and abroad. Cheniere's assets and overall platform last for many decades to come and our objective is to ensure not only our customers and stakeholders, but our country and our allies can realize the full benefits of Cheniere's business, well beyond the outcome of any single election. Please turn to Slide 5, where I'll highlight our key accomplishments for the quarter and introduce our increased guidance ranges for 2024.

In the Q3, we generated consolidated adjusted EBITDA of approximately $1,500,000,000 distributable cash flow of approximately $820,000,000 and net income of approximately $900,000,000 These excellent financial results are once again thanks to our company wide commitment to operational excellence. During the Q3, we continue to execute on our comprehensive capital allocation plan, which is designed to provide investors with cash flow visibility, disciplined capital management and long term value creation. We repurchased another nearly $300,000,000 of stock during the quarter, bringing the year to date total to approximately $2,000,000,000 During the quarter, we also paid down $150,000,000 of debt at Sabine Pass and we funded approximately $500,000,000 of CapEx mainly related to Stage 3. We also increased our 3rd quarter dividend by 15% to $2 per share annualized. During the quarter, we produced and exported 158 LNG cargoes from our facilities, which was highlighted by the production and export of 1,000 LNG Cargo from Corpus Christi.

I would like to recognize the operational and leadership team and everyone at Corpus Christi for the achievement of this major milestone and for further reinforcing Cheniere's globally recognized reputation as a safe and reliable operator. Bechtel continues construction execution on Corpus Christi Stage 3 on budget and on accelerated schedule. As of September 30, the Stage 3 project had reached approximately 68% complete. Pre commissioning activities continue on Train 1 with nearly half the required systems turned over to commissioning and start up teams who are beginning to place those systems into service. We expect the introduction of 1st gas into Train 1 to occur in the coming weeks.

First gas is an important execution milestone. And from a timing perspective, with that milestone occurring soon, it is consistent with the reduction of first LNG by the end of the year. We are fortunate this year to avoid any impact from hurricanes on operations or construction activities at both Semine Pass and Corpus Christi. As a result, our target of achieving 1st LNG production from Train 1 at Stage 3 by the end of the year remains within reach and substantial completion in early 2025, well ahead of the guaranteed schedule. We continue to expect to have 3 trains from Stage 3 achieve substantial completion during 2025.

Zach will cover the numbers in detail, but we expect to have more open volumes in 2025 than we did in 2024, driven primarily by the substantial completion of those trains, and that reinforces our expectations that 2024 should be an inflection point for EBITDA and financial growth should resume in 2025 as those assets begin operations. Looking to the balance of 2024 today, we're raising and tightening the ranges of our full year guidance to $6,000,000,000 to $6,300,000,000 in consolidated adjusted EBITDA and $3,400,000,000 to $3,700,000,000 of distributable cash flow. The guidance increase is primarily driven by better than expected production and incremental margin along with portfolio optimization activities upstream and downstream of our facility. On the previous call, we discussed a slightly improved production forecast as a result of our maintenance execution during the Q2, and we are seeing that forecast production materialize. Even accounting for the increased volume in the forecast, we continue to have an immaterial amount of unsold volume remaining for the balance of the year as the team has been opportunistically selling our open capacity this fall.

Jack will have more to say on the guidance increases in his remarks in a few minutes. Please turn to Slide 6, we'll update you on important development related to our environmental stewardship. I hope you saw that yesterday we announced the establishment of a voluntary Scope 1 methane emissions intensity target for our liquefaction assets. The target calls for Cheniere to consistently maintain a Scope 1 annual measured methane emissions intensity of 0.03% per ton of LNG produced across Sabine Pass and Corpus Christi by 2027. The establishment of the methane target represents the latest milestone in Cheniere's climate strategy, which is built upon our principles of transparency, science, supply chain and operational excellence.

Our measurement informed methane target of 0.03%

is about 1 tenth of the hypothetical emissions intensity utilized in some recent publicized papers estimating lifecycle LNG emissions.

This rigorous target reflects our commitment to leverage our data driven efforts to improve emissions performance across our operations and is consistent with the requirements of gold standard certification within the UN Environmental Programme Oil and Gas Methane Partnership 2.0, which Cheniere joined in 2022. The methane target we have set is a culmination of significant work completed by our team and a series of technology providers in leading academic institutions. We are able to establish this target thanks to the collaborative work we've done through the programs I've spoken about on previous calls, especially our quantification, monitoring, reporting and verification or QMRV programs. The target builds upon and complements our QMRV program and other climate related outputs such as our cargo emission tags and our recently updated and peer reviewed life cycle assessment. The QMRV efforts, which have been underway for nearly 2 years and remain ongoing involve multi scale measurement activities to develop a measurement informed inventory of emissions data and that data informs the process of establishing the methane target.

Included into the data set for our methane target, for example, are readings from approximately 50 aerial emissions measurements of our operations at our facilities over a period of more than a year. Utilizing actual operational data and not simply emissions factors or outdated estimates provides a robust credible foundation that stakeholders can trust and against which our performance can be measured. Cheniere's approach to environmental performance and stewardship has always been scientific, transparent and methodical, not reactionary or aspirational. And we are pleased to see our strategy and efforts be recognized by ratings providers. During the quarter, MSCI upgraded Cheniere's ESG rating to AAA, the highest score possible.

With the upgrades specifically citing improvements in climate management reporting and greenhouse gas intensity performance. We'll continue to pursue our strategy guided by the same climate and sustainable principles that have helped lead us to the significant achievements we have accomplished to date. With that, I'll now hand it over to Anatol to discuss the LNG market. Thank you all again for your continued support of Cheniere.

Thanks, Jack, and good morning, everyone. Please turn to Slide 8. Over the last year, we've seen very limited LNG supply growth year over year with September being an exception. Global LNG imports increased 33,600,000 tons in the month, up more than 9% versus 23%. This was largely due to lower levels of planned and unplanned supply outages this year compared to last rather than true capacity driven supply growth and the impact on the market was muted.

The perceived underlying market tightness continued to support spot price levels, which continue to climb during the quarter despite healthy storage inventories and relatively soft near term market dynamics in Europe. September TTF contract settled at $12.54 in MMBtu, up from $11.48 last year and $10.84 in July. Similarly, JKM settled September at 12.78, dollars up from $11.21 last year and $12.14 in July. The run up in month ahead prices was supported by escalating geopolitical risks, various supply outages, strong demand outside of Europe as well as some cooler weather forecasts within Europe. In the U.

S, Henry Hub settled September at $1.93 nearly flat relative to August, but lower than July settlement of $2.63 an MMBtu despite various price driven production cuts. Strong demand in Asia kept JKM at a premium TTTF during the quarter and throughout most of the year. As shown on the top right, this spread led to an over 18,000,000 ton shift in LNG flows from Europe to Asia for the 1st 9 months of the year. However, this premium has narrowed substantially since the end of September due to cooler weather in Europe, residual Norwegian maintenance and an increasing geopolitical risk premium. I'll address the regional dynamics in more detail in the next slide.

As noted, LNG imports into Asia continued to grow in nearly all markets with 3rd quarter receipts increasing 10% year on year. The JKT and China market areas combined contributed nearly 70% of the region's total 6,300,000 tons year on year increase during the quarter. Long stretches of heat in Japan, South Korea and parts of China coupled with the need to fill storage ahead of the upcoming winter season continued to lift gas demand. Notably, China's imports in September surpassed 7,000,000 tons, an increase of 32% year on year as 2 new regas terminal started operations and new storage capacity further supported demand. Taiwan's demand increased by 12% year on year during the quarter as the country shut down 1 reactor at a 9 50 megawatt nuclear plant in July.

The country's last reactor is scheduled to be shut down in May next year, which we expect will continue to expand the country's gas fired power demand. During the quarter, Thailand registered a slight decline in imports, primarily due to a boost in domestic gas production. While this renewed production should temporarily offset some of the broader declines in domestic gas production, we expect little to no impact on the country's call for LNG longer term. As mentioned earlier, Asia's growing imports came at the expense of Europe, where imports were generally flat during the quarter and are down over 20% on the year. European gas fundamentals have remained steady in recent months with lower power demand and improving but still tepid industrial consumption.

However, after a series of mild winters resulting in some demand destruction in the heating sector, some cooler temperatures in September across the region tightened the market, which has been amplified by increased geopolitical risks. European storage levels remained healthy at 95% as of mid October, but price risk is skewed to the upside. All eyes are now focused on anticipated storage levels exiting winter in early 2025, especially with limited support from Ukraine storage, which remains about 30% below last year's levels. Further reductions are expected in Russian flows, potential LNG supply disruptions from further outages or geopolitical escalations, along with continued LNG pull from Egypt could lead to sustain higher European premiums in order to attract flexible cargoes, particularly if we revert to normal weather temperatures in the region this year. Additionally, it's important to also acknowledge the increased competition for LNG cargoes from rising demand in regions outside of Europe and Asia.

Low hydropower output in Brazil along with a strong pull from the MENA region supported Atlantic demand and tightened the JKM TTF spread during the quarter. LNG imports into the MENA region rose 57% year on year during the quarter largely due to Egypt, which relied on the spot market to help alleviate rapidly declining domestic production. In addition to imports via Jordan's Aqaba terminal, Egypt imported approximately 20 cargoes during the Q3 and another 20 cargoes are expected to be delivered by year end. In the absence of any immediate relief from new LNG supply, these dynamics should continue to highlight the delicate balance of the global gas market, further supporting the upside price risk I mentioned earlier. Let's move to the next slide to further develop this point.

We've noted for several quarters now how the LNG market remains precariously balanced, sensitive to any signs of potential disruption in supply or demand. From geopolitical tensions to rapid shifts and market balances driven by extraneous elements such as weather, domestic gas production levels or the changes in the price or availability of competing fuels all underscore the criticality of adequate, reliable and flexible LNG supplies in the global energy mix. In recent weeks, escalating geopolitical tensions have triggered renewed concerns about supply reliability and adequacy amidst that precarious balance. These events have already affected the European gas and LNG markets playing critical role in elevating prices and market uncertainty. Over the past 3 years, we've witnessed how geopolitics continue to have a significant impact on commodities, specifically impacting European gas infrastructure, pipe gas contracts, flows and transit routes, which has driven higher absolute price levels as well as prolonged elevated market volatility.

Today, Europe's winter gas balances remain vulnerable as further cuts in Russian pipeline gas flows seem likely if the transit agreement through Ukraine is not renewed. The developments in the Middle East raised concerns about upstream and midstream gas infrastructure that could impact Egypt's gas supply security, potentially constraining global LNG market balances. Meanwhile, continued delays from projects under development prevent immediate material relief in the prompt. Global liquefaction utilization has been pushed beyond seasonal norms to produce incremental volumes, but there is limited additional running room and demand continues to be rationed. The lack of spare capacity means that the system remains particularly vulnerable to any unplanned outages and risks to flow interruptions, be they operational, geopolitical or otherwise.

To mitigate against these adverse impacts, we see long term contracting and the related supply growth underpinned by these agreements as 2 key pillars for a more resilient, robust and stable market. In the past few years, we've seen an increase in longer term contracts, some in excess of 20 years, which support the development of much needed new capacity. Global supply growth and flexibility as well as affordable stable long term contracts are key to enable energy security and affordability and to help insulate consumers worldwide from future energy crises like we saw in 2022. And aligned with the establishment of our methane target, we must also highlight the clear environmental advantages of LNG and the critical role it is set to play in global decarbonization. As developed and developing economies alike look to increase LNG and natural gas as a component of primary energy supply, Cheniere's leadership role in environmental stewardship will only further separate us from the competition and enable us to continue developing and executing projects which deliver significant value to our shareholders.

With that, I'll now turn the call over to Zack to review our financial results and guidance.

Thanks Anatol and good morning everyone. I'm pleased to be here today to review our Q3 2024 results, key financial accomplishments, our increased and tightened 2024 guidance and our current outlook for 2025. Turn to Slide 12. For the Q3 2024, we generated net income of approximately $900,000,000 consolidated adjusted EBITDA of approximately $1,500,000,000 and distributable cash flow of approximately $820,000,000 With these 3rd quarter results, we have now reported positive net income on a quarterly and cumulative trailing 4 quarter basis, 8 quarters in a row. Compared to last year, our Q3 2024 results reflect a higher proportion of our LNG being sold under long term contracts as well as the continued moderation of international gas prices.

These impacts were partially offset by higher volumes of LNG delivered from our 2 sites during the quarter. Similarly, compared to the Q2 of this year, our production was higher due to most of the planned maintenance at both sites occurring in June. During the Q3, we recognized in income 5.63 TBtu of physical LNG, which included 5.60 TBtu from our projects and 3 TBtu sourced from 3rd parties. Approximately 97% of our LNG volumes recognized in the quarter were sold in relation to term SBA or IPM agreements. Our strong financial results continue to support meaningful progress on our 2020 vision, capital allocation plan with another $1,000,000,000 deployed in the Q3 towards shareholder returns, accretive growth and balance sheet management.

As of the Q3, we've allocated over $12,000,000,000 of our $20,000,000,000 plus target as we continue to reduce our share count and enhance our capital returns, while retaining financial flexibility to fund accretive growth across our platform, all of which should position us to generate over $20 per share of run rate distributable cash flow for our shareholders later this decade. During the Q3, we repurchased approximately 1,600,000 shares for approximately $282,000,000 Through the 1st 9 months of the year, we've deployed approximately $2,000,000,000 into our shares and reduced our share count by over 12,000,000 shares. We have now repurchased approximately 10% of our outstanding shares since announcing our 2020 vision plan in September 2022, reducing our shares outstanding from approximately $250,000,000 to under $225,000,000 today in the queue. At this point, we are over halfway to our mid term goal of 200,000,000 shares. A foundational strategy of the plan is to enable us to buy back more shares when the stock underperforms on an absolute and relative basis and the year to date results demonstrate the power of the plan's design.

We are committed to further reducing our total shares outstanding as we completed the previous $4,000,000,000 share repurchase authorization this month and are currently starting to work through our additional $4,000,000,000 share repurchase authorization through 2027. As previously announced with our June capital allocation update, we increased our 3rd quarter dividend by approximately 15% to $2 annualized and intend to follow through with our guidance of growing our dividend by approximately 10% annually through the end of this decade. This goal should trend us closer to a payout ratio of approximately 20% over time, which will enable us to retain the financial flexibility essential to our comprehensive and balanced long term capital allocation plan and disciplined growth objectives. Moving to the balance sheet. During the quarter, we repaid $150,000,000 of outstanding principal of the SPL 2025 notes with cash on hand.

We plan to repay the remaining $650,000,000 outstanding principal of these notes with cash on hand ahead of its March 2025 maturity as we focus our debt pay down within CQP in preparation for financing the SBL expansion project. After repaying the remaining SBL 2025s, we will not have any debt maturing anywhere in the Cheniere complex until the middle of 2026. The rating agencies continue to recognize our progress on the balance sheet. Last week, S and P upwardly revised the ratings outlook at Corpus Christi Holdings or CCH to positive. And as noted on our last call, we received our 22nd credit rating upgrade in the Q3 when Fitch upgraded CCH to BBB plus The continued recognition from the rating agencies is a testament to our team strategically managing our balance sheet and with regard to these rating agency actions in particular reflects the progress achieved on our Stage 3 projects.

Speaking of Stage 3, during the quarter, we funded approximately $400,000,000 of CapEx on Stage 3, bringing total spend on the project to over $4,300,000,000 With approximately $3,000,000,000 in consolidated cash and over $10,000,000,000 of overall liquidity throughout the Cheniere complex, we expect to continue equity funding the Stage 3 CapEx while also remaining active on our buyback program as we continue to manage down our cash balances before utilizing the undrawn 3,000,000,000 dollars CCH term loan, which we expect to eventually draw in 2025. Turn now to Slide 13, where I will discuss our updated 2024 guidance and initial outlook for 2025. Today, we are raising and tightening our full year 2024 guidance ranges to $6,000,000,000 to $6,300,000,000 in consolidated adjusted EBITDA and $3,400,000,000 to $3,700,000,000 in distributable cash flow, a $250,000,000 increase to the midpoint as well as tightening of the ranges from $400,000,000 to $300,000,000 or less than 5% of the midpoint of guidance. Our increased guidance is close to equally attributable to optimization activities completed upstream and downstream of our facilities since the last call as well as slightly higher production and margins than previously forecast during the quarter and into 4Q. We were also able to tighten the ranges another $100,000,000 as we are effectively sold out for the balance of this year, reducing the amount of variability in our forecast in our most contracted year to date.

That being said, our guidance continues to reflect only contributions from completed or locked in portfolio optimization activities as we do not forecast potential contributions from future optimization opportunities, albeit likely more limited this late in the year. And of course, our results could be impacted by the timing of certain cargoes around year end. As noted on prior calls, our DCF could be affected by changes in the tax code, particularly as it relates to the alternative minimum tax and the treatment of certain tax positions related to our unrealized derivatives. These changes could impact the timing and amount of our cash tax payments this year and going forward, but should be immaterial on an NPV basis and not impact our ability to generate over $20,000,000,000 of available cash through 2026. And while we do not forecast any contribution to revenues or EBITDA from Stage 3 volumes this year, we continue to target 1st LNG from Train 1 by year end.

Based on the progress achieved to date, we forecast Train 1 to achieve substantial completion at the end of Q1 or early Q2 next year and Trains 23 to achieve substantial completion in the second half of the year. With this assumption, we expect to produce approximately 47,000,000 to 48,000,000 tons of LNG in total across our two sites next year, inclusive of forecast Stage 3 volumes and a major maintenance plan at Sabine Pass next year. Those step change from our 45,000,000 ton run rate across our existing 9 trains in operations, the variability is based on uncertainty around specific Stage 3 commissioning and ramp up schedules as well as year end timing. Of that 47,000,000 to 48,000,000 tons of production, we forecast over 46,000,000 to over 47,000,000 tons of volume after commissioning, supporting 2025 EBITDA. After accounting for the approximately 43,000,000 tons of long term contracts already in place, we expect to have over 3,000,000 to over 4,000,000 tons of spot volume available for CMI.

The team has been active opportunistically selling some of that 2025 spot volume since our last call And we currently forecast approximately 2,000,000 to 3,000,000 tons or approximately 100,000,000 to 150 TBtu of unsold open capacity in 2025. We therefore also forecast that a $1 change in market margin would impact EBITDA by approximately $100,000,000 to $150,000,000 for the full year. Consistent with previous practice, we intend to provide official 2025 financial guidance on our February call. Looking at curves today, netbacks are averaging around $7 to $8 in 2025. So the timing of our Stage 3 trains coming online and the resulting incremental marketing volumes could drive significant variability in our expected earnings for 2025 as we grow beyond our 9 train platform.

As a reminder, the Stage 3 trains are being built with a design and technology that is new to us. So the length and extent of the commissioning process is somewhat uncertain. As the initial train start commissioning, we will gain a better sense on the specific timing of these new volumes and their contribution to our financial results next year. As with the commissioning of our first nine trains, we hope to improve the commissioning process for each subsequent train by deploying lessons learned. We expect the remaining 4 mid scale trains to reach substantial completion in 2026, at which point we have several million tons of new long term contracts starting in 20262027, keeping our platform over 90% contracted with investment grade counterparties and take or pay style cash flows and averaging approximately 95% contracted through the mid-twenty 30s.

Earlier this year, I described 2024 as likely a trough year for EBITDA as all of our long term contracts supporting the 9 train platform had commenced and international gas prices began to moderate despite spot margins remaining very healthy this year, averaging $8 As Jack mentioned, we still expect this to be the case as Stage 3 volumes start to hit our P and L in 2025. We remain proud of our team's unrelenting efforts to unlock additional value to support financial metrics well above our 9 train run rate guidance this year. Looking ahead to 2025 and beyond, we will continue to leverage the vast competitive advantages afforded by our leading brownfield infrastructure platform in order to enhance the long term value delivered to shareholders and to continue to supply our customers flexible, reliable and cleaner burning LNG. That concludes our prepared remarks. Thank you for your time and your interest in Cheniere.

Operator, we are ready to open the line for questions.

Thank We will now begin the question and answer

And our first question is coming from Jeremy Tonet with JPMorgan.

Thanks for all the color today. Very helpful. I was just wondering a bit on the commissioning process right now. As it stands right now, if you froze where the futures are, where the spread is for LNG, those commissioning cargoes, what would be the potential scale of reduction in cost for the project? Could you help us kind of think through that?

Hey, Jeremy, it's Zach. I'd start first with the guidance of 47,000,000 to 48,000,000 tons of total production including commissioning. And then we then I mentioned that we're over 46,000,000 to over 47,000,000 tons of basically P and L production in 2025. So it's around 1,000,000 tons, a little less than that in the guidance right now that is commissioning, that's not supporting EBITDA and will offset CapEx. Because Stage 3 is combined with Trains 1, 2, 3, those volumes in terms of the margins on those commissioning volumes will be a mix of spot volumes and contracted volumes.

And that's accounted for when we talk about spot volumes in the P and L for CMI to sell of over 3,000,000 to over 4,000,000 tons. But as you think about around 1,000,000 tons or 50 TBTU, we're talking about 100 of 1,000,000 of dollars that will help offset CapEx and just be another funding source for us in the coming year.

Got it. Very helpful there. 100 of 1,000,000 of dollars. Thank you. And then just want to, I guess, come back to the SPL expansion and kind of commercialization efforts at this point.

With the FDA authorization, how does that, I guess, impact discussions that you're having with customers right now? And I guess, what's your outlook for that project? And how contracted are you looking for at this point?

Hey, Jeremy, it's Anatol. Good morning. So as you know, we've got order of magnitude 10,000,000 tons. There are 3 counterparties for mid scale 8, 9 and then the balance for Train 7 and we started on Train 8 at SPL. We're taking our time now as we kind of optimize and figure out what the best path is for our brownfield advantages and we're really pursuing these efforts with certain select counterparties and being very judicious at how we move that project forward as we figure out the best way to get the right balance of economics returns and contractual support.

But ultimately, it's not going to be very different from our 90% plus contracted 7 times CapEx to EBITDA target as we navigate that. And as you've heard Zach mentioned on previous calls, it will probably be a phased approach. So we're in very good shape. We've got great engagement, obviously, as the world thinks through all of these challenges and as we continue to deliver now over 3,700 cargoes from our 2 facilities without missing a beat, we're in a very good position on our commercial engagements.

Got it. Very helpful. Thank you for that.

And next question is coming from the line of Theresa Chen with Barclays.

Good morning. Thank you for taking my questions. Maybe first on the commercial front, as a follow-up to Jeremy's question. Just as your competing projects in the U. S.

Gulf Coast have seemingly continued to face delays and other challenges, while Stage 3 remains on time on budget. How has this influenced or impacted your commercial discussions for the upcoming projects?

Teresa, thank you for the question. And I can tell you, we have a very strong relationship with Bechtel that we've built over the last decade that has allowed us to work very closely as a team to be sure that we deliver our projects on budget ahead of schedule and that the performance is guaranteed. Our reliability, the 1,000 cargoes at Corpus Christi, the 2,700 cargoes that we've produced at Sabine have made Anatol's job a little bit easier because we're finally being recognized as a very reliable, safe provider of LNG. And I'll let Anatol cover how those conversations have been going.

Yes. Thanks, Tricia. Thanks, Jack. The Anatol's job keeps getting easier and easier. What we announced earlier well, I guess last night about the methane target, we've been going down the path of these scientific kind of very process driven assessments of our own emissions profile and all of our QMRV efforts.

We've talked to you guys about how that's been recognized by our counterparties for the last couple of years, but things as transparent as establishing a methane target are another key component. So we've got the reliability, we've got as you pointed out and Jack mentioned the E and C, EPC execution, the reliability of our products and delivering projects on time, on budget and serving our customers with an ever cleaner product. So, yes, lots of tailwinds for Anatol's efforts.

Great. Thank you. And not trying to make Anatol's job harder, but I do have a follow-up on your comments related to the regas outlook in Asia. So related to your views on China's regas capacity coming online or Asia in general, where do you think we go from here? And do you think that any sort of cyclical softness over the near medium term could potentially decelerate this pace of expansions?

Is there any elasticity in that timeline?

Well, the expansion has been so rapid that just algorithmically I would not be shocked if the pace of growth slowed, but China is going to be a 250 +1000000 ton regas capacity market. We expect it to get to about 140,000,000 tons of imports over the next 5 to 7 years and the rest of Asia is going to continue to grow. I'm not a fan of summarizing kind of the environment as quote, India end quote. But if you look at Asia's growth overall, those two economies are responsible. Everything else is kind of rounds up and down to very little change and we expect them to continue to grow at very robust rates.

And one of the things that we talk about that I think would be very beneficial to the market over the medium term is to the extent the prices moderate as this new supply enters the market over the next 3 to 5 years, a number of gassy economies that have been really starved of product at these elevated price levels, we expect to reenter and to avail themselves of more gas. Unfortunately, they don't have the credit and the scale to have the kind of long term contracts that afford them the stable and reliable supply that we're touting here. But I don't see any cyclical slowdown or a moderation of growth rate for gas which has grown LNG actually has grown over 5% as a CAGR over the last decade and I think that will continue.

The next question is coming from Michael Blum with Wells Fargo.

Thanks. Good morning, everyone. Wanted to ask about the beat and raise from this quarter. Are these portfolio optimization initiatives and the higher production that drove the guidance increase in 2024. Is that sustainable as we look to 2025?

We would hope so, but we won't know until we see it show up in the actuals. We have a budget that we rigorously go through with the operations team and then we go through with the Board and we'll be in a position to give you a good range for next year in February in terms of financial guidance. But when it comes to optimization, we're the 2nd largest operator of LNG in the world. And we have a lot of ships that we charter and we buy a lot of gas in this country. So there should be opportunities.

But to say what the quantum is, that would be hard to define ahead of time. But in terms of the guidance increase this time, I'd say I'd split it 3 ways on the optimization side. Upstream of the plants, there were better basis differentials that we just couldn't have forecasted earlier on that were able to be captured. Then we were able to opportunity sub charter more of our length ahead of Stage 3 coming online for the rest of the year. And then with some of the positions we have all over the world and a few third party sourcing, we were able to optimize the portfolio downstream.

And together that was around $100 plus 1,000,000 added to the guidance. On the production side, honestly that would be hard to forecast ahead of time considering we had a relatively smooth hurricane season for Cheniere. The ambient temperatures were also lower and they were able to just outperform at both sites and honestly pick up from earlier in the year where production was slightly down. So that alone with $8,000,000 $9 margins for the rest of this year added another $100 plus 1,000,000 So hard to say, we can bake that in. And I would assume in a February guidance, we wouldn't be baking that in initially.

Okay, great. No, that's good color. Appreciate it. And then I was wondering if you can give us a sense of your assumptions on the timeline for the 3 Stage 3 trains that you expect to complete in 2025. And given your track record and Bechtel's track record, I mean, I realize this is a new technology, but do you think a 4th train could possibly be achieved in 2025?

Michael, this is Jack. As you know, I'm pushing the organization pretty hard right now on our construction efforts. We have today over 70 operators seconded to Bechtel that are commissioning and in startup mode. And I tend to be a glass half full kind of guy, but I think our guiding you to 3 trains would be enough for me to pop a bottle of champagne and celebrate. Four trains, I think would be a little much for us to accomplish as a team.

And I'm just being totally transparent and honest with you. But I'll turn it over to Zach and he can tell you what his assumptions are in his production model.

Sure. Just for a little more clarity, on the high end, if we're going to make it to 48,000,000 tons of production next year, you'd have to assume that trains 1, 2 and 3 reach substantial completion by the end of Q1, Q2 and Q3, respectively. And then on the lower end, where we're closer to 47, we have decent visibility on Train 1. So we're hopeful that can still come online in late Q1 or early Q2. But then it would be a little bit later in the second half of the year for Trains 23 to end up at the 47,000,000 ton level.

So ideally, we'll have a bit more of an understanding of how things are going by the next call. But even by the next call, we don't expect to have substantial completion of Event Train 1.

The next question is coming from Keith Stanley with Wolfe

Good morning. Good morning. First just curious on the 100 to 150 TBtu of open exposure. How comfortable would you be trying to hedge more of that ahead of the winter? Or do you prefer to keep that open just operationally until you have the Stage 3 trains starting to come online?

So this is Zach. I saw a few notes from folks this morning and I just want to make it clear. As you think about 2025, 1st and foremost, it's all about the CMI spot capacity. CMI spot capacity that we guided to is over 3000000 to over 4000000 tons. Since the call, we were able to be opportunistic and sell some of our 2025 Lynx and we sold over 1,000,000 tons in a market that was trading around $8 at the time for next year.

So that's locking in nicely around $500,000,000 for the company. That was mainly locking in production from the existing 9 trains, just because we have more clarity, more understanding of how those produce over time, whereas it would be very difficult for us to sell physically or even to sell hedge financially volumes that were are not as certain. So some of those will have to be closer to the date of loading than to be as proactive as we have been. With all that said, Q1 and Q4 will still be our biggest production quarters just with lower ambient temperatures and the fact that our major maintenance will happen in the summer. And then as you can imagine with the cadence of the trains coming online, at best there will be one train operating in Q2 and then ideally in second half of the year 2 more come online.

So Q2 is probably our lowest level of production for the year. So we might have more confidence going into next year or early next year to start selling at the latter part of the year as we have more production. But assume we're we sold quite a bit already considering it's only October still.

That all makes sense. Second question on just a markets question. What are your expectations for European demand into next year and over the medium term after a big drop in power driven demand in this year. I think you said you're seeing some stabilization in European demand?

Yes. Thanks, Keith. So the one big issue that will play out is how the last Bcf a day or so of pipe flows through Ukraine from Gazprom play out. The expectation our expectation market expectation is that that does not get renewed. So the delta in European gas demand is much smaller than that.

We're seeing good stabilization in the larger economies in terms of industrial power, as you pointed out, is a big swing factor if it is a robust wind period that has a couple of million ton impact on the overall demand. But structurally, the thing that has changed is that we don't see infrastructure being a constraint anymore, not just on the regas side, but also on pipeline and the ability to move gas intra Europe. And we think that natural gas demand and hence LNG demand for Europe is going to remain fairly stable through the middle of next decade. Then it's more of a question mark and we expect it to decline modestly. But we expect it to stay in this kind of 120,000,000, 130,000,000 ton market range for a number of years.

The next question is coming from Ben Nolan with Stifel.

Good morning, guys. So I wanted to ask maybe Anatol, if we could the you talk about much higher prices in LNG and all of the potential disruptions in the Middle East, Ukraine and elsewhere and people sort of hedging their bets and that leading to potentially more long term contracting. Although certainly for U. S. Operators and just generally globally, it doesn't seem like there's been a terrible amount of actual activity on the long term side.

Do you think maybe particularly to the U. S, do you think your customers are maybe just waiting until after the election or I guess I would have thought a little bit more activity given all the noise out there.

Thanks, Ben. I think as we've discussed in previous quarters, what we're going through now is a kind of post-twenty two-twenty twenty three fog of war period where 75,000,000 tons were executed and the market is figuring out that it's not that easy to execute these things, right, from a timing standpoint, from a regulatory, from an economic standpoint, commercial as well. So the market is thinking through how to react to that. You're absolutely right. There were only a handful of long term transactions.

Ours with Galp being 1 of 3, I think, 20 year deals in the quarter. So but that is I would say that's not a reflection of kind of market appetite for more. And I think you'll continue to see a very healthy market for projects that can be advanced economically and reliably. So you're right, we're going through a period of reevaluation by customers. And as Theresa said, against that backdrop, my job is very easy.

Got you. Okay. And then secondly for me is on the shipping side actually. There's been a pretty sharp decline in shipping spot rates. And I know you guys are primarily long term contracted and use that as an opportunity to use your net long position as an opportunity to recontract when you have open availability.

But just curious if there's any way strategically for you to maybe take advantage of an especially soft LNG shipping market at the moment?

Hey, Ben. I guess the number one driver, as Zach has alluded to, is our management of that fleet and the fact that we have shipping lined up and committed for our own volumes and in many cases like the producer transactions that we partner with as well. And the team has done a great job and one of the big drivers of optimization opportunities has been chartering out that length as these optimization opportunities presented themselves. We are, I think today the 2nd largest charterer of LNG vessels. We have been for a number of years by far the largest, the most dynamic player in chartering vessels in and out.

So you're absolutely right. There are opportunities to optimize the portfolio. We are of course on the eve of commissioning Stage 3 and these lower day rates provide some other opportunities on that front as we await the production from Train 1. So that's one of the reasons why we don't bake into our guidance things that we have not locked in on that front because you never know what pitch is going to come your way, whether it will be a 300,000 day rate, 1 winter or 20,000 in the prompt as we're seeing today.

Got it. Okay. I appreciate it. Thank you.

Our next question is coming from Bob Brackett with Bernstein Research.

Cheniere Energy (LNG) Q3 2024 Earnings Call Transcript

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