Q4 2023 Cheniere Energy Partners LP Earnings Call

February 22, 2024

Please go ahead.

Thanks, operator, good morning, everyone and welcome to <unk> fourth quarter and full year 2023 earnings conference call. The slide presentation and access to the webcast for today's call are available at Cheniere Dot com.

Joining me. This morning are Jack Fusco, <unk>, President and CEO, and it'll Fagan Executive Vice President and Chief Commercial Officer, Zach Davis, Executive Vice President and CFO and other members of Cheniere Senior management.

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 two 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 <unk> results. Today's call May also include selected financial information and results for Cheniere Energy partners L. P or <unk>, we do not intend to cover <unk> results separately from those of Cheniere Energy Inc.

As part of our discussion of Cheniere as results. Today's call May also include selected financial information and results for Cheniere Energy Partners LP or <unk>, we do not intend to cover <unk> results separately from those of Cheniere Energy Inc.

The call agenda is shown on slide three 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 and 2020 for guidance.

After our prepared remarks, we will open the call for Q&A.

After prepared remarks, we will open the call for Q&A.

I'll now turn the call over to Jack Fusco, <unk>, President and CEO.

Thank you Randy good morning, everyone. Thanks for joining us today as we review our successful 2023 and discuss our outlook for what is setting up to be a very busy and promising 2024.

Randy Good morning, everyone. Thanks for joining us today as we review our successful 2023 and discuss our outlook for what is setting up to be a very busy and promising 2024.

In 2023, we drove exceptional results across the key strategic priorities of the company and we did so while reinforcing our track record on safety execution and operational reliability.

In 2023, we drove exceptional results across the key strategic priorities of the company and we gain scale, while reinforcing our track record on safety execution and operational reliability IMAX.

I'm extremely proud of my <unk> hundred's generic colleagues across operations engineering, and construction origination and others, who continue to be driven by excellence and take pride in solidifying Cheniere is best in class across our platform we.

I am extremely proud of my <unk> hundred's generic colleagues across operations engineering, and construction origination and others, who continue to be driven by excellence and take pride in solidifying Cheniere is best in class across our platform we have.

We made significant strides despite some persistent macro headwinds and increased uncertainty in 2023.

Made significant strides despite some persistent macro headwinds and increased uncertainty in 2023.

<unk>, largely driven by conflict geopolitics and the evolving regulatory landscape, particularly right here in America.

Each largely driven by conflict geopolitics and the evolving regulatory landscape, particularly right here in America.

I'll touch on that later in a moment, but the macro backdrop for LNG today provides the black yet clear reminder of the criticality of secure and stable energy supply and the value of a reliable.

I'll touch on the ladder in a moment, but the macro backdrop for LNG today provides the black yet clear reminder of the criticality of secure and stable energy supply and the value of a reliable.

And customer focused operator, who consistently delivers on its promises.

And customer focused operator, who consistently delivers on its promises towards.

Two its global stakeholders.

Please turn to slide five while our renew some key operational and financial achievements from the fourth quarter and full year 2023, and introduce our 2024 financial guidance.

<unk> global stakeholders.

Please turn to slide five while our renew some key operational and financial achievements from the fourth quarter and full year 2023, and introduce our 2024 financial guidance.

We generated consolidated adjusted EBITDA of approximately $1 $65 billion in the fourth quarter, bringing our full year total to approximately $8 8 billion. The high end of our most recent guidance range.

We generated consolidated adjusted EBITDA of approximately $1 $65 billion in the fourth quarter.

Our full year total to approximately $8 8 billion.

High end of our most recent guidance range.

We generated approximately $1 $1 billion of distributable cash flow in the fourth quarter and $6 5 billion for the full year, which is above the high end of our guidance range.

Looking back at the original guidance provided for 2023, we beat the midpoint of each of those guidance ranges by over $500 million.

Once again illustrating the volatile nature of current global natural gas markets and the value of <unk> platform to monetize that volatility last year.

For the fourth quarter regenerated approximately $1 $4 billion of net income, bringing the full year total to approximately $9 9 billion.

For the fourth quarter regenerated, approximately $1 4 billion and net income, bringing the full year total to approximately $9 9 billion.

Strategically 2023 was another year marked by significant accomplishments across the entire platform and I'll highlight just a few of them here.

First and foremost we continue to execute on the company's long term objectives.

First and foremost we continue to execute on the company's long term objectives with.

With safety at the foundation of our actions and a 2023, we once again demonstrated this by achieving a total recordable incident rate of 0.10.

Which is well within the top decile for industrial producers.

We achieved this while simultaneously operating the second largest LNG platform in the world and.

We achieved this while simultaneously operating the second largest LNG platform in the world.

And being deep in construction on a 10 plus million ton per annum.

And being deep in construction on a 10 plus million ton per annum expansion project.

<unk> project.

These safety results are a source of tremendous pride for me.

And that pride should be felt by all the company's stakeholders.

And that price should be felt by all the company's stakeholders.

We produced and recorded a record 169 LNG cargoes in the fourth quarter, bringing the total to a record 600.

37 cargoes for the full year.

Total production was in line with our forecast of about 45 million tonnes.

37 cargoes for the full year.

Total production was in line with our forecast of about 45 million tonnes.

Inclusive of the successful major maintenance turnaround at Sabine pass over the summer.

Europe remained the premium market for U S cargoes.

Europe remained the premium market for U S cargoes across 2023% to 73% of the volume produced at our facilities was delivered to Europe.

<unk>, 2023% to 73% of the volume produced at our facilities was delivered to Europe.

<unk>, new long term customer contracts commenced over the course of 2023, representing approximately $3 7 million tonnes per annum and.

<unk>, new long term customer contracts commenced over the course of 2023, representing approximately $3 7 million tonnes per annum and earlier. This month, we commenced our $1 1 million ton per annum, Petro <unk> contract, which was tied to train six on the very first day of the Dfc.

And earlier this month, we commenced our $1 1 million ton per annum, Petro <unk> contract, which was tied to train six on the very first day of the Dfc D window holding to our standard of always meeting our customer commitments.

Window holding to our standard of always meeting our customer commitments.

On the E&P front Corpus Christi stage III is progressing on an accelerated timeline and we continue to forecast first LNG production from train one at the end of this year.

On the E&P front Corpus Christi stage III is progressing on an accelerated timeline and we continue to forecast first LNG production from train one at the end of this year and.

In 2023, we advancing total project completion to over 50% I am extremely pleased.

In 2023, we advancing total project completion to over 50% I am extremely pleased with the progress we continue to make together with bechtel on stage III and I'm optimistic for further schedule improvements over time.

Some important steps last year in preparation for stage III to commence commissioning and operations.

Construction on the ADC pipeline being built from Aqua dosing to support stage three is progressing well and the pipeline is expected to be in service in the third quarter in advance of train one's accelerated startup.

In addition in the second half of last year, we purchased for approximately $100 million in existing 400 megawatt power plant in Corpus Christi, which is located on our property.

In order to help mitigate risks associated with our increased power purchasing needs once stage III commences operations.

These milestones coupled with the construction progress on the project reinforces my confidence in stage III timeline, improving over time with first LNG this year and meaningful LNG production.

Added to our portfolio in 2025.

Our commercial momentum continued in 2023 as LNG buyers the world over help get the commercialization of the SPL expansion project off to an incredibly promising start we.

We have signed long term agreements with six Counterparties across Asia, Europe, and Canada for an aggregate of over six 5 million tonnes per annum effectively commercializing all of train seven.

We are encouraged by the market's early reception, especially since a majority of these counterparties are repeat customers.

I view it as a recognition of the value of engineers reputation.

We are focused on furthering development of the project in 2024 across commercialization.

Tori and financing work streams with a focus on submitting our full permit application with the FERC before the end of this quarter.

Throughout 2023, Zach and his team continued to execute on the 2020 vision capital allocation plan.

Significant progress across our key pillars of the plan debt reduction capital return and disciplined growth investments.

We've paid down over $1 billion of debt and achieved investment grade ratings throughout our structure. We bought back almost 10 million shares for approximately $1 5 billion and declared dividends of $1 66 per share and we invested approximately $1 $5 billion into stage three we've made great strides.

On the comprehensive plan since announcing it in late 2022.

And now turning our focus and attention to 2024 I am pleased to introduce our 2024 financial guidance of five 5% to six point out $1 billion and consolidated adjusted EBITDA.

Two 9% to $3 4 billion and distributable cash flow and $3 15 to $3 $35 per unit.

Distribution of <unk>.

We again are forecasting annual results that are above the midpoint of our run rate <unk> guidance and our expected results. This year have a tremendous amount of visibility.

Given on how our highly contracted we are.

On the <unk> distribution guidance consistent with our prior messaging, we intend to maintain the 310 base distribution and a just a variable component beginning in 2024 in order to begin preserving some cash and fortifying <unk> balance sheet as he SPL expansion project gains momentum.

Zach will provide more details on the 24 guidance in a few minutes.

Turn now to slide six.

Where I will address the Doe news and our response.

As Europe, all aware the department of Energy recently announced it would suspend making determinations on authorizations for LNG exports to non free trade agreement countries pending an update to the economic and environmental analysis underpinning is public interest determination.

One <unk>.

While this decision does not currently impact our expansion projects or farsi processes at Sabine pass and Corpus Christi, It does introduce regulatory and permitting uncertainty into the U S LNG industry as a whole.

I firmly believe that a fair and transparent regulatory framework is essential for the future development of natural gas infrastructure in the United States.

Particularly liquefaction capacity given the scale of investment commercial support and time required to bring these projects online.

With that said, we believe we will secure all necessary regulatory approvals for mid scale trains eight nine and the SPL expansion project within our expected timelines as we have for more than a decade under multiple administrations.

To be clear the deal reaction has not slowed down our expansion projects at either site.

We're full steam ahead on Corpus Christi trains eight nine and the <unk> expansion project developments.

We expect to file the FERC application for SPL, very soon and Corpus Christi trains $8 nine or in advanced stages, and the FERC approval process the.

The environmental assessment for trains eight nine is schedule for receipt by the end of March.

And we just received a letter of determination from FEMSA at key agency and the FERC process last week.

We remain confident.

Our previous timelines won't be materially impacted and we will maximize the efficiency with having back to on site already through stage III.

Having spent the last eight years at Cheniere.

I've never been more confident in the critical role of U S LNG and the global energy market and I firmly believe the dose studies will come to the same conclusion, given one the importance of long term energy security.

The opportunities for global de carbonization through coal to gas switching for power generation and their critical role that dispatched for gas fired power plants plays and Backstopping intermittent renewables.

Three low and stable domestic natural gas prices and of course for the incredible economic benefits created in the communities, where we live and work.

Global energy markets are calling for additional LNG supply.

The U S has significantly advanced the answer this call with our abundant and low cost natural resources flexibility and affordability of U S volumes NHL.

And until recently, the reliability and certainty of the U S regulatory regime.

Gulf Coast LNG positions the U S as a leader in facilitating energy security and worldwide emissions reductions.

As a generational opportunity.

Something we should be proud of.

And working to maximize not restrict with that.

I'll hand, it over to Anatol to discuss the LNG market.

You all again for your continued support of Cheniere.

Thanks, Jack and good morning, everyone. The global LNG market continues to rebalance throughout 'twenty three as Europe navigated its energy crisis in Asia adapted to the delicate new market equilibrium amid some regional economic headwinds.

Global LNG trade grew by approximately 3% from 22, adding $10 5 million tons of supply to the overall market.

Aside from 2020 global supply growth has not been this low since 2011 through 2015 period. Nevertheless, this increase in supply was broadly matched by an increase in Asian demand, which grew approximately 4% year over year to approximately 263 million tons per annum is the region furthers its posts.

2015 period. Nevertheless, this increase in supply was broadly matched by an increase in Asian demand, which grew approximately 4% year over year to approximately 263 million tons per annum is the region furthers its post pandemic return.

On the supply side only one new train came online in 'twenty three globally. The third train of Tango LNG in Indonesia.

Pandemic return.

On the supply side, while the one new train came online in 'twenty three globally. The third train of Tango LNG in Indonesia.

Most of the growth in LNG output last year actually came from the continued ramp up of existing projects in the U S.

The us exported 86 million tons last year, becoming the world's largest exporter in 2023 ahead of Australia and Qatar for the first time.

In the U S exported 86 million tons last year, becoming the world's largest exporter in 2023 ahead of Australia and Qatar for the first time in more than half of those volumes were produced by Cheniere in.

More than half of those volumes were produced by Cheniere.

In the fourth quarter alone U S exports reached record highs of nearly 24 million tonnes contributing to the global markets rebalancing. Despite persistent geopolitical address globally and the continued phase out of Russia and pipe gas in Europe spot price levels have decreased this winter compared to last year due to a combination of mild weather.

Macroeconomic fundamentals high storage levels and sufficient LNG supply availability in.

In the fourth quarter <unk> averaged $13 66 in EM and <unk> $14 97.

In the fourth quarter Tcf averaged $13 66 in EM and <unk> $14 97.

Both significantly lower than levels seen in the previous two years and both have continued to trend down through the first quarter of this year.

Henry hub benchmark also decreased in the fourth quarter falling to an average of $2 88, <unk> for the full year 2023, Tcf monthly settlement prices averaged $13 73, and <unk> over 66% lower year over year, and four 6% lower than 2021 <unk>.

Henry hub benchmark also decreased in the fourth quarter falling to an average of $2 88, <unk> for the full year 2023, Tcf monthly settlement prices averaged $13 73, and that one btu over 66% lower year over year, and four 6% lower than 2021.

Similarly, the 'twenty three average settlement price for <unk> decreased 53% year over year to an average of $16 13.

Similarly, the 23 average settlement price for <unk> decreased 53% year over year to an average of $16 13.

While the Henry hub average settlement price was $2 74.

Down approximately 59% from $6 64 in 2022 during the height of the energy crisis in Europe.

Let's address the regional dynamics on the next page.

With more than 65% of all U S. LNG volumes in 2023 flowing in Europe. The region's underground storage inventories remained elevated throughout the year easing concerns about physical market tightness image further reductions in all other sources of gas supply to the region.

Let's address the regional dynamics on the next page.

Total gas supply to Europe fell 56, bcm year on year due mostly to the continued reduction in Russia and flows as well as heavy upstream maintenance and Norway further affecting pipe gas supply.

Total gas supply to Europe fell 56, bcm year on year due mostly to the continued reduction in Russia and flows as well as heavy upstream maintenance in Norway further affecting pipe gas supply.

Nonetheless storage levels ended the calendar year at 86% for the second highest level for the periods and storage data became available in 2011.

Nonetheless storage levels ended the calendar year at 86% full the second highest level for the periods and storage data became available in 2011.

Meanwhile, gas demand in the region's key markets continued to drive declining by 9% year on year in 2023, following a 12% reduction in 2022.

The power sector accounted for nearly half of these reductions amid relatively mild temperatures continued conservation efforts, improving nuclear performance and growth in renewable generation.

And aside from Germany, industrial demand reductions appear to have bottomed out in 'twenty three throughout the region.

In Asia as I mentioned, LNG demand grew by 4% or <unk> 9 million tonnes year on year, thanks to a resurgence in demand from China and other emerging economies throughout Asia.

Of the uptick in Asia as demand was largely due to a rebound in China's economy, which resulted in the seven 5% year on year increase in gas consumption. It was up 27 bcm. Despite.

Of the uptick in Asia as demand was largely due to a rebound in China's economy, which resulted in the seven 5% year on year increase in gas consumption. It was up 27 bcm.

Despite a 13 Bcf increase in domestic gas output and the scheduled seven bcm ramp up in the power of Siberia flows last year, China's reliance on LNG remained high at 25% of total gas supply.

The country's imports rebounded by about 12% to 71 million tons last year about $8 5 million tons below the peak 2021 levels.

We continue to expect gradual but continued growth in gas consumption that will increase the call on LNG going forward.

We continue to expect gradual but continued growth in gas consumption that will increase the call him LNG going forward.

In addition to China, and approximately $8 5 million tonnes year on year increase in South and Southeast Asia as imports also contributed to growing global demand last year.

In addition to China, and approximately $8 5 million ton year on year increase in South and Southeast Asia as imports also contributed to growing global demand last year.

And in India led the charge as LNG spot prices moderated in demand for gas fired power generation reached record levels in India.

Additionally, three new receiving terminals started in this region given the nascent important markets in the Philippines, and Vietnam access to LNG, which we believe will help power their economies for years to come.

Additionally, three new receiving terminals started in this region given the nascent important markets of the Philippines, and Vietnam access to LNG, which we believe will help power their economies for years to come.

LNG demand growth in Asia was partially offset by the reduced demand for LNG in Japan, due to lower electricity demand and increased nuclear availability.

In Japan, two nuclear reactors restarted in 2003, increasing available nuclear capacity to the highest level since the Fukushima disaster in 2011.

This is a structural trend in Japan that we expect will continue to impact gas fired power generation and consequently, LNG imports over time.

Let's move to the next slide where we'll consider the outlook for gas and these and other economies.

As discussed global gas demand in 'twenty three remained relatively flat.

As discussed global gas demand in 'twenty three remained relatively flat growing.

One by 20, bcm or one half of 1% amid tight global supplies and historically elevated prices in.

Grown by 20, bcm or one half of 1% amid tight global supplies and historically elevated prices in.

In contrast, global demand for coal was up one 4% on the back of increased use in emerging and developing economies.

Given the Doe action related to climate, the Jack already discussed it's worth highlighting here. The simple fact that for the second year in a row global coal consumption hit a new all time record.

Coal fired power generation increased in 23, despite continued coal to gas switching in the U S.

Coal fired power generation increased 23, despite continued coal to gas switching in the U S.

Notable declines in Europe, and significant growth in renewable generation overall, which rose over 22% globally.

As shown in the lower left more than half of the power demand growth in China, and India and 23 was supplied by coal.

Coal fired generation from these two nations alone increased by 419, Terawatt hours, which is roughly equivalent to the total power generation for the entire country of France, and more than 80% of the entire growth in renewable power generation seen last year.

While China, and India remain committed to growing gas as a primary energy source in their respective economies type gas supplies and higher than normal global LNG prices in recent years have impacted the pace of potential gas consumption growth in these developing economies.

More broadly coal remains the largest source of power generation globally and represents about two thirds of power sector emissions and about a quarter of total emissions globally.

With power demand expected to double by 2050, any hope of achieving global de carbonization and clean energy targets will require further displacement of coal use wherever possible, especially in countries like China and India.

As Jack noted natural gas holds a critical role in helping achieve these goals over the coming decades, which we expect will result in robust increases in demand for natural gas over that period as shown by the outlooks on the Central chart.

The fast growing economies in the Asia Pacific region are expected to play the greatest role empowering gas demand beyond the 2040.

When demand from Europe, and the developed world could possibly be in modest decline and regional gas supplies in Asia further deplete.

The outlook for global gas demand should remain robust going into the second half of this century, because natural gas is an affordable reliable and sustainable solution that will serve to displace coal and support the deployment of intermittent renewable energy sources.

As such in 'twenty three alone we have executed over $6 5 million tonnes per annum of long term agreements representing over 119 million tons in aggregate volume of LNG between 2026 and 2015.

As such in 'twenty three alone we have executed over $6 5 million tonnes per annum of long term agreements representing over 119 million tons in aggregate volume of LNG between 2026 and 2050 <unk>.

The majority of which are with repeat customers and are structured to meet each customer's unique long term objectives.

We have a majority of which are with repeat customers and are structured to meet each customer's unique long term objectives.

These investment grade Counterparties include North American producers portfolio players and Asian, and European end users, all of which seek secure cleaner and affordable and flexible supply.

Our customers sign up for decades of LNG from Cheniere, because they believe in the long term role of natural gas and they believe in <unk> ability to deliver the LNG reliably and responsibly.

Our customer sign up for decades of LNG from Cheniere, because they believe in the long term role of natural gas and they believe in <unk> ability to deliver the LNG reliably and responsibly.

Looking ahead to 'twenty four as the market continues to stabilize and achieve the stable pricing necessary to ensure market access and adoption. We anticipate our premium products will continue to have broad based appeal.

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

Thanks, Anatol and good morning, everyone.

I am pleased to be here today to review, our fourth quarter and full year 2023 results and key financial accomplishments and introduce our financial guidance for 2024.

Thanks, Anatol and good morning, everyone.

I'm pleased to be here today to review, our fourth quarter and full year 2023 results and key financial accomplishments and introduce our financial guidance for 2024.

Turning to slide 12.

For the fourth quarter and full year 2023, we generated net income of approximately $1 4 billion and $9 9 billion.

Turning to slide 12.

For the fourth quarter and full year 2023, we generated net income of approximately $1 4 billion and $9 9 billion.

Consolidated adjusted EBITDA of approximately 165 billion.

And $8 8 billion.

And distributable cash flow of approximately $1 1 billion.

And $8 8 billion in.

And distributable cash flow of approximately $1 1 billion and $6 5 billion respectively.

And $6 5 billion respectively.

With today's results our full year consolidated adjusted EBITDA results were at the high end of our most recent guidance range and we exceeded the high end of the range on distributable cash flow, mainly attributed to higher margin captured on open capacity and optimization upstream and downstream of the plant.

In addition, we have now reported positive net income on a quarterly and cumulative trailing four quarter basis five quarters in a row.

As compared to 2022 or.

Our fourth quarter and full year 2023 results continue to reflect a higher proportion of our LNG being sold under long term contracts with less volumes being sold into short term markets as well as the further moderation of international gas prices relative to what we experienced in 2022.

As compared to 2022.

Our fourth quarter and full year 2023 results continued to reflect a higher proportion of our LNG being sold under long term contracts with less volumes being sold into short term markets as well as the further moderation of international gas prices relative to what we experienced in 2022.

These impacts were partially offset by certain portfolio optimization activities that our teams were able to achieve throughout the year.

During the fourth quarter and full year, we recognized an income 618, and 2000 and 353 television to U a physical LNG, respectively, which included 607 and 2318 TB to you from our projects our record for the full year.

And 11% and 35 <unk> sourced from third parties respectively.

Approximately 90% and 87% of these LNG volumes recognized in income were sold under long term SBA or IPM agreements with initial terms greater than 10 years, respectively.

While we have many significant achievements to highlight from 2023, I'm, particularly proud of my team's focused execution on our 2020 vision capital allocation plan.

While we have many significant achievements to highlight from 2023 I'm, particularly proud of my team is focused execution on our 2020 vision capital allocation plan.

We deployed approximately $5 billion towards balance sheet management shareholder returns and accretive growth in 2023 alone while maintaining strong available liquidity going into this year.

In aggregate since updating our capital allocation plan in September 2022, with a target of $20 billion of cash deployment through 2026 and $20 per share of run rate DCF, we have now deployed over $8 billion.

In aggregate since updating our capital allocation plan in September 2022, with a target of $20 billion of cash deployment through 2026 and $20 per share run rate DCF, we have now deployed over $8 billion.

Execution under the plan got off to a fast start in early 2023, when we achieved investment grade ratings at both of our parent entities, bringing the entire cheniere complex to investment grade status and.

And in June we issued our inaugural corporate investment grade bond, placing $1 4 billion of unsecured notes at <unk>.

These milestones follow approximately $8 billion of deleveraging over the last three years from approximately $32 billion of debt at our peak to now under 24 billion.

During the fourth quarter, we repaid $50 million of long term indebtedness further redeeming a portion of the senior secured notes due in 2024 at SPL and bringing our total long term debt pay down for the year to approximately $1 2 billion.

We plan to address the remaining balance of the SPL 2024 notes with cash on hand within Cqb early this year after which point, we will have addressed all maturities in the complex for the year.

We have already begun strategizing around the 2025 maturities, we have at both SPL and CCH and as always we will evaluate opportunities to efficiently refinance or delever throughout the year.

The buyback plan is working as designed and enabling us to be opportunistic.

During the fourth quarter and full year 2023, we repurchased an aggregate of approximately $2 million and $9 5 million shares of common stock for approximately $339 million and $1 5 billion respectively.

As the share price has provided greater opportunities. So far this year compared to the fourth quarter of 2023 deployment under the share repurchase plan is accelerated and year to date are in just a month and a half or so we have already deployed nearly $500 million.

Which is more than we did in any quarter in 2023, repurchasing almost 3 million shares so far.

Which is more than we did in any quarter in 2023.

Bringing our total shares outstanding to under $235 million. Currently we will continue deploying now under $2 billion remaining under the plan over the next year or so with the expectation we will get to the cumulative one to one share repurchase debt paydown ratio and complete the current four.

Purchasing almost 3 million shares so far bringing our total shares outstanding to under $235 million. Currently we will continue deploying the now under $2 billion remaining under the plan over the next year or so with the expectation we will get to the cumulative one to one share repurchase.

Billion dollar authorization ahead of its three year window.

<unk> to debt Paydown ratio and complete the current $4 billion authorization ahead of its three year window.

At which point the focus will primarily be on updating the buyback plan again with the board, while maintaining our balance sheet across the complex as we prepare for our accretive growth initiatives at corpus and soybean in the coming years.

We also declared $1 66 per common share and dividends for 2023, nearly 15% increase year over year, having increased our quarterly dividend by 10% in Q3, consistent with our stated target of 10% annual dividend growth.

Over time, we intend to steadily increase our overall payout ratio as our platform grows while still maintaining the financial flexibility essential to our capital allocation plan and growth objectives.

During the quarter, we funded approximately $467 million of Capex at our stage III project, bringing total spend to approximately $1 5 billion for the year and a little over $3 billion in total for the project.

While frontloading the equity spend has enabled considerable interest savings, we still have over $3 billion available on our CCH term loan that we plan to utilize overtime as the project progresses towards full completion in 2026, and we expect to spend between one five and $2 billion in stage III Capex this year.

Turning now to slide 13, where I will discuss our 2020 for guidance and outlook for the year.

Today, we are introducing our full year 2024 guidance ranges of five 5% to $6 billion and consolidated adjusted EBITDA and $2, 9% to $3 4 billion and distributable cash flow.

Today, we are introducing our full year 2024 guidance ranges of five 5% to $6 billion and consolidated adjusted EBITDA and $2 nine to $3 4 billion and distributable cash flow.

As we've been clear about on recent calls 2024 represents our most contracted year to date is all contracts signed to underpin our existing 45 million ton platform have commenced as well as some bridging volumes tied to contract signed and supportive of our growth projects. It's.

It's likely 2024 will represent a trough year for EBITDA after being down sequentially. Since 2022, as we expect to move upward post 2024 as stage III commences and eventually reaches run rate in 2026 and beyond with very little unsold capacity remaining throughout the year. These ranges largely reflect.

<unk> after being down sequentially since 2022, as we expect to move upward post 2024 as stage III commences and eventually reaches run rate in 2026 and beyond with very little unsold capacity remaining throughout the year. These ranges largely reflect our nine train run rate guidance adjusted for a higher proportion.

Our nine train run rate guidance adjusted for a higher proportion of volumes sold under long term contracts or bridging volume as well as some forward selling of spot cargos at higher international gas prices.

And the volumes sold under long term contracts or bridging volume as well as some forward selling of spot cargos at higher international gas prices.

These positive adjustments are partially offset by the prepayment and cancellation of the chevron to UA and some incremental O&M costs related to our planned maintenance program.

We expect to produce approximately 45 million tonnes of LNG. This year inclusive inclusive of planned maintenance at both sites. We remain optimistic we will achieve first LNG from train one of stage III this year, but that would not impact our revenues or EBITDA in 2024, as it will likely remain in commissioning through year.

And.

In terms of portfolio optimization activities. We include any such transactions already completed in the guidance, but we do not forecast. Additionally.

And.

In terms of portfolio optimization activities. We include any such transactions already completed in the guidance, but we do not forecast. Additionally.

We are hiring.

Via <unk>.

2022.

And remains on track as we continue to execute on the plan this year.

2022.

And remains on track as we continue to execute on the plan this year.

Credit goes to our commercial team who have.

Sold our 2% open capacity going into this year, which has come down from 50 <unk> to 15 TV to you since the November call.

Credit goes to our commercial team who have.

Sold our 2% open capacity going into this year, which has come down from 50 <unk> to 15 TV to you since the November call.

Highlighting that despite the recent drop in global gas indices are EBIT forecast remains above the $5 $5 billion mid point of our nine train run rate guidance as always our results could be impacted by the timing of certain cargos around year end as well as incremental margin from further optimization upstream and downstream of our facilities.

Our distributable cash flow for 2024 could also be affected by any changes in the tax code under the IRA. However, the guidance provided today is based on the current IRI tax law guidance and assumes we qualify for the minimum corporate tax of 15% this year.

As the year progresses, we will likely tighten our range is consistent with what we've done in the last two guidance cycles at <unk>. Our full year 2024 distribution guidance range is $3 15 to $3 35 per common unit.

Which maintains our base distribution of $3 10.

In a variable distribution of between 5% and 25.

Which maintains our base distribution of $3 10.

In a variable distribution of between 5% and 25.

As we have discussed publicly for the last year by adjusting the variable component of our base plus variable distribution. This year, we are preserving cash and balance sheet capacity at <unk> in anticipation of funding. The 10 plus billion SPL expansion project. According to our disciplined capital investment parameters, which call for financing the <unk>.

Project, 50% with cash flow, while maintaining investment grade ratings at both SPL and CQ <unk>.

All within a traditional MLP structure. This CPU guidance keeps us on our previously assumed timeline and should be viewed as an indication of our confidence and the attractiveness and viability of the SPL expansion project in the near term deleveraging at CGP or SPL can be considered early investments in the SPL expansion project.

Until we are in a position to formally sanctioned the project raise financing and begins construction, which we planned for in 2026.

We expect a accretive SPL expansion project could increase the run rate distributable cash flow at <unk> to over $5 per unit a.

A win not only for <unk> unit holders by LNG shareholders as well since we are in the high splits of the MLP, meaning approximately 75% of the incremental cash flow would accrue to cei and further meaningfully increased our run rate DCF per share target over time as it was not baked into the original 2020 vision looking beyond.

A win not only for <unk> unit holders the LNG shareholders as well since we are in the high splits of the MLP, meaning approximately 75% of the incremental cash flow would accrue to cei and further meaningfully increased our run rate DCF per share target over time as it was not baked into the original 2020 vision looking beyond.

This year the Cheniere story remains the same our highly contracted business model is built upon long duration fixed fee investment grade take or pay style cash flows, which underpin the $40 billion natural gas infrastructure platform, we operate today.

As we pursue brownfield expansions our approach will be consistent with that of the first over 55 million tonnes adhering to our disciplined investment parameters. So that our cash flows and our value proposition remain insulated from whatever transitory supply and demand imbalances may occur over the next decade plus.

Our company provides investors with exposure to LNG the theme more so than the commodity and it is inherent stability and long term visibility in our contracted cash flows growth and shareholder returns that should enable us to continue to deliver meaningful value to our stakeholders for decades to come back.

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 you if you would like to ask a question. Please press star one on your telephone keypad. Please make sure. Your mute function is turned off to allow your signal to reach our equipment. We ask you limit yourself to one question and one follow up to allow as many questions as possible you may rejoin the queue. If you have additional questions.

I'll go first to John Mckay with Goldman Sachs.

Okay.

We'll go first to John Mckay with Goldman Sachs.

Hey, good morning, Thank you for the time.

The color you guys gave on the 24 guide and you're already above that kind of nine train run rate, but maybe you can just spend another minute talking through what kind of gets you to the low end of the range versus the high end of the range. It's about the same.

Hey, good morning, Thank you for the time.

$500 range, you gave for 'twenty three but there were more open.

500 million range, you gave for 'twenty three but there were more open.

Volumes on salt at that point, so maybe just kind of walk through those dynamics. Thank you.

Hi, John Exec and ill just say the $500 million range is basically we are keeping the same cadence that we've had for the last couple of years with the $500 million, it's still under 10%.

The EBITDA.

It's safe to assume that we're going to start right now around the midpoint of that range.

The EBITDA.

It's safe to assume that we're going to start right now around the midpoint of that range.

And from there.

I'd say theres, a few variables, even though the open capacity is so small and $1 CMI move in margins is only $15 million.

And from there.

I'd say theres, a few variables, even though the open capacity is so small and $1 CMI move in margins is only $15 million.

With most of the year still ahead of us $1 move in Henry hub.

Can move EBITDA in the lifting margin by around $100 million.

Can move EBITDA in the lifting margin by around $100 million and just year end timing of deliveries that can move things around $100 million as well, even though a lot of those end of your cargoes or even locked in at pretty attractive rates by the team.

And just year end timing of deliveries that can move things around $100 million as well, even though a lot of those end of your cargoes or even locked in at pretty attractive rates by the team.

When it comes to the upside and downside to the high end and low end.

On the low end.

It would really have to be something unforeseen today operationally.

On the low end.

It would really have to be something unforeseen today operationally.

That got us back close to that to the low end considering how locked in we are so it would be maybe a longer maintenance cycle.

That got us that close to that to the low end considering how locked in we are so it would be maybe a longer maintenance cycle.

When we even had last year, which which we don't foresee or a tougher hurricane season or something of that sort.

And then we even had last year, which which we don't foresee or a tougher hurricane season or something of that sort.

On the upstream on the.

Upside I would just say we've been very clear from the get go we don't guide on optimization upstream and downstream of the plant that is not locked in.

On the upstream on the.

Upside I would just say we've been very clear from the get go we don't guide on optimization upstream and downstream of the plant that is not locked in.

So as that accrues ideally through the year, even though margins are lower than Henry hub is lower and volatile volatility has moderated.

That should help us get to the upside and then yes, we'll stay optimistic on seeing if we can get a couple more cargoes out.

Through the course of the year.

I appreciate all that detail, maybe just a follow up and maybe this one's for.

Through the course of the year.

I appreciate all that detail, maybe just a follow up and maybe this one's for.

And a tall theres been obviously a lot of focus in the market.

On kind of the next three three and a half years.

On kind of the next three three and a half years for.

For the LNG market with <unk> in Qatar supply coming online and the demand picture.

<unk> for the LNG market with <unk> in Qatar supply coming online and the demand picture.

Maybe not warming up as fast as we would have hoped understand that kind of a long term dynamics you talked about earlier on the call, but maybe just spend a couple of minutes walking through what you'll see is those kind of medium term outlook and maybe what the supply demand balance looks like around the.

Maybe not.

Coming up as fast as we would have hoped understand that kind of a long term dynamics you talked about earlier on the call, but maybe just spend a couple of minutes walking through what you see is this kind of medium term outlook and maybe what the supply demand balance looks like around the back half of this decade.

The back half of this decade. Thanks.

Sure. Thanks, John Thanks for the questions I'll start kind of in reverse order.

The market will grow what supply allows it to grow so the $10 5 million tonnes was a function of that supply coming into the market and being placed where it was most needed at the margin.

The things that are encouraging to us and we see as kind of an extra bold trends are the commitments to gas and the investments in long dated infrastructure.

The things that are encouraging to us and we see as kind of inexorable trends are the commitments to gas and the investments in long dated infrastructure.

Not a month goes by that we don't add a couple of re gas terminals and.

Things like gas fired power plants are very difficult to get turbines are difficult to get for years and that is a function of the deployment of that infrastructure globally. So we prefer a world where where LNG is is in those high single low double digit rates where return.

<unk> for us are attractive, but reasonable and the consumers can get their hands on these attractive btu is and as we mentioned in the prepared remarks are competitive with coal and other generation sources. So we remain very optimistic youll see volumes going into south and southeast Asia Youll see the the margin.

<unk> for us are attractive, but reasonable and the consumers can get their hands on these attractive btu is and as we mentioned in the prepared remarks are competitive with with coal and other generation sources. So we remain very optimistic youll see volumes going into south and southeast Asia Youll see the the margin.

<unk>.

Elastic demand come back into the market, we are already seeing that even in the early days post post the Chinese new year, and we think that these are trends that will last for decades and decades to come and we have kind of those commercial the commercial engagements with those types of counterparties that are continuing a pace. So.

<unk>.

We think the market will.

<unk> will enjoy absorbing this this volume and whether it comes on line on schedule or if things are modestly delayed as they have been historically, we think that the market will will show robust growth and ability to absorb this this next wave.

We think the market will.

That's great appreciate the time today. Thank you.

Thank you we'll go next to Jeremy Tonet with J P. Morgan.

Hi, good morning.

Good morning, Jeremy.

Okay.

Hi, good morning.

Just wanted to kind of unpack a little bit more on earlier comments there when you talked about hitting the midpoint of prior guidance range.

Good morning, Jeremy.

Just wanted to kind of unpack a little bit more on your earlier comments there when you talked about hitting the midpoint of prior guidance range.

No.

Just wondering.

No.

What type of.

Optimization.

Just wondering.

Cheniere has been able to.

What type of optimum.

Optimization.

Got it.

Cheniere has been able to.

Volatility in the market upstream and downstream.

Got it.

Volatility in the market upstream and downstream.

Operations, what's that number.

Operations with that number.

It's been in the one hundreds of millions of dollars Jeremy in terms of the optimization.

And I'd say, one hundreds of millions of dollars both in the upstream and downstream side mind, you and re hub was significantly up in.

In 'twenty, two moderated a bit last year and it's even further down today. So.

We'll see how much can be there and then on the on the other side.

Yes, we have a ton of IPM deals.

<unk>, so we will optimize those as we see fit in and sub charter out any of our length in our in our shipping portfolio, which in the past has added hundreds of millions of dollars mind, you even that market has moderated as well in terms of the volatility, but when you add those two things together it would really take yes.

Deals so we'll optimize those as we see fit in and sub charter out any of our length in our in our shipping portfolio, which in the past has added hundreds of millions of dollars mind, you even that market has moderated as well in terms of the volatility.

When you add those two things together it would really take yes.

Great execution, and some opportunistic moments throughout the year.

For us to get to the high end of the range.

Got it so just to be clear there than hundreds of millions of dollars of synergies our optimization, rather our upstream and downstream both we've seen historically.

Got it so just to be clear there than hundreds of millions of dollars of synergies our optimization, rather upstream and downstream both we've seen historically.

And that's not really baked into the guidance as we see it today because the guidance really just locked in.

What you've already locked down is that the right way to think about things.

That's right.

We're pretty clear for quite some time now.

Yes, that's right.

As we thought about this year would be the closest we would need to run rate and considering how proactive we were going into this year and now that we're only down to <unk>, we're still above the midpoint of the run rate range for nine trains and we don't even have the EUA from Chevron anymore.

We were pretty clear for quite some time now.

As we thought about this year would be the closest we would meet our run rate and considering how proactive we were going into this year and now that we're only down to <unk>, we're still above the midpoint of the run rate range for nine trains and we don't even have the EUA from Chevron anymore.

So.

This is where we expected it to be and it was baked into the 2020 vision in the 20 plus billion dollars of cash flow through 2006, and we will see.

<unk>.

This is where we expected it to be and it was baked into the 2020 vision in the 20 plus billion dollars of cash flow through.

How things play out on the optimization side, but it's not baked in to this guidance today.

Through 'twenty, six and we will see.

How things play out on the optimization side, but it's not baked in to this guidance today.

Got it very helpful. So a lot of upside potential, but not baked into the guide very clear there. Thank you very much.

Thank you Jeremy.

We'll go next to Brian Reynolds with UBS.

Thank you Jeremy.

We'll go next to Brian Reynolds with UBS.

Hi, good morning, everyone.

Maybe to talk about just the <unk>.

Hi, good morning, everyone.

Distribution cut on the variable side, if you could just help talk about sizing and timing of that and ultimately how it relates to.

Maybe to talk about just the <unk>.

Distribution cut on the variable side, if you could just help talk about sizing and timing of that and ultimately how it relates to.

Translating into the 15 M Tpa expansion, assuming like an 850 build so it seems like there's still a little bit of a variable component in the guidance above that three one kind of run rate. So just kind of curious how you came to that number and how we should think about pre funding just given it could be $10 billion to $15 billion for four for the SPL expansion. Thanks.

Sure.

As we thought about the variable adjustment.

Sure.

I'd say over the last two years, we were incredibly efficient with our cash inside of EQT.

As we thought about the variable adjustment.

I'd say over the last two years, we were incredibly efficient with our cash inside of EQT.

And with the distributions, including the variable being over $4. Both years, we probably distributed out almost $700 million more than even the run rate DCF per unit guidance that we gave.

And with the distributions, including the variable being over $4. Both years, we'd probably distributed out almost $700 million more than even the run rate DCF per unit guidance that we gave.

So now its time as we're getting closer to officially filing.

With the FERC for the Sabine expansion and are targeting that 2026.

That we're going to start retaining some of the cash and bringing down the variable we're saving around let's say $700 million.

And a large portion of that will actually just go into.

Paying down a bit of debt that's coming due.

Giving us this flexibility financially to add leverage capacity. Once we have the project stay with that let's say 50 50 debt to equity during construction and maintain the base distribution throughout while still being investment grade at Savannah, and <unk>. So we're trying to thread the needle there and to.

Paying down a bit of debt that's coming due.

Giving us this flexibility financially to add leverage capacity. Once we have the project stay with that let's say 50 50 debt to equity during construction and maintain the base distribution throughout while still being investment grade at Savannah, and CQ piece. So we're trying to thread the needle there and to.

Do that we need to start planning now mind you. Some of the cash. That's retained is also going into the development of supporting the feed and getting Sabine expansion ready for <unk>.

Do that we need to start planning now mind you. Some of the cash. That's retained is also going into development of supporting the feed and getting Sabine expansion ready for FID.

And there's even a $100 million or so baked in there for debottlenecking purposes, We think we've found some ways too.

Get to the higher end of the $4 90 to 501 range on the first exchange that hopefully cannot pay dividends to us in the coming years. So theres a few things in there, but it is mainly debt paydown in the near term to add leverage capacity and flexibility in the long term mind, you its still $2 billion of distributions coming.

Out of <unk> this year.

With $1 2 billion of that going into <unk>.

Out of <unk> this year.

<unk> going to cei, but if we can pull all this off and build this project and get to that over to $5 GPU.

With $1 2 billion of that going into <unk>.

<unk> going to CDI, but if we can pull all this off and build this project and get to that over to $5 GPU.

We're talking about almost $2 billion of consolidated EBITDA, and we're talking about almost $1 billion of DCF to cei.

It's a win win for all parties.

Right makes sense I appreciate all that.

My second question just around maybe further optimization I know for the SPL expansion. It seems like Theres, some capital efficiency and optimization opportunities at the boil off gas and some other things.

Right makes sense I appreciate all that.

But as we think about the existing asset base I think you talked about 45 M Tpa kind of being a good run rate it seems like 23.

Above that as we look ahead to 2024 have we squeezed out all the optimization on the existing asset base or are there are some new technologies are engines that could help.

Above that as we look ahead to 2024 have we squeezed out all the optimization on the existing asset base or are there. Some new technologies are engines that could help.

To further drive efficiencies and optimization on the existing asset base going forward. Thanks.

Brian This is Jack and while we're not going to guide upwards of 45 million tons today.

I'm always amazed at what my operations folks can can deliver so whether it's optimizing.

The trains or for our maintenance schedule.

They are just.

Constantly outperformed.

They are just.

So we're looking now exact mentioned the 100.

Constantly outperformed.

100, or so million dollars for Debottlenecking, one of the things I find really promising as we're looking at a new technology of our our fin fans. Those are the fans that we used to cool the refrigerant that liquefy the natural the natural gas.

So we're looking now exact mentioned the 100.

100, or so million dollars for Debottlenecking and one of the things I find really promising as we're looking at a new technology of our our fin fans. Those are the fans that we used to cool the refrigerant that liquefy the natural the natural gas.

And we think Theres, a big opportunity there. So we'll be trying that out in earnest this year and hope to have more news for you on later calls.

Great I appreciate it have a great rest of your morning.

Thank you we'll go next to Theresa Chen with Barclays.

Good morning.

Back to Jack's comments on the evolving regulatory backdrop and with respect to the <unk> pod I'm, just curious how thats impacted conversations with customers both within the context of commercializing your expansion projects, but also in relation to the broader.

Good morning.

At the U S government has two LNG exports and the perception of global customers and the credibility and competitiveness of U S. LNG industry any salient commercial color you can provide would be great.

Teresa I think I'm going to just start with some overall comments and then I'll turn it over to Anatol, but I have to say this isn't really new we've been through multiple administrations here at Cheniere, we have been through multiple studies on the public interest in exporting America's natural gas what.

As shocking and new is over over the last eight years I think <unk> proven all the benefits to America to our allies over export in U S LNG and I find it appalling.

Is shocking and new is over over the last eight years I think <unk> proven all the benefits to America to our allies over exporting U S LNG and I find it appalling.

We.

We need scientist to tell us theoretically using theories and hypotheses.

We.

We need scientist to tell us theoretically using theories and hypotheses.

The benefits or not but.

As you know.

The benefits or not but.

We know that they are those benefits are factual they are proven their witnessed by the world. So I really look forward to seeing those studies report.

As you know.

We know that they are those benefits are factual they are proven their witnessed by the world. So I really look forward to seeing those studies report.

Look forward to the comment period, so we can get the record straight and accurate.

Hopeful that cooler heads ultimately prevail and.

And that the.

The facts will be evident in this pause will be a distant memory.

And that the.

The facts will be evident in this pause will be a distant memory.

But with that I'll turn it over to Anatol. He can he can tell you a little bit about what our conversations have been with our customers. Yes. Thanks Jaclyn. Thanks Theresa.

Pick up where Jack left off.

This is the third time that Doe is doing this study and I would say to Jack's point. The first two are a distant memory as the U S goes from kind of mid nineties.

Pick up where Jack left off.

This is the third time that Doe is doing this study and I would say to Jack's point. The first two are a distant memory as the U S goes from kind of mid nineties.

<unk> tons per annum of capacity today to close to 200, we still think.

Really believed that the U S will be the market's first 200 million ton exporter and we will navigate this with a lot of the things that we have been doing for the last four or five years on our LCA and our.

Really believed that the U S will be the market's first 200 million ton exporter and we will navigate this with a lot of the things that we have been doing for the last four five years on our LCA and our.

Our environmental science and tracking the emissions profiles, providing the cargo mission tags are all things that are new in the equation and then of course, just the quantum of LNG exports from the U S and gas dedicated to LNG exports is a new component in this equation. So we.

To Jack's point, we look forward to do methodical kind of science based review and updating its profile, but we are confident and we relayed the same answer to our customers and our commercial engagements that we're confident that that cheniere will be able to navigate whatever comes out of the Doe.

To Jack's point, we look forward to do methodical kind of science based review and updating its profile, but we are confident and we relayed the same answer to our customers and our commercial engagements that we are confident that that cheniere will be able to navigate whatever comes out of the Doe.

<unk> continued to prosecute expansions on our on our timeline so.

This is not new every every time there is a pivot whether that is a modest pivot or more major pivot. We have these discussions, but we've navigated them for a decade, plus and are confident we will continue to do so and thats exactly the message that we give to our customers and we are we obviously.

This is not new every every time there is a pivot whether that is a modest pivot or more major pivot. We have these discussions, but we've navigated them for a decade, plus and are confident we'll continue to do so and thats exactly the message that we give to our customers and we are we obviously.

We firmly believe that.

Thank you and Ana Paula I'm going back to your comments.

We firmly believe that.

Thank you Anatol and going back to your comments.

Later to the elasticity benefit market currently and as price sensitive buyers increased interest can you elaborate on that and what do you think the magnitude of that demand can be if prices remain low.

Yes.

The market, it's hard to say that these are.

Yes.

Kind of unprecedented dynamics in the sense that the amount of infrastructure that has been brought online over the last three to five years is unprecedented over that period. So we talk about the amount of liquefaction capacity, that's coming online in the back half of this decade, but.

The market, it's hard to say that these are.

Again, not a month goes by that there's not a new re gas terminal Europe added five.

Southeast Asia has added for Europe will now add Alex and droplets in Greece in the coming days or weeks. So the ability to consume this volume is.

Is enormous and we are approaching a scale now relative to the current 400 million tons of exports, which obviously will grow.

As.

<unk> and we are approaching a scale now relative to the current 400 million tons of exports, which obviously will grow.

<unk> of almost <unk> hundred million tonnes per annum of import capacity, so markets like India, which have rebounded strongly as prices moderate are now in a position to import more than twice as much volume as it imported in 2003 that was not a position that India was in.

In early 2020, when prices were low and it was a price elastic consumers. So I think youll see.

That price elastic demand function really surprised to the upside as <unk>.

Philippines.

Thailand, Vietnam, India et cetera are all in a position to take meaningful incremental volumes.

Philippines.

Thailand, Vietnam, India et cetera are all in a position to take meaningful incremental volumes. So.

Quite quite optimistic on that front and I think we all see these liquefaction numbers coming in again historically, they have surprised to the downside in terms of schedule and and utilization. So we will see how the world re balances, but it certainly has the capacity to consume essentially whatever.

Number you think will be added to the supply side.

A number you think will be added to the supply side.

Thank you.

Thank you we'll go next to Spiro <unk> with Citi.

Thank you.

Thank you we'll go next to Spiro <unk> with Citi.

Thanks, operator.

Wanted to go back to the 2020 vision.

Thanks, operator.

Jack.

Wanted to go back to the 2020 vision.

One five years into that program, you mentioned tracking on or even ahead of plan to date, but I guess, if we just shift the focus to the forward outlook.

Jack.

One five years into that program.

You mentioned tracking on or even ahead of plan to date, but I guess, if we just shift the focus to the forward outlook.

Think about that outlook for 'twenty, five or sorry, 24 through 26, how does that compare to what you envision back in 2022, and you sort of said that $20 billion target I imagined some puts and takes and then stage III maybe coming on early not sure where you had the LG card then I'm just trying to understand how much.

Think about that outlook for 'twenty, five or sorry, 24 through 26, how does that compare to what you envision back in 2022 as you sort of said that $20 billion target I imagined some puts and takes each then stage III maybe coming on early not sure where you had the LG card then I'm just trying to understand how much.

It is in the imputed there.

Sure so.

It is in the imputed there.

I would just say we're still at 20 plus billion of available cash through 2006, and there are some puts and takes we've made some more money.

Sure so.

I would just say we're still at 20 plus billion of available cash through 2006, and there are some puts and takes we've made some more money.

In years like the past year. This year was always planned to be highly contracted and then we assumed guaranteed completion dates for stage III, meaning not train seven was never going to come online until till 2027 outside of that that period of time. So all in we're still over $20 billion.

In years like the past year. This year was always planned to be highly contracted and then we assumed guaranteed completion dates for for stage III, meaning not train seven was <unk> going to come online until till 2027 outside of that that period of time. So all in we're still over $20 billion.

We've deployed over $8 billion.

So about 40% and about 30% of the time.

We've deployed over $8 billion.

So about 40% and about 30% of the time.

But the main thing to focus on is really that excess cash and how we're going to deploy that going forward and as you can tell.

With some of the debt paydown, which will be less than we even did this year staying inside of <unk> cei is going to mainly be focused on catching up on the buyback and completing the equity funding of stage III at this point, we've done over $2 billion of buybacks, we've done over $3 $5 billion of debt Paydown.

So theres still a one $5 million give or take that still needs to occur for that catch up of the one to one so we will be pretty focused on that this year in case in point.

So theres still a one $5 billion give or take that still needs to occur for that catch up of the one to one so we will be pretty focused on that this year in case in point.

The program was set up to be opportunistic at times like this and Thats why the shares outstanding is trickling down and by the end of the year or early next year, Yes, we'll probably have to upsize the plan again.

And keep on marching on this long term path to eventually 200 million shares and in the long term run rate.

Got it.

Thank you second question.

Got it.

Just given your I think the largest single largest buyers of natural gas just curious how youre thinking about the supply over the next few years I think right now producers understandably retrenching, just given where pricing is the same time.

Thank you second question.

Given your I think your largest single largest buyers of natural gas just curious how youre thinking about the supply over the next few years I think right now producers understandably retrenching, just given where pricing is the same time.

We're hearing from some midstream companies that there are pockets of shortages in the mid Atlantic just due to the <unk>.

Horizon data centers and other types of electric needs. So curious as you think about that outlook. When all of this LNG capacity comes online in the next few years do you think.

<unk> been able to stand up and sort of deliver that spot.

<unk>, you can give us stand up and sort of deliver that spot.

Thanks, Dara this anatol I'll I'll jump in.

Thanks for the San Antonio I'll jump in.

We're very comfortable with I'm confident in the resource and the economics of developing that resource in this nation.

The challenge, we have which we've highlighted.

Multiple times for years is building infrastructure and I think it is going to be a long time before anybody attempts another mountain valley pipeline or equivalent out of what is an incredible resource in the northeast in the Marcellus and Utica that said.

The challenge, we have which we've highlighted.

No.

Take <unk>.

Very seriously and as sacrosanct gas supply and the infrastructure needed to supply our facilities for decades to come and that's one of many reasons why the U S. Gulf Coast is our home and where we're very confident that that Louisiana, Texas mid continents can continue to develop the resource.

No.

We take.

The infrastructure necessary to get it to us Jack mentioned, the ADC pipeline Thats moving well, obviously Permian continues to grow and we will need more interest state infrastructure, we will need more interstate infrastructure as you probably saw we filed for <unk> together with our SPL applications. So we are we are.

The infrastructure necessary to get it to us Jack mentioned, the ADC pipeline Thats moving well, obviously Permian continues to grow and we will need more interest state infrastructure, we will need more interstate infrastructure as you probably saw we filed four together with our SPL applications. So we are we are.

Confident that the Gulf Coast will continue to be well supplied but but obviously, we would prefer that other resource in the country was able to get to market as well.

Got it helpful color as always I'll leave it there thanks guys.

Thank you we'll go next to Tristan Richardson with Scotiabank.

Thank you we'll go next to rich <unk>.

Hey, guys just one from me this morning follow up on a prior question about.

John Richardson with Scotiabank.

Hey, guys just one from me this morning follow up on.

Distribution levels of <unk>.

Prior question about.

I think the philosophy of a base plus variable is relatively new gone back to 2022, but.

Distribution levels of <unk>.

Yes.

Philosophy of a base plus variable is relatively new gone back to 2022, but.

Is there a potential here that could rethink that philosophy.

Is there a potential here that you could rethink that philosophy.

With the focus on retaining more cash in anticipation of the proposed <unk>.

And with the focus on retaining more cash in anticipation of the proposed <unk>.

I think what we planned in 2022 was.

Planned for distributing out a lot of cash efficiently.

And in 'twenty, two and 'twenty three.

And then being in a position where we can do.

In 'twenty, two and 'twenty three.

Mega project inside an MLP.

And then being in a position where we can do.

So when we set the 310 distribution.

Mega project inside an MLP.

The base, we intend to pull that obviously this year, we're actually even above that we had enough cash to be able to meet our objectives going into developing and preparing for the Sabine expansion and so we're going to distribute that out to cei and our unit holders.

When we set the 310 distribution as.

As the base, we intend to pull that off.

Obviously this year, we're actually even above that we have enough cash to be able to meet our objectives going into developing and preparing for the Sabine expansion and so we're going to distribute that out to cei and our unit holders.

When it comes down to <unk> the project in the next couple of years.

But when it comes down to <unk> the project in the next couple of years.

<unk> maintained the base distribution stay.

The goal is maintain the base distribution.

Stay investment grade everywhere and.

Fund the project.

Stay investment grade everywhere and.

Within cash flow. So this all kind of works, which is pretty amazing for an MLP, but one with six trains fully up and running.

Fund the project.

Within cash flow. So this all kind of works, which is pretty amazing for an MLP, but one with six trains fully up and running.

It works quite well and then as you think about the $3 10 based distribution orders of 325 this year yes.

Yeah, again, we're still talking about $2 billion of distributions and an over 6% yield.

So we are cognizant of making sure that that was competitive and kept us going in the right direction with our unit holders and our own stake in <unk>.

I appreciate it and then maybe just a follow up on the 24 guide.

<unk> and then maybe just a follow up on the 24 guide. Thank you.

In the prepared comments you highlighted a higher proportion of bridging volumes just wanted to sort of the upward items in the guide versus the nine train run rate can you talk about.

How may be mechanically bridging volumes of work and how that can kind of contribute more to that upside.

How may be mechanically bridging volumes are working and how that can kind of contribute more to that upside.

Sure those bridging volumes are basically long term contracts that helped us underpin RFID stage three that have already begun before stage three has begun.

Sure those bridging volumes are basically long term contracts that helped us underpin RFID stage three that have already begun before stage III has begun.

Those bridging volumes, our anr of two to $2 50 range and why we went into this year 90, 798% contracted.

So when we think about the bridging volumes, though in the context of having some near term volumes on a 15 to 20 year deal.

If the curve is liquid we will get value for the curve and blended over the 20 years or 15 years. So.

Those margins are incrementally up to a deal that might start with the CP have a trained up and running.

Those margins are incrementally up to a deal that might start with the CP of a train up and running.

We're only talking about.

Nickels and dimes here.

We're only talking about Nichols.

No that's great. Thank you I appreciate it.

Nickels and dimes here.

No that's great. Thank you I appreciate it.

Thank you, we'll take our final question from Ben Nolan with Stifel.

Yes. Thanks.

Yes.

Well.

Yes. Thanks.

For my first one as we think about.

Yes.

Well.

<unk>, how the year plays out and appreciating that virtually everything is fixed.

For my first one as we think about.

How the year plays out and appreciating that virtually everything is fixed.

Is there going to be any any sort of cadence to how how the EBITDA and the cash flow comes through or should it be pretty linear do you thing.

It's never perfectly linear we produced more in the winter months at that at the site. So with that you should expect slightly more EBITDA.

In the colder colder.

Quarters versus the summer or the shoulder seasons.

In the colder colder.

Quarters versus the summer or the the shoulder season.

Basically it should be.

On a year five 5% to $6 billion to EBITDA and why we don't guide on a quarterly basis.

But we expect 45 million tons, and we are now 99% contracted and the optimization.

I'm not forecasting that today, so that's probably the only thing that could create some variability quarter to quarter.

Okay I appreciate that and then for my follow up.

Just on the regulatory side. Obviously this is the third time, we've been going through this process I'm curious if you guys think the hurdle is getting increasingly more challenging.

For new projects or.

Is it do you think that.

All of this rhetoric is.

Is changing how how Washington thinks about the business.

Well first the <unk>.

<unk> always been higher right. This is a very capital intensive business. It takes years to get one of these across the finish line. It's a balancing act between capital cost and.

<unk> and <unk>.

And contracted amounts and financings and everything else and we make it look easy band, but it is not.

The only positive thing in the past was the regulatory certainty around America contract sanctity and.

While I think this is politically motivated.

Hopeful that at the end of the day.

We go back to where we were before which is we let the market dictate which projects will survive and which ones work and that's where we've always been in the market has been extremely efficient.

At who they are going to bet on and I would bet on Cheniere every single day.

Alright, well I appreciate you guys fitting me in thanks.

Thank you and thank you all for all of your support.

That will conclude today's call. We appreciate your participation.

Operator: conference over to Randy Bhatia. Please go ahead.

Randy Bhatia: Thanks, operator. Good morning, everyone, and welcome to Cheniere's Q4 and full year 2023 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 Feygin, Executive Vice President and Chief Commercial Officer, Zach Davis, Executive Vice President and CFO, and other members of Cheniere's senior management. 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.

Randy Bhatia: 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, L.P. 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 three. 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 and 2024 guidance. After prepared remarks, we will open the call for Q&A. I'll now turn the call over to Jack Fusco, Cheniere's president and CEO.

Jack Fusco: Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review a successful 2023 and discuss our outlook for what is setting up to be a very busy and promising 2024. In 2023, we drove exceptional results across the key strategic priorities of the company, and we did so while reinforcing our track record on safety, execution, and operational reliability. I'm extremely proud of my 1,600 Cheniere colleagues across operations, engineering, and construction, origination, and others who continue to be driven by excellence and take pride in solidifying Cheniere as best in class across our platform. We made significant strides despite some persistent macro headwinds and increased uncertainty in 2023, each largely driven by conflict, geopolitics, and the evolving regulatory landscape, particularly right here in America.

Jack Fusco: I'll touch on the latter in a moment, but the macro backdrop for LNG today provides a blunt yet clear reminder of the criticality of secure and stable energy supply and the value of a reliable and customer-focused operator who consistently delivers on its promises to its global stakeholders. Please turn to slide 5 while I review some key operational and financial achievements from the Q4 and full year 2023 and introduce our 2024 financial guidance. We generated Consolidated Adjusted EBITDA of approximately $1.65 billion in the Q4, bringing our full year total to approximately $8.8 billion, the high end of our most recent guidance range.

Jack Fusco: We generated approximately $1.1 billion of distributable cash flow in Q4 and $6.5 billion for the full year, which is above the high end of our guidance range. Looking back at the original guidance provided for 2023, we beat the midpoint of each of those guidance ranges by over $500 million. Once again, illustrating the volatile nature of current global natural gas markets and the value of Cheniere's platform to monetize that volatility last year. For Q4, we generated approximately $1.4 billion in net income, bringing the full year total to approximately $9.9 billion. Strategically, 2023 was another year marked by significant accomplishments across the entire platform, and I'll highlight just a few of them here.

Jack Fusco: First and foremost, we continue to execute on the company's long-term objectives with safety at the foundation of our actions. In 2023, we once again demonstrated this by achieving a total recordable incident rate of 0.10, which is well within the top decile for industrial producers. We achieved this while simultaneously operating the second-largest LNG platform in the world and being deep in construction on a 10+ million ton per annum expansion project. These safety results are a source of tremendous pride for me, and that pride should be felt by all the company stakeholders. We produced and recorded a record 169 LNG cargoes in Q4, bringing the total to a record 637 cargoes for the full year.

Jack Fusco: Total production was in line with our forecast of about 45 million tons, inclusive of the successful major maintenance turnaround at Sabine Pass over the summer. Europe remained the premium market for US cargoes across 2023. 73% of the volume produced at our facilities was delivered to Europe. 5 new long-term customer contracts commenced over the course of 2023, representing approximately 3.7 million tons per annum. Earlier this month, we commenced our 1.1 million ton per annum PETRONAS contract, which was tied to Train 6 on the very first day of the DFCD window, holding to our standard of always meeting our customer commitments. On the E&C front, Corpus Christi Stage 3 is progressing on an accelerated timeline, and we continue to forecast first LNG production from Train 1 at the end of this year.

Jack Fusco: In 2023, we advanced total project completion to over 50%. I'm extremely pleased with the progress we continue to make together with Bechtel on Stage Three, and I'm optimistic for further schedule improvements over time. We took some important steps last year in preparation for Stage Three to commence commissioning and operations. Construction on the ADCC pipeline being built from Agua Dulce to support Stage Three is progressing well, and the pipeline is expected to be in service in Q3 in advance of Train One's accelerated startup. In addition, in H2 of last year, we purchased for approximately $100 million an existing 400MW power plant in Corpus Christi, which is located on our property, in order to help mitigate risks associated with our increased power purchasing needs once Stage Three commences operations.

Jack Fusco: These milestones, coupled with the construction progress on the project, reinforces my confidence in Stage Three's timeline, improving over time with first LNG this year and meaningful LNG production added to our portfolio in 2025. Our commercial momentum continued in 2023 as LNG buyers the world over helped get the commercialization of the SPL expansion project off to an incredibly promising start. We have signed long-term agreements with six counterparties across Asia, Europe, and Canada for an aggregate of over 6.5 million tons per annum, effectively commercializing all of Train Seven. We are encouraged by the market's early reception, especially since the majority of these counterparties are repeat customers. I view it as a recognition of the value of Cheniere's reputation.

Jack Fusco: We are focused on furthering development of the project in 2024 across commercialization, regulatory, and financing work streams, with a focus on submitting our full permit application with the FERC before the end of this quarter. Throughout 2023, Zach and his team continued to execute on the 2020 Vision Capital Allocation Plan, making significant progress across the key pillars of the plan, debt reduction, capital return, and disciplined growth investments. We've paid down over $1 billion of debt and achieved investment-grade ratings throughout our structure. We bought back almost 10 million shares for approximately $1.5 billion in declared dividends of $1.66 per share, and we invested approximately $1.5 billion into Stage 3. We've made great strides on the comprehensive plan since announcing it in late 2022.

Jack Fusco: Now, turning our focus and attention to 2024, I am pleased to introduce our 2024 financial guidance of $5.5 to 6.0 billion in Consolidated Adjusted EBITDA, $2.9 to 3.4 billion in Distributable Cash Flow, and $315 to 335 per unit distribution of CQP. We again are forecasting annual results that are above the midpoint of our run rate nine train guidance, and our expected results this year have a tremendous amount of visibility given on how highly contracted we are. On the CQP distribution guidance, consistent with the prior messaging, we intend to maintain the $310 base distribution and adjust the variable component beginning in 2024 in order to begin preserving some cash and fortifying the CQP balance sheet as the SPL Expansion Project gains momentum.

Jack Fusco: Zach will provide more details on the 2024 guidance in a few minutes. Turn now to slide 6, where I will address the DOE news and our response. As you're all aware, the Department of Energy recently announced it would suspend making determinations on authorizations for LNG exports to non-free trade agreement countries, pending an update to the economic and environmental analysis underpinning its public interest determination methodology. While this decision does not currently impact our expansion projects or our FERC processes at Sabine Pass and Corpus Christi, it does introduce regulatory and permitting uncertainty into the US LNG industry as a whole. I firmly believe that a fair and transparent regulatory framework is essential for the future development of natural gas infrastructure in the United States, particularly liquefaction capacity, given the scale of investment, commercial support, and time required to bring these projects online.

Jack Fusco: With that said, we believe we will secure all necessary regulatory approvals for mid-scale Trains Eight and Nine and the SPL expansion project within our expected timelines, as we have for more than a decade under multiple administrations. To be clear, the DOE action has not slowed down our expansion projects at either site. We are full steam ahead on Corpus Christi Trains Eight and Nine and the SPL expansion project development. We expect to file the FERC application for SPL very soon, and Corpus Christi Trains Eight and Nine are in advanced stages in the FERC approval process. The environmental assessment for Trains Eight and Nine is scheduled for receipt by the end of March. We just received a letter of determination from PHMSA, a key agency in the FERC process last week.

Jack Fusco: We remain confident that our previous timelines won't be materially impacted, and we will maximize the efficiency with having Bechtel on-site already through Stage 3. Having spent the last eight years at Cheniere, I've never been more confident in the critical role of US LNG in the global energy market. I firmly believe the DOE studies will come to the same conclusion, given one, the importance of long-term energy security, two, the opportunities for global decarbonization through coal to gas switching for power generation, and the critical role that dispatchable gas-fired power plants plays in backstopping intermittent renewables, three, low and stable domestic natural gas prices, and of course, four, the incredible economic benefits created in the communities where we live and work. Global energy markets are calling for additional LNG supply.

Jack Fusco: The US is significantly advantaged to answer this call with our abundant and low-cost natural resources, flexibility and affordability of US volumes, and until recently, the reliability and certainty of the US regulatory regime. Gulf Coast LNG positions the US as a leader in facilitating energy security and worldwide emissions reductions. This is a generational opportunity, something we should be proud of, and working to maximize, not restrict. With that, I'll hand it over to Anatol to discuss the LNG market. Thank you all again for your continued support of Cheniere.

Anatol Feygin: Thanks, Jack, and good morning, everyone. The global LNG market continued to rebalance throughout 2023 as Europe navigated its energy crisis and Asia adapted to the delicate new market equilibrium amid some regional economic headwinds. Global LNG trade grew by approximately 3% from 2022, adding 10.5 million tons of supply to the overall market. Aside from 2020, global supply growth has not been this low since 2011 through 2015 period. Nevertheless, this increase in supply was broadly matched by an increase in Asian demand, which grew approximately 4% year-over-year to approximately 263 million tons per annum as the region furthers its post-pandemic return. On the supply side, only one new train came online in 2023 globally, the third train at Tangguh LNG in Indonesia.

Anatol Feygin: Most of the growth in LNG output last year actually came from the continued ramp-up of existing projects in the US. The US exported 86 million tons last year, becoming the world's largest exporter in 2023, ahead of Australia and Qatar for the first time. More than half of those volumes were produced by Cheniere. In the Q4 alone, US exports reached record highs of nearly 24 million tons, contributing to the global markets rebalancing. Despite persistent geopolitical unrest globally and the continued phase-out of Russian pipe gas in Europe, spot price levels have decreased this winter compared to last year due to a combination of mild weather, macroeconomic fundamentals, high storage levels, and sufficient LNG supply availability.

Anatol Feygin: In Q4, TTF averaged $13.66 an MMBtu, and JKM, $14.97, both significantly lower than levels seen in the previous two years, and both have continued to trend down through Q1 of this year. Henry Hub benchmark also decreased in Q4, falling to an average of $2.88 an MMBtu. For the full year of 2023, TTF monthly settlement prices averaged $13.73 an MMBtu, over 66% lower year-over-year and 4.6% lower than 2021. Similarly, the 2023 average settlement price for JKM decreased 53% year-over-year to an average of $16.13, while the Henry Hub average settlement price was $2.74, down approximately 59% from $6.64 in 2022 during the height of the energy crisis in Europe.

Anatol Feygin: Let's address the regional dynamics on the next page. With more than 65% of all US LNG volumes in 2023 flowing in Europe, the region's underground storage inventories remained elevated throughout the year, easing concerns about physical market tightness amid further reductions in all other sources of gas supply to the region. Total gas supply to Europe fell 56 BCM year-on-year, due mostly to the continued reduction in Russian flows, as well as heavy upstream maintenance in Norway, further affecting pipe gas supply. Nonetheless, storage levels ended the calendar year at 86% full, the second-highest level for the period since storage data became available in 2011. Meanwhile, gas demand in the region's key markets continued to drop, declining by 9% year-on-year in 2023, following a 12% reduction in 2022.

Anatol Feygin: The power sector accounted for nearly half of these reductions amid relatively mild temperatures, continued conservation efforts, improving nuclear performance, and growth in renewable generation. Aside from Germany, industrial demand reductions appear to have bottomed out in 2023 throughout the region. In Asia, as I mentioned, LNG demand grew by 4% or 9 million tons year-on-year, thanks to a resurgence in demand from China and other emerging economies throughout Asia. Most of the uptick in Asia's demand was largely due to a rebound in China's economy, which resulted in a 7.5% year-on-year increase in gas consumption. It was up 27 BCM. Despite a 13 BCM increase in domestic gas output and the scheduled 7 BCM ramp-up in the Power of Siberia flows last year, China's reliance on LNG remained high at 25% of total gas supply.

Anatol Feygin: The country's imports rebounded by about 12% to 71 million tons last year, about 8.5 million tons below the peak 2021 levels. We continue to expect gradual but continued growth in gas consumption that will increase the call on LNG going forward. In addition to China, an approximately 8.5 million tons year-on-year increase in South and Southeast Asia's imports also contributed to growing global demand last year. Thailand and India led the charge as LNG spot prices moderated and demand for gas-fired power generation reached record levels in India. Additionally, 3 new receiving terminals started in this region, giving the nascent import markets of the Philippines and Vietnam access to LNG, which we believe will help power their economies for years to come.

Anatol Feygin: LNG demand growth in Asia was partially offset by the reduced demand for LNG in Japan due to lower electricity demand and increased nuclear availability. In Japan, two nuclear reactors restarted in 2023, increasing available nuclear capacity to the highest levels since the Fukushima disaster in 2011. This is a structural trend in Japan that we expect will continue to impact gas-fired power generation and consequently, LNG imports over time. Let's move to the next slide, where we'll consider the outlook for gas in these and other economies. As discussed, global gas demand in 2023 remained relatively flat, growing by 20 BCM or 0.5% amid tight global supplies and historically elevated prices. In contrast, global demand for coal was up 1.4% on the back of increased use in emerging and developing economies.

Anatol Feygin: Given the DOE action related to climate that Jack already discussed, it's worth highlighting here the simple fact that for the second year in a row, global coal consumption hit a new all-time record. Coal-fired power generation increased in 2023 despite continued coal to gas switching in the US, notable declines in Europe, and significant growth in renewable generation overall, which rose over 22% globally. As shown in the lower left, more than half of the power demand growth in China and India in 2023 was supplied by coal. Coal-fired generation from these two nations alone increased by 419 TWh, which is roughly equivalent to the total power generation for the entire country of France and more than 80% of the entire growth in renewable power generation seen last year.

Anatol Feygin: While China and India remain committed to growing gas as a primary energy source in their respective economies, tight gas supplies and higher than normal global LNG prices in recent years have impacted the pace of potential gas consumption growth in these developing economies. More broadly, coal remains the largest source of power generation globally and represents about two-thirds of power sector emissions and about a quarter of total emissions globally. With power demand expected to double by 2050, any hope of achieving global decarbonization and clean energy targets will require further displacement of coal use wherever possible, especially in countries like China and India. As Jack noted, natural gas holds a critical role in helping achieve these goals over the coming decades, which we expect will result in robust increases in demand for natural gas over that period, as shown by the outlooks on the central chart.

Anatol Feygin: The fast-growing economies in the Asia Pacific region are expected to play the greatest role in powering gas demand beyond the 2040s, when demand from Europe and the developed world could possibly be in modest decline and regional gas supplies in Asia further deplete. The outlook for global gas demand should remain robust going into the second half of this century because natural gas is an affordable, reliable, and sustainable solution that will serve to displace coal and support the deployment of intermittent renewable energy sources. In 2023 alone, we have executed over 6.5 million tons per annum of long-term agreements, representing over 119 million tons in aggregate volume of LNG between 2026 and 2050. The majority of which are with repeat customers and are structured to meet each customer's unique long-term objectives.

Anatol Feygin: These investment-grade counterparties include North American producers, portfolio players, and Asian and European end users, all of which seek secure, cleaner, affordable, and flexible supply. Our customers sign up for decades of LNG from Cheniere because they believe in the long-term role of natural gas, and they believe in Cheniere's ability to deliver the LNG reliably and responsibly. Looking ahead to 2024, as the market continues to stabilize and achieve the stable pricing necessary to ensure market access and adoption, we anticipate our premium products will continue to have broad-based appeal. With that, I'll turn the call over to Zach to review our financial results and guidance.

Zach Davis: Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our Q4 and full year 2023 results, key financial accomplishments, and introduce our financial guidance for 2024. Turn to slide 12. For Q4 and full year 2023, we generated net income of approximately $1.4 billion and $9.9 billion, Consolidated Adjusted EBITDA of approximately $1.65 billion and $8.8 billion, and Distributable Cash Flow of approximately $1.1 billion and $6.5 billion respectively.

Zach Davis: With today's results, our full year Consolidated Adjusted EBITDA results were at the high end of our most recent guidance range, and we exceeded the high end of the range on Distributable Cash Flow, mainly attributed to higher margins captured on open capacity and optimization upstream and downstream of the plants. In addition, we have now reported positive net income on a quarterly and cumulative trailing four-quarter basis 5 quarters in a row. As compared to 2022, our Q4 and full year 2023 results continue to reflect a higher proportion of our LNG being sold under long-term contracts with less volumes being sold into short-term markets, as well as the further moderation of international gas prices relative to what we experienced in 2022. These impacts were partially offset by certain portfolio optimization activities that our teams were able to achieve throughout the year.

Zach Davis: During Q4 and full year, we recognized in income 618 and 2,353 TBtu of physical LNG respectively, which included 607 and 2,318 TBtu from our projects, a record for the full year, and 11 and 35 TBtu sourced from third parties respectively. Approximately 90% and 87% of these LNG volumes recognized in income were sold under long-term SPA or IPM agreements with initial terms greater than 10 years respectively. While we have many significant achievements to highlight from 2023, I'm particularly proud of my team's focused execution on our 2020 vision capital allocation plan. We deployed approximately $5 billion towards balance sheet management, shareholder returns, and accretive growth in 2023 alone, while maintaining strong available liquidity going into this year.

Zach Davis: In aggregate, since updating our capital allocation plan in September 2022, with a target of $20 billion of cash deployment through 2026 and $20 per share of run rate DCF, we have now deployed over $8 billion. Execution under the plan got off to a fast start in early 2023 when we achieved investment-grade ratings at both of our parent entities, bringing the entire Cheniere complex to investment-grade status. In June, we issued our inaugural corporate investment-grade bond, placing $1.4 billion of unsecured notes at CQP. These milestones follow approximately $8 billion of deleveraging over the last 3 years from approximately $32 billion of debt at our peak to now under $24 billion.

Zach Davis: During Q4, we repaid $50 million of long-term indebtedness, further redeeming a portion of the senior secured notes due in 2024 at SPL and bringing our total long-term debt paydown for the year to approximately $1.2 billion. We plan to address the remaining balance of the SPL 2024 notes with cash on hand within CQP early this year, after which point we will have addressed all maturities in the complex for the year. We have already begun strategizing around the 2025 maturities we have at both SPL and CCH, and as always, we will evaluate opportunities to efficiently refinance or delever throughout the year. The buyback plan is working as designed and enabling us to be opportunistic.

Zach Davis: During Q4 and full year 2023, we repurchased an aggregate of approximately 2 million and 9.5 million shares of common stock for approximately $339 million and $1.5 billion, respectively. As the share price has provided greater opportunities so far this year compared to Q4 of 2023, deployment under the share repurchase plan has accelerated, and year to date, or in just a month and a half or so, we have already deployed nearly $500 million, which is more than we did in any quarter in 2023. Repurchasing almost 3 million shares so far, bringing our total shares outstanding to under 235 million currently.

Zach Davis: We will continue deploying the now under $2 billion remaining under the plan over the next year or so, with the expectation we will get to the cumulative one-to-one share repurchase to debt paydown ratio and complete the current $4 billion authorization ahead of its three-year window, at which point the focus will primarily be on updating the buyback plan again with the board while maintaining our IG balance sheet across the complex as we prepare for our accretive growth initiatives at Corpus and Sabine in the coming years. We also declared $1.66 per common share in dividends for 2023, a nearly 15% increase year-over-year, having increased our quarterly dividend by 10% in Q3, consistent with our stated target of 10% annual dividend growth.

Zach Davis: Over time, we intend to steadily increase our overall payout ratio as our platform grows while still maintaining the financial flexibility essential to our capital allocation plan and growth objectives. During the quarter, we funded approximately $467 million of CapEx at our stage three project, bringing total spend to approximately $1.5 billion for the year and a little over $3 billion in total for the project. While front-loading the equity spend has enabled considerable interest savings, we still have over $3 billion available on our CCH term loan that we plan to utilize over time as the project progresses towards full completion in 2026, and we expect to spend between $1.5 and 2 billion in stage three CapEx this year.

Zach Davis: Turn now to slide 13, where I will discuss our 2024 guidance and outlook for the year. Today, we are introducing our full year 2024 guidance ranges of $5.5 to 6 billion in Consolidated Adjusted EBITDA and $2.9 to 3.4 billion in Distributable Cash Flow. As we've been clear about on recent calls, 2024 represents our most contracted year to date, as all contracts signed to underpin our existing 45 million ton platform have commenced, as well as some bridging volumes tied to contracts signed in support of our growth projects. It's likely 2024 will represent a trough year for EBITDA after being down sequentially since 2022, as we expect to move upward post 2024 as Stage 3 commences and eventually reaches run rate in 2026 and beyond.

Zach Davis: With very little unsold capacity remaining throughout the year, these ranges largely reflect our 9-train run rate guidance, adjusted for a higher proportion of volumes sold under long-term contracts or bridging volume, as well as some forward selling of spot cargoes at higher international gas prices. These positive adjustments are partially offset by the prepayment and cancellation of the Chevron TUA and some incremental O&M costs related to our planned maintenance program. We expect to produce approximately 45 million tons of LNG this year, inclusive of planned maintenance at both sites. We remain optimistic we will achieve first LNG from train one of stage three this year, but that would not impact our revenues or EBITDA in 2024, as it will likely remain in commissioning through year-end.

Zach Davis: In terms of portfolio optimization activities, we include any such transactions already completed in the guidance, but we do not forecast additional beyond 2022. 2022 remains on track as we continue to execute on the plan this year, and credit goes to our commercial team who have pre-sold our 2% open capacity going into this year, which has come down from 50 TBtu to 15 TBtu since the November call, highlighting that despite the recent drop in global gas indices, our EBITDA forecast remains above the $5.5 billion midpoint of our 9-train run rate guidance. As always, our results could be impacted by the timing of certain cargoes around year-end, as well as incremental margin from further optimization upstream and downstream of our facilities.

Zach Davis: Our distributable cash flow for 2024 could also be affected by any changes in the tax code under the IRA. However, the guidance provided today is based on the current IRA tax law guidance and assumes we qualify for the minimum corporate tax of 15% this year. As the year progresses, we will likely tighten our ranges consistent with what we've done in the last two guidance cycles. At CQP, our full year 2024 distribution guidance range is $3.15 to $3.35 per common unit, which maintains our base distribution of $3.10 and a variable distribution of between 5 and 25 cents.

Zach Davis: As we have discussed publicly for the last year, by adjusting the variable component of our base plus variable distribution this year, we are preserving cash and balance sheet capacity at CQP in anticipation of funding the $10+ billion SPL expansion project according to our disciplined capital investment parameters, which call for financing the project 50% with cash flow while maintaining investment-grade ratings at both SPL and CQP, all within a traditional MLP structure. This DPU guidance keeps us on our previously assumed FID timeline and should be viewed as an indication of our confidence in the attractiveness and viability of the SPL expansion project. In the near term, deleveraging at CQP or SPL can be considered early investments in the SPL expansion project until we are in a position to formally sanction the project, raise financing, and begin construction, which we plan for in 2026.

Zach Davis: We expect the accretive SPL Expansion Project could increase the run rate distributable cash flow at CQP to over $5 per unit, a win not only for CQP unit holders, but LNG shareholders as well. Since we are in the high splits of the MLP, meaning approximately 75% of the incremental cash flow would accrue to CEI and further meaningfully increase our run rate DCF per share target over time, as it was not baked into the original 2020 vision. Looking beyond this year, the Cheniere story remains the same. Our highly contracted business model is built upon long duration, fixed fee, investment-grade, take-or-pay style cash flows, which underpin the $40 billion natural gas infrastructure platform we operate today.

Zach Davis: As we pursue brownfield expansions, our approach will be consistent with that of the first over 55 million tons, adhering to our disciplined investment parameters so that our cash flows and our value proposition remain insulated from whatever transitory supply and demand imbalances may occur over the next decade plus. Our company provides investors with exposure to LNG, the theme more so than the commodity, and its inherent stability and long-term visibility in our contracted cash flows, growth, and shareholder returns that should enable us to continue to deliver meaningful value to our stakeholders for decades to come. 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.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. Please make sure your mute function is turned off to allow your signal to reach our equipment. We ask you limit yourself to one question and one follow-up to allow as many questions as possible. You may rejoin the queue if you have additional questions. We'll go first to John Mackay with Goldman Sachs.

John Mackay: Hey, good morning. Thank you for the time. I appreciate the color you guys gave on the 2024 guide and that you're already above the kind of 9-train run rate. Maybe you could just spend another minute talking through what kind of gets you to the low end of the range versus the high end of the range. You know, it's about the same $500 million range you gave for 2023, but there were more open volumes unsold at that point. Maybe just kind of walk through those dynamics. Thank you.

Zach Davis: Hi, John, it's Zach. I'll just say the $500 million range is basically we're keeping the same cadence that we've had for the last couple of years with the $500 million. It's still under 10% of the EBITDA. It's safe to assume that we're gonna start right now around the midpoint of that range. From there, I would say there's a few variables, even though the open capacity is so small and $1 CME move in margins is only $15 million. With most of the year still ahead of us, $1 move in Henry Hub can move EBITDA in the lifting margin by around $100 million.

Zach Davis: Just year-end timing of deliveries, that can move things around $100 million as well, even though a lot of those end-of-year cargoes are even locked in at pretty attractive rates by the team. When it comes to the upside and downside to the high end and low end. On the low end, it would really have to be something unforeseen today operationally that got us that close to the low end, considering how locked in we are. It would be maybe a longer maintenance cycle than we even had last year, which we don't foresee, or a tougher hurricane season or something of that sort.

Zach Davis: On the upside, I'd just say we've been very clear from the get-go. We don't guide on optimization upstream and downstream of the plants that's not locked in. As that accrues, ideally through the year, even though margins are lower, Henry Hub is lower and volatility has moderated, that should help us get to the upside. Yeah, we'll stay optimistic on seeing if we can get a couple more cargoes out through the course of the year.

John Mackay: I appreciate all that detail. Maybe just a follow-up, and maybe this one's for Anatol. There's been obviously a lot of focus in the market on kind of the next 3.5 years for the LNG market with, you know, US and Qatar supply coming online, and the demand picture, you know, maybe not warming up as fast as we would have hoped. I understand the kind of long-term dynamics you talked about earlier in the call, but maybe just spend a couple of minutes walking through what you see as this kind of, you know, medium-term outlook, and maybe what the supply-demand balance looks like around, you know, the back half of this decade. Thanks.

Anatol Feygin: Sure. Thanks, John. Thanks for the questions. I'll start kind of in reverse order. You know, the market will grow what the supply allows it to grow, right? The 10.5 million tons was a function of that supply coming into the market and being placed where it was most needed at the margin. The things that are encouraging to us and we see as kind of inexorable trends are the commitments to gas and the investments in long-dated infrastructure. Not a month goes by that we don't add a couple of regas terminals, and you know, things like gas-fired power plants are very difficult to get. Turbines are difficult to get for years, and that is a function of the deployment of that infrastructure globally.

Anatol Feygin: We prefer a world where LNG is in those high single-digit, low double-digit rates, where returns for us are attractive but reasonable, and the consumers can get their hands on these attractive BTUs, and as we mentioned in the prepared remarks, are competitive with coal and other generation sources. We remain very optimistic. You'll see volumes going into South and Southeast Asia. You'll see the marginal kind of elastic demand come back into the market. We're already seeing that even in the early days post the Chinese New Year. We think that these are trends that will last for decades and decades to come. We have kind of those commercial engagements with those types of counterparties that are continuing apace.

Anatol Feygin: We think the market will enjoy absorbing this volume and whether it comes online on schedule or if things are modestly delayed as they have been historically, we think that the market will show robust growth and ability to absorb this next wave.

John Mackay: That's great. I appreciate the time today. Thank you.

Zach Davis: Thank you. We'll go next to Jeremy Tonet with J.P. Morgan.

Operator: Thank you. We'll go next to Jeremy Tonet with J.P. Morgan.

Jeremy Tonet: Hi, good morning.

Anatol Feygin: Good morning, Jeremy.

Jeremy Tonet: Just wanted to kind of unpack a little bit more on your earlier comments there when you talked about beating the midpoint of the prior guidance range. I think I don't know if it's a $ half billion or so. Just wondering, you know, what type of quantum of optimization Cheniere has been able to realize because of volatility in the market, both upstream and downstream operations. What's that number look like?

Zach Davis: It's been $ hundreds of millions, Jeremy, in terms of the optimization. I'd say $ hundreds of millions, both in the upstream and downstream side. Mind you, Henry Hub was significantly up in 2022, moderated a bit last year, and it's even further down today. We'll see how much can be there. Then on the other side, yeah, we have a ton of IPM deals, DES deals, so we'll optimize those as we see fit and sub charter out any of our length in our shipping portfolio, which in the past has added $ hundreds of millions. Mind you, even that market has moderated as well in terms of the volatility.

Zach Davis: When you add those two things together, it would really take great execution and some opportunistic moments throughout the year for us to get to the high end of the range.

Jeremy Tonet: Got it. Just to be clear there then, $ hundreds of millions of synergies, or optimization rather, upstream and downstream both we've seen historically, and that's not really baked into the guidance, as we see it today because the guidance really just locks in what you've already locked down. Is that the right way to think about things?

Zach Davis: Yeah. That's right. We were pretty clear for quite some time now, as we thought about this year would be the closest we would be to the run rate. Considering how proactive we were going into this year, and now that we're only down to 15 TBtu, we're still above the midpoint of the run rate range for 9 trains, and we don't even have the TUA from Chevron anymore. This is where we expected it to be. It was baked into the 2020 vision and the $20+ billion of cash flow through 2026. We'll see how things play out on the optimization side. It's not baked in to this guidance today.

Jeremy Tonet: Got it. Very helpful. A lot of upside potential, but not baked into the guide. Very clear there. Thank you very much.

Jack Fusco: Thanks, Jeremy.

Operator: We'll go next to Brian Reynolds with UBS.

Brian Reynolds: Hi, good morning, everyone. Maybe to talk about just the distribution cut on the variable side. If you could just help, you know, talk about, you know, sizing and timing of that and ultimately how it relates to, you know, translating into the 15 MTPA expansion, you know, assuming like an 850 build. It seems like there's still a little bit of variable component in the guidance above that 3.1 kind of run rate. Just kind of curious how you came to that number and how we should think about, you know, pre-funding, you know, just given, you know, it could be $10 to 15 billion for the SPL expansion. Thanks.

Zach Davis: Sure. As we thought about the variable adjustment, I would say over the last two years, we were incredibly efficient with our cash inside of CQP. With the distributions, including the variables being over $4, both years, we probably distributed out almost $700 million more than even the run rate DCF per unit guidance that we give. Now it's time as we're getting closer to officially filing with the FERC for the Sabine expansion and are targeting that 2026 FID, that we're going to start retaining some of the cash and bringing down the variable. We're saving around, let's say $700 million.

Zach Davis: A large portion of that will actually just go into paying down a bit of debt that's coming due, giving us this flexibility financially to add leverage capacity once we FID the project, stay with that, let's say 50/50 debt to equity during construction and maintain the base distribution throughout while still being investment grade at Sabine and CQP. We're trying to thread a needle there. To do that, we need to start planning now. Mind you, some of the cash that's retained is also going into development of supporting the feed and getting Sabine expansion ready for FID. There's even $100 million or so baked in there for debottlenecking purposes.

Zach Davis: We think we found some ways to get to the higher end of the 4.9 to 5.1 range on the first exchange that hopefully can pay dividends to us in the coming years. There's a few things in there, but it is mainly debt paydown in the near term to add leverage capacity and flexibility in the long term. Mind you, it's still $2 billion of distributions coming out of CQP this year, with $1.2 billion of that going to CEI. If we can pull all this off and build this project and get to that over $5 DPU, we're talking about almost $2 billion of consolidated EBITDA, and we're talking about almost $1 billion of DCF to CEI.

Zach Davis: It's a win-win for all parties.

Brian Reynolds: Right. Makes sense. Appreciate all that. My second question, just around maybe further optimization. I know for the SPL expansion, it seems like there's some capital efficiency and optimization opportunities with boil off gas and some other things. You know, but as we think about the existing asset base, I think you talked about, you know, 45 MTPA, you know, kind of being a good run rate. It seems like 23, you know, was above that. You know, as we look ahead to 2024, have we squeezed out all the optimization on the existing asset base, or are there some new technologies or engines that could help, you know, kind of further drive efficiencies and optimization on the existing asset base going forward? Thanks.

Jack Fusco: Brian, this is Jack. While we're not going to guide upwards of the 45 million tons today, I'm always amazed at what my operations folks can deliver. Whether it's optimizing the trains or our maintenance schedule, they have just constantly outperformed. We're looking now. Zach mentioned $100 million or so for debottlenecking. One of the things I find really promising is we're looking at a new technology of our fin fans. Those are the fans that we use to cool the refrigerants that liquefy the natural gas, and we think there's a big opportunity there. We'll be trying that out in earnest this year, and I hope to have more news for you on later calls.

Brian Reynolds: Great. Appreciate it. Have a great rest of your morning.

Operator: Thank you. We'll go next to Theresa Chen with Barclays.

Theresa Chen: Morning. Going back to Jack's comments on the evolving regulatory backdrop, with respect to the DOE pause, I'm just curious how has this impacted conversations with customers, both within the context of commercializing your expansion projects, but also in relation to the broader commitment that the US government has to LNG exports and the perception of your global customers, and the credibility and competitiveness of the US LNG industry? Any salient commercial color you can provide would be great.

Jack Fusco: Theresa, I think I'm gonna just start with some overall comments, and then I'll turn it over to Anatol. I have to say, you know, this isn't really new. We've been through multiple administrations here at Cheniere. We've been through multiple studies on, you know, the public interest in exporting America's natural gas. What is shocking and new is over the last eight years, I think Cheniere has proven all the benefits to America and to our allies over exporting US LNG. I find it appalling that, you know, we need scientists to tell us theoretically, using theories and hypotheses of the benefits or not. As you know, we know that those benefits are factual, they're proven, they were witnessed by the world. I really look forward to seeing this study's report.

Jack Fusco: I look forward to the comment period, so we can get the record straight and accurate. I'm hopeful that cooler heads ultimately prevail, and that, you know, the facts will be evident, and this pause will be, you know, a distant memory. With that, I'll turn it over to Anatol, and he can tell you a little bit about what our conversations have been with our customers.

Anatol Feygin: Yeah. Thanks, Jack, and thanks, Teresa. Just to pick up where Jack left off, you know, this is the third time that DOE is doing this study, and I would say to Jack's point, the first two are a distant memory as the US goes from kind of mid-90s of millions of tons per annum of capacity today to close to 200. We still think really believe that the US will be the market's first 200 million ton exporter, and we will navigate this with the DOE. A lot of the things that we have been doing for the last four or five years on our LCA and our on our environmental science and tracking the emissions profiles, providing the Cargo Emission Tags, are all things that are new in the equation.

Anatol Feygin: Of course, just the quantum of LNG exports from the US and gas dedicated to LNG exports is a new component in this equation. We look forward to DOE's methodical, kind of science-based review and updating its profile, to Jack's point. We are confident, and we relay the same answer to our customers and our commercial engagements, that we're confident that Cheniere will be able to navigate whatever comes out of the DOE and continue to prosecute expansions on our timeline. This is not new. Every time there is a pivot, whether that is a modest pivot or a more major pivot, we have these discussions. We've navigated them for a decade plus, and are confident we'll continue to do so.

Anatol Feygin: That's exactly the message that we give to our customers, and we obviously firmly believe that.

Theresa Chen: Thank you. Anatol, going back to your comments, related to the elasticity benefits in the market currently, as price-sensitive buyers increase interest, can you elaborate on that? What do you think the magnitude of that demand, you know, can be if prices remain low?

Anatol Feygin: Yeah. Well, look, the market, it's hard to say that these are kind of unprecedented dynamics in the sense that the amount of infrastructure that has been brought online over the last 3 to 5 years is unprecedented over that period. We talk about the amount of liquefaction capacity that's coming online in the back half of this decade. You know, again, not a month goes by that there's not a new regas terminal. Europe added 5. Southeast Asia has added 4. Europe will now add Alexandroupolis in Greece in the coming days or weeks.

Anatol Feygin: The ability to consume this volume is enormous, and we're approaching a scale now relative to the current 400 million tons of exports, which obviously will grow, of almost 1,300 million tons per annum of import capacity. Markets like India, which have rebounded strongly as prices moderate, are now in a position to import more than twice as much volume as it imported in 2023. That was not a position that India was in early 2020 when prices were low, and it was a price-elastic consumer. I think you'll see that price elastic demand function really surprise to the upside as Philippines, Thailand, Vietnam, India, etc., are all in a position to take meaningful incremental volumes. Quite optimistic on that front.

Anatol Feygin: I think we all see these liquefaction numbers coming and, you know, again, historically, they have surprised to the downside in terms of schedule and utilization. We'll see how the world rebalances, but it certainly has the capacity to consume essentially whatever number you think will be added to the supply side.

Theresa Chen: Thank you.

Anatol Feygin: Thank you. We'll go next to Spiro Dounis with Citi.

Spiro Dounis: Thanks, operator. Good morning, team. Wanna go back to the 2020 vision if we could, Zach. I guess we're about one and a half years into that program, and you mentioned tracking on or even ahead of plan to date. I guess if we just shift the focus to the forward outlook and think about that outlook for 2025, or sorry, 2024 through 2026, how does that compare to what you envisioned back in 2022 as you sort of set that $20 billion target? I imagine some puts and takes since then. Stage 3 maybe coming on early. Not sure where you had the LNG curve then. Just trying to understand how much conservatism you imputed there.

Zach Davis: Sure. I would just say we're still at $20+ billion of available cash through 2026, and there are some puts and takes. We've made some more money in years like the past year. This year was always planned to be highly contracted, and then we assumed guaranteed completion dates for stage three, meaning not even train seven wasn't even going to come online till 2027 outside of that period of time. All in, we're still over $20 billion. We've deployed over $8 billion, so about 40% in about 30% of the time. But the main thing to focus on is really that excess cash and how we're gonna deploy that going forward.

Zach Davis: As you can tell, with some of the debt pay down, which will be less than we even did this year, staying inside of CQP, CEI is gonna mainly be focused on catching up on the buyback and completing the equity funding of Stage 3. At this point, we've done over $2 billion of buybacks, but we've done over $3.5 billion of debt pay down. There's still a $1.5 billion, give or take, that still needs to occur for that catch-up of the one-to-one. We'll be pretty focused on that this year. Case in point, the program was set up to be opportunistic at times like this, and that's why the shares outstanding is trickling down.

Zach Davis: By the end of the year or early next year, yeah, we'll probably have to upsize the plan again and keep on marching on this long-term path to eventually 200 million shares in the long-term run rate.

Spiro Dounis: Got it. That's helpful, Zach. Thank you. Second question. Just given you're I think the largest or one of the largest buyers of natural gas, just curious how you're thinking about the supply over the next few years. I think right now producers understandably retrenching just given where pricing is. At the same time, we're hearing from some midstream companies that there are pockets of shortages in the Mid-Atlantic just due to the rise in data centers and other types of electric needs. Curious, as you think about, you know, that outlook when all this LNG capacity comes online, you know, in the next few years, do you think the producers are gonna be able to stand up and sort of deliver on all that supply?

Anatol Feygin: Thanks, Spiro. This is Anatol. I'll jump in. Look, we're very comfortable with and confident in the resource and the economics of developing that resource in this nation. The challenge we have, which we've highlighted, you know, multiple times for years is building infrastructure. I think it's gonna be a long time before anybody attempts another Mountain Valley Pipeline or equivalent out of what is an incredible resource in the Northeast, in the Marcellus and Utica. That said, you know, you know us and we take very seriously and as sacrosanct gas supply and the infrastructure needed to supply our facilities for decades to come.

Anatol Feygin: You know, that's one of many reasons why the US Gulf Coast is our home, and we're very confident that Louisiana, Texas, Midcontinent can continue to develop the resource and the infrastructure necessary to get it to us. Jack mentioned the ADCC pipeline that's moving well. Obviously, Permian continues to grow, and we'll need more intrastate infrastructure. We will need more interstate infrastructure, as you probably saw we filed for together with our SPL application. We are confident that the Gulf Coast will continue to be well supplied, but obviously would prefer that other resource in the country was able to get to market as well.

Spiro Dounis: Got it. Helpful color as always. I'll leave it there. Thanks, guys.

Anatol Feygin: Thank you. We'll go next to Tristan Richardson with Scotiabank.

Operator: Thank you. We'll go next to Tristan Richardson with Scotiabank.

Tristan Richardson: Hey, guys. Just one from me this morning. Follow up on a prior question about the distribution levels of CQP. I mean, you know, I think that the philosophy of a base plus variable is relatively new going back to 2022. You know, is there a potential here that you could rethink that philosophy and with the focus on retaining more cash in anticipation of the proposed SPLX?

Zach Davis: I think what we planned in 2022 was planned for distributing out a lot of cash efficiently in 2022 and 2023, and then being in a position where we can do a mega project inside an MLP. When we set the $3.10 distribution as the base, we intend to uphold that. Obviously, this year we're actually even above that. We had enough cash to be able to meet our objectives going into developing and preparing for the Sabine expansion. We're gonna distribute that out to CEI and our unit holders. When it comes down to FID-ing the project in the next couple years, the goal is to maintain the base distribution, stay investment grade everywhere and yeah, fund the project within cash flow.

Zach Davis: This all kind of works, which is pretty amazing for an MLP, but one with six trains fully up and running. It works quite well. Then as you think about the 310 base distribution or the 325 this year, again, we're still talking about $2 billion of distributions and an over 6% yield. We were cognizant of making sure that that was competitive and kept us going in the right direction with our unitholders and our own stake in CQP.

Tristan Richardson: I appreciate it, Zach. Maybe just to follow up on the 2024 guide. I think in the prepared comments, you highlighted a higher proportion of bridging volumes as one of sort of the upward items in the guide versus the 9-train runway. Can you talk about, you know, how maybe mechanically bridging volumes work and how that can kind of contribute more to that upside?

Zach Davis: Sure. Those bridging volumes are basically long-term contracts that helped us underpin our FID Stage 3 that have already begun before Stage 3 has begun. Those bridging volumes are in our 2 to 250 range, and why we went into this year 97%, 98% contracted. When we think about the bridging volumes, though, in the context of having some near-term volumes on a 15- to 20-year deal, if the curve is liquid, we will get value for the curve and blend it over the 20 years or the 15 years. Those margins are incrementally up to a deal that might start with a CP of a train up and running. But we're only talking about nickels and dimes here.

Tristan Richardson: Nope. That's great. Thank you. Appreciate it, Zach.

Operator: Thank you. We'll take our final question from Ben Nolan with Stifel.

Ben Nolan: Yeah, thanks. Hey, guys. Well, for my first one, as we think about how the year plays out and appreciating that virtually everything is fixed, is there gonna be any sort of cadence to how the EBITDA and the cash flow comes through or should it be pretty linear, do you think?

Zach Davis: It's never perfectly linear. We produce more in the winter months at the site. With that, you should expect slightly more EBITDA in the colder quarters versus the summer or the shoulder seasons. Basically it should be a year of $5.5 to 6 billion of EBITDA, and why we don't guide on a quarterly basis. We expect 45 million tons, and we are now 99% contracted. The optimization, I'm not forecasting that today, so that's probably the only thing that could create some variability quarter to quarter.

Ben Nolan: Okay. I appreciate that. For my follow-up, just on the regulatory side, you know, obviously this is the third time we've been going through this process. Curious if you guys think the hurdle is getting increasingly more challenging for new projects. Do you think that all of this rhetoric is, you know, is changing how Washington thinks about the business?

Jack Fusco: Yeah. Well, first, the hurdle's always been high, right? This is a very capital-intensive business. It takes years to get one of these across the finish line. It's a balancing act between capital costs, SBAs, contracted amounts, financings, and everything else. We make it look easy, Ben, but it's not. You know, the only positive thing in the past was the regulatory certainty around America and contract sanctity. While I think this is politically motivated, I'm hopeful that at the end of the day, we go back to where we were before, which is we let the market dictate which projects will survive and which ones won't. That's where we've always been, and the market's been extremely efficient at who they're going to bet on.

Zach Davis: I would bet on Cheniere every single day.

Jack Fusco: I would bet on Cheniere every single day.

Ben Nolan: All right. Well, I appreciate you guys fitting me in. Thanks.

Zach Davis: Thank you. Thank you all for all of your support.

Operator: That will conclude today's call. We appreciate your participation.

Q4 2023 Cheniere Energy Partners LP Earnings Call

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