Q3 2024 Cheniere Energy Partners LP Earnings Call

October 31, 2024

Good day and welcome to the Cheniere energy third quarter 'twenty 'twenty four earnings call and webcast today's conference is being recorded.

Operator 1: Good day, and welcome to the Cheniere Energy Q3 2024 Earnings Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Randy Bhatia, Vice President of Investor Relations. Please go ahead.

Operator: Good day, and welcome to the Cheniere Energy Q3 2024 Earnings Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Randy Bhatia, Vice President of Investor Relations. Please go ahead.

At this time I would like to turn the conference over to Randy Bhatia, Vice President of Investor Relations. Please go ahead.

Thank you operator, good morning, everyone and welcome to <unk> third quarter 2024 earnings Conference call.

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

Joining me. This morning are Jack Fusco, Cheniere, as president and CEO, and vegan executive Vice President and Chief Commercial Officer.

Davis Executive Vice President and CFO before we begin I would like to remind all listeners that our remarks, including answers to your questions may contain forward looking statements and actual results could differ materially from what is described in these statements.

Slide 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.

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

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.

Speaker Change: 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 increased 224 guidance and initial outlook for 2025.

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

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

Jack Fusco: Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review our outstanding Q3 results, which reflect excellent performance and success achieved across the entire Cheniere platform. Before we get into the quarterly results and our full year guidance increase, I wanted to spend a brief moment addressing the US presidential election taking place next week. The election is an important time for our country as we are reminded of the freedom we are afforded as Americans to choose our president every four years. I encourage all of my Cheniere colleagues in the US to exercise the right to vote in order to have their voices heard. As expected, emotions are running high given we're so proximate to election day.

Jack Fusco: Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review our outstanding Q3 results, which reflect excellent performance and success achieved across the entire Cheniere platform. Before we get into the ly results and our full year guidance increase, I wanted to spend a brief moment addressing the US presidential election taking place next week. The election is an important time for our country as we are reminded of the freedom we are afforded as Americans to choose our president every four years. I encourage all of my Cheniere colleagues in the US to exercise the right to vote in order to have their voices heard. As expected, emotions are running high given we're so proximate to election day.

Thank you Randy good morning, everyone. Thanks for joining us today as we review our outstanding third quarter results, which reflect excellent performance and success achieved across the entire cheniere platform.

Speaker Change: Before we get into the quarterly results in.

And our full year guidance increase I wanted to spend a brief moment addressing the U S presidential election, taking place next week.

The election is an important time for our country as.

Speaker Change: As we are reminded of the freedom, we are afforded as Americans to choose our president every four years I encourage all of my senior colleagues in the U S to exercise their right to vote in order to have their voices heard.

Speaker Change: As expected emotions are running high given where so proximate to election day, but no matter the outcome in a few months' time upon inauguration day. This country will have a new president and a new administration.

Jack Fusco: No matter the outcome, in a few months' time, upon inauguration day, this country will have a new president and a new administration. At Cheniere, we look forward to working with the next president since issues and policies impacting energy security and availability are so critical to economic interests worldwide. As I mentioned on our August call, we believe our business to be bipartisan. Across multiple administrations spanning the political spectrum, Cheniere has successfully permitted, commercialized, built, and operated our platform, and we fully expect that to remain the case for decades to come. We maintain a significant presence and have excellent bipartisan engagement in Washington, as well as the state and local level with elected and appointed officials, given our business is heavily regulated and is a major source of direct and indirect economic output.

At <unk>, we look forward to working with the next president since issues and policies impacting energy security and availability are so critical to economic interest worldwide.

Speaker Change: As I mentioned, our August call, we believe our business to be bipartisan.

Across multiple administrations spanning the political spectrum Cheniere has successfully permitted commercialized built and operated.

Speaker Change: Our platform.

Speaker Change: And we fully expect that to remain the case for decades to come.

Maintain a significant presence and have excellent bipartisan engagement in Washington, as well as state and local level with elected and appointed officials given our business is heavily regulated and is a major source of direct and indirect economic output.

Jack Fusco: I look forward to furthering the engagement in DC with the new administration in order to ensure our voice is heard on important policy matters that can affect our business both here and abroad. Cheniere's assets and overall platform will last for many decades to come, and our objective is to ensure not only our customers and stakeholders, but our country and our allies can realize the full benefits of Cheniere's business well beyond the outcome of any single election. Please turn to slide 5, where I'll highlight our key accomplishments for the quarter and introduce our increased guidance ranges for 2024. In Q3, we generated consolidated adjusted EBITDA of approximately $1.5 billion, distributable cash flow of approximately $820 million, and net income of approximately $900 million.

Look forward to furthering the engagement in DC with the New administration in order to ensure our voice is heard on important policy matters that can affect our business both here and abroad.

Cheniere as assets and overall platform.

Speaker Change: Last for many decades to come and our objective is to ensure not only our customers and stakeholders, but our country and our allies can realize the full benefits of seniors business.

Well beyond the outcome of any single election.

Please turn to slide five where I'll highlight our key accomplishments for the quarter and introduce our increased guidance ranges for 2024.

In the third quarter, we generated consolidated adjusted EBITDA of approximately $1 5 billion distributable cash flow of approximately $820 million and net income of approximately $900 million.

These excellent financial results are once again, thanks to our company wide commitment to operational excellence.

Jack Fusco: These excellent financial results are once again, thanks to our company-wide commitment to operational excellence. During Q3, we continued to execute on our comprehensive capital allocation plan, which is designed to provide investors with cash flow visibility, disciplined capital management, and long-term value creation. We repurchased another nearly $300 million of stock during the quarter, bringing the year-to-date total to approximately $2 billion. During the quarter, we also paid down $150 million of debt at Sabine Pass, and we funded approximately $500 million of CapEx, mainly related to stage three. We also increased our Q3 dividend by 15% to $2 per share annualized. During the quarter, we produced and exported 158 LNG cargoes from our facilities, which was highlighted by the production and export of the 1,000th LNG cargo from Corpus Christi.

During the third quarter, we continue to execute on a comprehensive capital allocation plan, which is designed to provide investors with cash flow visibility disciplined capital management and long term value creation.

We repurchased another nearly $300 million of stock during the quarter, bringing the year to date total to approximately $2 billion. During the quarter. We also paid down $150 million of debt at Sabine pass and we funded approximately $500 million of Capex, mainly related to stage III.

We also increased our third quarter dividend by 15% to $2 per share annualized.

During the quarter, we produced and exported 158, LNG cargoes from our facilities, which was highlighted by the production and exports.

LNG cargo from Corpus Christi.

Jack Fusco: I would like to recognize the operational leadership team and everyone at Corpus Christi for the achievement of this major milestone and for further reinforcing Cheniere's globally recognized reputation as a safe and reliable operator. Bechtel continues construction execution on Corpus Christi stage three on budget and on accelerated schedule. As of September 30, the stage three project had reached approximately 68% complete. Pre-commissioning activities continue on train 1, with nearly half the required systems turned over to commissioning and startup teams who are beginning to place those systems into service. We expect the introduction of first gas into train 1 to occur in the coming weeks. First gas is an important execution milestone. From a timing perspective, with that milestone occurring soon, it is consistent with the production of first LNG by the end of the year.

Speaker Change: I would like to recognize the operational and leadership team and everyone at Corpus Christi for the achievement of this major milestone and for further reinforcing <unk> globally recognized reputation as a safe and reliable operator.

Bechtel continues construction execution on Corpus Christi stage III on budget non accelerated schedule.

As of September 30, the stage III project had reached approximately 68% complete.

Speaker Change: Pre commissioning activities continue on train one with nearly half the required systems turned over to commissioning and startup teams who are beginning to place those systems into service.

We expect the introduction of first gas into train one to occur in the coming weeks.

First gas is an important execution milestone.

And from a timing perspective with that milestone occurring soon it is consistent with the production of first LNG by the end of the year.

Jack Fusco: We are fortunate this year to avoid any impact from hurricanes on operations or construction activities at both Sabine Pass and Corpus Christi. As a result, our target of achieving first LNG production from train 1 at stage 3 by the end of the year remains within reach, and substantial completion in early 2025, well ahead of the guaranteed schedule. We continue to expect to have 3 trains from stage 3 achieve substantial completion during 2025. Zach will cover the numbers in detail, but we expect to have more open volumes in 2025 than we did in 2024, driven primarily by the substantial completion of those trains, and that reinforces our expectations that 2024 should be an inflection point for EBITDA, and financial growth should resume in 2025 as those assets begin operations.

We were fortunate this year to avoid any impact from hurricanes on operations or construction activities at both Sabine pass and Corpus Christi as a result, our target of achieving first LNG production from train one at stage III by the end of the year remains within reach and substantial completion in early 2025.

Well ahead of the guaranteed schedule.

We continue to expect to have three trains from stage III achieved substantial completion during 2025, Zach will cover the numbers in detail, but we expect to have more open volumes in 2025 than we did in 2024, driven primarily by the substantial completion of those trains and that reinforces our expectations that 2002.

24, it should be an inflection point for EBITDA and financial growth should resume in 2025 as those assets begin operations.

Looking to the balance of 2024 today, we're raising and tightening the ranges of our full year guidance.

Jack Fusco: Looking to the balance of 2024 today, we're raising and tightening the ranges of our full year guidance to $6 to 6.3 billion in consolidated adjusted EBITDA and $3.4 to 3.7 billion of distributable cash flow. The guidance increase is primarily driven by better-than-expected production and incremental margin along with portfolio optimization activities upstream and downstream of our facility. On the previous call, we discussed a slightly improved production forecast as a result of our maintenance execution during Q2, and we are seeing that forecast production materialize. Even accounting for the increased volume in the forecast, we continue to have an immaterial amount of unsold volume remaining for the balance of the year as the team has been opportunistically selling our open capacity this fall.

Speaker Change: Two 6% to six 3 billion and consolidated adjusted EBITDA and three four to $3 7 billion of distributable cash flow.

Speaker Change: The guidance increase is primarily driven by better than expected production and incremental margin along with portfolio optimization activities upstream and downstream of our facility.

Speaker Change: On the previous call, we discussed a slightly improved production forecast as a result of our maintenance execution during the second quarter and we're seeing that forecast production materialize.

Even accounting for the increased volume in the forecast we continue to have an immaterial amount of unsold volume remaining for the balance of the year as the team has been opportunistically selling our open capacity this fall.

Jack Fusco: Zach will have more to say on the guidance increases in his remarks in a few minutes. Please turn to slide 6, where I'll update you on an important development related to our environmental stewardship. I hope you saw that yesterday we announced the establishment of a voluntary scope one methane emissions intensity target for our liquefaction assets. The target calls for Cheniere to consistently maintain a scope one annual measured methane emissions intensity of 0.03% per ton of LNG produced across Sabine Pass and Corpus Christi by 2027. The establishment of the methane target represents the latest milestone in Cheniere's climate strategy, which is built upon our principles of transparency, science, supply chain, and operational excellence. Our measurement-informed methane target of 0.03% is about one-tenth of the hypothetical emissions intensity utilized in some recent publicized papers estimating lifecycle LNG emissions.

Jack will have more to say on the guidance increases in his remarks in a few minutes.

Please turn to slide six we'll update you on important developments related to our environmental stewardship.

I hope you saw that yesterday, we announced the establishment of a voluntary scope one methane emissions intensity target for our liquefaction assets.

Speaker Change: Target calls for Cheniere to consistently maintain a scope one annual measured methane emissions intensity of <unk>.

Zero, 3% per ton of LNG produced across Sabine pass and Corpus Christi by 2027.

The establishment of the methane target represents the latest milestone engineers climate strategy, which is built upon our principles of transparency.

<unk> supply chain and operational excellence.

Our measurement informed methane target of 1.03% is about 110th of the hypothetical emissions intensity utilized at some recent publicized papers estimating lifecycle LNG emissions.

This rigorous target reflects our commitment to leverage our data driven efforts to improve admissions performance across our operations.

Jack Fusco: This rigorous target reflects our commitment to leverage our data-driven efforts to improve emissions performance across our operations and is consistent with the requirements of gold standard certification within the United Nations Environment Programme Oil and Gas Methane Partnership 2.0, which Cheniere joined in 2022. The methane target we have set is a culmination of significant work completed by our team and a series of technology providers in leading academic institutions. We are able to establish this target thanks to the collaborative work we've done through the programs I've spoken about on previous calls, especially our quantification, monitoring, reporting, and verification, or QMRV programs. The target builds upon and complements our QMRV program and other climate-related outputs, such as our cargo emission tags and our recently updated and peer-reviewed lifecycle assessment.

And is consistent with the requirements of gold standard certification within the U S Environmental program oil and gas methane partnership to point out.

Which cheniere joined in 2022.

The methane target we have set as a culmination of significant work completed by our team and a series of technology providers and leading academic institutions.

We are able to establish a target thanks to the collaborative work we've done through the programs I've spoken about on previous calls, especially our quantification monitoring reporting and verification our QM RV programs.

The target builds upon and complements our <unk> program and other climate related outputs, such as our cargo emission tax and our recently updated in a peer reviewed lifecycle assessment.

Jack Fusco: The QMRV efforts, which have been underway for nearly two years and remain ongoing, involve multi-scale measurement activities to develop a measurement-informed inventory of emissions data, and that data informs the process of establishing the methane target. Included in the data set for our methane target, for example, are readings from approximately 50 aerial emissions measurements of our operations at our facilities over a period of more than a year. Utilizing actual operational data and not simply emissions factors or outdated estimates provides a robust, credible foundation that stakeholders can trust and against which our performance can be measured. Cheniere's approach to environmental performance and stewardship has always been scientific, transparent, and methodical, not reactionary or aspirational. We are pleased to see our strategy and efforts be recognized by ratings providers.

The <unk> efforts, which have been underway for nearly two years and will remain ongoing involve multi scale measurement activities to develop and measurement informed inventory of emissions data and that data informs the process of establishing the methane target <unk>.

Speaker Change: Included into the dataset for our methane target for example, our readings from approximately 50 arrow emissions measurements of our operations at our facilities over a period of more than a year.

Speaker Change: Utilizing actual operational data and not simply emissions factors or outdated estimates provides a robust credible foundation that stakeholders can trust.

And against which our performance can be measured.

<unk> approach to environmental performance and stewardship has always been scientific transparent and methodical not reactionary or aspirational.

And we are pleased to see our strategy and efforts to be recognized by ratings providers during the quarter MSCI upgraded seniors ESG rating to AAA the highest score possible.

Jack Fusco: During the quarter, MSCI upgraded Cheniere's ESG rating to AAA, the highest score possible, with the upgrades specifically citing improvements in climate management reporting and greenhouse gas intensity performance. We'll continue to pursue our strategy guided by the same climate and sustainable principles that have helped lead us to the significant achievements we have accomplished to date. With that, I'll now hand it over to Anatol to discuss the LNG market. Thank you all again for your continued support of Cheniere.

With the upgrades, specifically, citing improvements and climate management reporting and greenhouse gas intensity performance.

We will continue to pursue our strategy guided by the same climate and sustainable principles that have helped lead us to the significant achievements, we have accomplished to date.

With that I'll now hand, it over to Anatol to discuss the LNG market. Thank.

Thank you all again for your continued support of Cheniere.

Anatol: Thanks, Jack and good morning, everyone. Please turn to slide eight.

Anatol Feygin: Thanks, Jack, and good morning, everyone. Please turn to slide 8. Over the last year, we've seen very limited LNG supply growth year-over-year, with September being an exception. Global LNG imports increased 33.6 million tons in the month, up more than 9% versus 2023. This was largely due to lower levels of planned and unplanned supply outages this year compared to last rather than true capacity-driven supply growth, and the impact on the market was muted. The perceived underlying market tightness continued to support spot price levels, which continued to climb during the quarter despite healthy storage inventories and relatively soft near-term market dynamics in Europe. September TTF contract settled at $12.54/MMBTU, up from $11.48 last year and $10.84 in July.

Anatol: Over the last year, we've seen very limited LNG supply growth year over year with September being an exception.

Global LNG imports increased $33 6 million tons in the month up more than 9% versus 23. This was largely due to lower levels of planned and unplanned supply outages. This year compared to last rather than true capacity driven supply growth and the impact on the market was muted.

The perceived underlying market tightness continued to support spot price levels, which continued to climb during the quarter. Despite healthy storage inventories and relatively soft near term market dynamics in Europe September ETF contract settled at $12 54, <unk> up from $11 48 last year and $10 80.

Anatol: <unk> in July.

Anatol Feygin: Similarly, JKM settled September at 12.78, up from 11.21 last year and 12.14 in July. The run-up in month-ahead prices was supported by escalating geopolitical risks, various supply outages, strong demand outside of Europe, as well as some cooler weather forecasts within Europe. In the US, Henry Hub settled September at $0.93/MMBtu, nearly flat relative to August, but lower than July's settlement of $2.63/MMBtu, despite various price-driven production cuts. Strong demand in Asia kept JKM at a premium to TTF during the quarter and throughout most of the year. As shown on the top right, this spread led to an over 18 million tons shift in LNG flows from Europe to Asia for the first 9 months of the year.

Anatol: Similarly, J Cam settled September $12 78 up from $11 21 last year and $12 14 in July.

Anatol: The run up in months ahead prices was supported by escalating geopolitical risks very supply outages strong demand outside of Europe, as well as some cooler weather forecasts within Europe.

In the U S. Henry hub settled September at $1 93, a M nearly flat relative to August, but lower than July settlement of $2 63, and <unk>, despite various price driven production cuts.

Strong demand in Asia kept <unk> at a premium <unk> during the quarter and throughout most of the year.

As shown on the top right. This spread led to an over 18 million tons shift in LNG flows from Europe to Asia for the first nine months of the year.

Anatol Feygin: However, this premium has narrowed substantially since the end of September due to cooler weather in Europe, residual Norwegian maintenance, and an increasing geopolitical risk premium. I'll address the regional dynamics in more detail in the next slide. As noted, LNG imports into Asia continued to grow in nearly all markets, with Q3 receipts increasing 10% year-over-year. The JKT and China market areas combined contributed nearly 70% of the region's total 6.3 million tons year-over-year increase during the quarter. Long stretches of heat in Japan, South Korea, and parts of China, coupled with the need to fill storage ahead of the upcoming winter season, continued to lift gas demand. Notably, China's imports in September surpassed 7 million tons, an increase of 32% year-over-year, as two new regas terminals started operations and new storage capacity further supported demand.

However, this premium has narrowed substantially since the end of September due to cooler weather in Europe, residual Norwegian maintenance and an increasing geopolitical risk premium.

Address the regional dynamics in more detail in the next slide.

As noted LNG imports into Asia continued to grow in nearly all markets with third quarter receipts, increasing 10% year on year.

<unk> and China market areas combined contributed nearly 70% of the regions totaled $6 3 million tonnes year on year increase during the quarter.

Long stretches of heat in Japan, South Korea, and parts of China, coupled with the need to fill storage ahead of the upcoming winter season continued to lift gas demand.

Notably China's imports in September surpassed 7 million tons, an increase of 32% year on year as two new re gas terminal started operations and new storage capacity further supported demand.

Anatol Feygin: Taiwan's demand increased by 12% year on year during the quarter as the country shut down one reactor at a 950-megawatt nuclear plant in July. The country's last reactor is scheduled to be shut down in May 2025, which we expect will continue to expand the country's gas-fired power demand. During the quarter, Thailand registered a slight decline in imports, primarily due to a boost in domestic gas production. While this renewed production should temporarily offset some of the broader declines in domestic gas production, we expect little to no impact on the country's call for LNG longer term. As mentioned earlier, Asia's growing imports came at the expense of Europe, where imports were generally flat during the quarter and are down over 20% on the year.

Taiwan's demand increased by 12% year on year during the quarter as the country shut down one reactor at the 950 megawatt nuclear plant in July.

The country's last reactor is scheduled to be shut down in May next year, which we expect will continue to expand the country's gas fired power demand.

During the quarter, Thailand registered a slight decline in imports primarily due to a boost in domestic gas production.

Anatol: This renewed production should temporarily offset some of the broader declines in domestic gas production, we expect little to no impact on the country's call for LNG longer term.

As mentioned earlier Asia's growing imports came at the expense of Europe, where imports were generally flat during the quarter and are down over 20% on the year.

Anatol Feygin: European gas fundamentals have remained steady in recent months, with lower power demand and improving, but still tepid, industrial consumption. However, after a series of mild winters resulting in some demand destruction in the heating sector, some cooler temperatures in September across the region tightened the market, which has been amplified by increased geopolitical risks. European storage levels remained healthy at 95% as of mid-October, but price risk is skewed to the upside. All eyes are now focused on anticipated storage levels exiting winter in early 2025, especially with limited support from Ukraine storage, which remains about 30% below last year's levels. Further reductions are expected in Russian flows.

European gas fundamentals have remained steady in recent months with lower power demand and improving but still tepid industrial consumption.

However, after a series of mild winters, resulting in some demand destruction in the heating sector. Some cooler temperatures in September across the region tightened the market, which has been amplified by increased geopolitical risks.

European storage levels remained healthy at 95% as of mid October but price risk is skewed to the upside.

Anatol: All eyes are now focused unanticipated storage levels exiting winter in early 'twenty, five, especially with limited support from Ukraine storage, which remains about 30% below last year's levels.

Further reductions are expected in Russia flows potential LNG supply disruptions from further outages or geopolitical escalations, along with continued LNG pull from Egypt could lead to sustained higher European premiums in order to attract flexible cargoes, particularly if we revert to normal weather temperatures in the region. This year.

Anatol Feygin: Potential LNG supply disruptions from further outages or geopolitical escalations, along with continued LNG pull from Egypt, could lead to sustained higher European premiums in order to attract flexible cargoes, particularly if we revert to normal weather temperatures in the region this year. Additionally, it's important to also acknowledge the increased competition for LNG cargoes from rising demand in regions outside of Europe and Asia. Low hydropower output in Brazil, along with a strong pull from the MENA region, supported Atlantic demand and tightened the JKM TTF spread during the quarter. LNG imports into the MENA region rose 57% year-over-year during the quarter, largely due to Egypt, which relied on the spot market to help alleviate rapidly declining domestic production. In addition to imports via Jordan's Aqaba terminal, Egypt imported approximately 20 cargoes during Q3, and another 20 cargoes are expected to be delivered by year-end.

Anatol: Additionally, it is important to also acknowledge the increased competition for LNG cargoes from rising demand in regions outside of Europe and Asia.

Speaker Change: Hello, hydropower output in Brazil, along with a strong pull from the Mena region supported Atlantic demand and tightened the JK mttf spread during the quarter.

Speaker Change: LNG imports into the Mena region rose, 57% year on year during the quarter, largely due to Egypt, which relied on the spot market to help alleviate rapidly declining domestic production.

In addition to imports via Jordans Acaba terminal.

Egypt imported approximately 20 cargoes during the third quarter and another 20 cargoes are expected to be delivered by year end.

Anatol Feygin: In the absence of any immediate relief from new LNG supply, these dynamics should continue to highlight the delicate balance of the global gas market, further supporting the upside price risk I mentioned earlier. Let's move to the next slide to further develop this point. We've noted for several quarters now how the LNG market remains precariously balanced, sensitive to any signs of potential disruption in supply or demand. From geopolitical tensions to rapid shifts in market balances driven by extraneous elements such as weather, domestic gas production levels, or the changes in the price or availability of competing fuels, all underscore the criticality of adequate, reliable, and flexible LNG supplies in the global energy mix. In recent weeks, escalating geopolitical tensions have triggered renewed concerns about supply reliability and adequacy amidst that precarious balance.

In the absence of any immediate relief from new LNG supply. These dynamics should continue to highlight the delicate balance of the global gas market further supporting the upside price risks I mentioned earlier.

Let's move to the next slide to further develop this point.

We've noted for several quarters now how the LNG market remains precariously balanced sensitive to any signs of potential disruption in supply or demand from.

From geopolitical tensions to rapid shifts in market balances driven by extraneous elements, such as whether domestic gas production levels or the changes in the price or availability of competing fuels all underscore the criticality of adequate reliable and flexible LNG supplies in the global energy mix.

In recent weeks escalating geopolitical tensions have triggered renewed concerns about supply reliability and adequacy amidst that for carriers balanced.

Anatol Feygin: These events have already affected the European gas and LNG markets, playing a critical role in elevating prices and market uncertainty. Over the past three years, we've witnessed how geopolitics continue to have a significant impact on commodities, specifically impacting European gas infrastructure, pipe gas contracts, flows, and transit routes, which has driven higher absolute price levels, as well as prolonged elevated market volatility. Today, Europe's winter gas balances remain vulnerable as further cuts in Russian pipeline gas flows seem likely if the transit agreement through Ukraine is not renewed. The developments in the Middle East raise concerns about upstream and midstream gas infrastructure that could impact Egypt's gas supply security, potentially constraining global LNG market balances. Meanwhile, continued delays from projects under development prevent immediate material relief in the prompt.

Speaker Change: These events have already affected the European gas and LNG markets play a critical role in elevating prices and market uncertainty over.

Over the past three years, we've witnessed how geopolitics continue to have a significant impact on commodities, specifically impacting European gas infrastructure piped gas contracts flows in transit routes, which has driven higher absolute price levels as well as prolonged elevated market volatility.

Today Europe is winter gas balances remain vulnerable as further cuts in Russian pipeline gas flows seem likely if the transit agreement Craig.

<unk> is not renewed the.

The developments in the middle East raised concerns about upstream and midstream gas infrastructure that could impact Egypt gas supply security potentially constraining global LNG market balances. Meanwhile, continued delays from projects under development prevent immediate material relief in the prompt.

Anatol Feygin: Global liquefaction utilization has been pushed beyond seasonal norms to produce incremental volumes, but there is limited additional running room and demand continues to be rationed. The lack of spare capacity means that the system remains particularly vulnerable to any unplanned outages and risks to flow interruptions, be they operational, geopolitical or otherwise. To mitigate against these adverse impacts, we see long-term contracting and the related supply growth underpinned by these agreements as two key pillars for a more resilient, robust, and stable market. In the past few years, we've seen an increase in longer-term contracts, some in excess of 20 years, which support the development of much-needed new capacity. Global supply growth and flexibility, as well as affordable, stable long-term contracts, are key to enable energy security and affordability, and to help insulate consumers worldwide from future energy crises like we saw in 2022.

Global liquefaction utilization has been pushed beyond seasonal norms to produce incremental volumes, but there is limited additional running room and demand continues to be rationed.

The lack of spare capacity it means that the system remains particularly vulnerable to any unplanned outages and risks to flow interruptions be the operational geopolitical or otherwise.

Speaker Change: To mitigate against these adverse impacts we see long term contracting and the related supply growth underpinned by these agreements as two key pillars for our more resilient robust and stable market.

Speaker Change: In the past few years, we've seen an increase in longer term contracts. Some in excess of 20 years, which support the development of much needed new capacity.

Global supply growth and flexibility as well as affordable stable long term contracts are key to enable energy security and affordability and to help insulate consumers worldwide from future energy crises like we saw in 2022.

Anatol Feygin: Aligned with the establishment of our methane target, we must also highlight the clear environmental advantages of LNG and the critical role it is set to play in global decarbonization. As developed and developing economies alike look to increase LNG and natural gas as a component of primary energy supply, Cheniere's leadership role in environmental stewardship will only further separate us from the competition and enable us to continue developing and executing projects which deliver significant value to our shareholders. With that, I'll now turn the call over to Zach to review our financial results and guidance.

Speaker Change: And aligned with the establishment of our methane targets. We must also highlight the clear environmental advantages of LNG and the critical role. It is set to play in global de Carbonization.

Speaker Change: As developed and developing economies alike look to increase LNG and natural gas as a component of primary energy supply Cheniere. His leadership role in environmental stewardship will only further separate us from the competition and enable us to continue to developing and executing projects, which deliver significant value to our shareholders.

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

Thanks, Anatol and good morning, everyone.

Zach Davis: Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our Q3 2024 results, the financial accomplishments, our increased and tightened 2024 guidance, and our current outlook for 2025. Turn to slide 12. For the Q3 2024, we generated net income of approximately $900 million, consolidated adjusted EBITDA of approximately $1.5 billion, and distributable cash flow of approximately $820 million. With these third-quarter results, we have now reported positive net income on a quarterly and cumulative trailing four-quarter basis 8 quarters in a row. Compared to last year, our third quarter 2024 results reflect a higher proportion of our LNG being sold under long-term contracts, as well as the continued moderation of international gas prices.

Zach Davis: Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our Q3 2024 results, the financial accomplishments, our increased and tightened 2024 guidance, and our current outlook for 2025. Turn to slide 12. For the Q3 2024, we generated net income of approximately $900 million, consolidated adjusted EBITDA of approximately $1.5 billion, and distributable cash flow of approximately $820 million. With these Q3 results, we have now reported positive net income on a quarterly and cumulative trailingQ4 basis Q8 in a row. Compared to last year, our third quarter 2024 results reflect a higher proportion of our LNG being sold under long-term contracts, as well as the continued moderation of international gas prices.

Zach: I'm pleased to be here today to review our third quarter 2024 results key financial accomplishments are increased and tightened our 2020 for guidance and our current outlook for 2025.

Zach: Turning to slide 12.

For the third quarter 2024, we generated net income of approximately $900 million Consol.

Consolidated adjusted EBITDA of approximately $1 5 billion.

And distributable cash flow of approximately $820 million.

Zach: With these third quarter results. We have now reported positive net income on a quarterly and cumulative trailing four quarter basis eight quarters in a row.

Compared to last year, our third quarter 2024 results reflect a higher proportion of our LNG being sold under long term contracts as well as the continued moderation of international gas prices.

Zach Davis: These impacts were partially offset by higher volumes of LNG delivered from our two sites during the quarter. Similarly, compared to Q2 of this year, our production was higher due to most of the planned maintenance at both sites occurring in June. During Q3, we recognized in income 563 TBtu of physical LNG, which included 560 TBtu from our projects and 3 TBtu sourced from third parties. Approximately 97% of our LNG volumes recognized in the quarter were sold in relation to term SPA or IPM agreements. Our strong financial results continue to support meaningful progress on our 20/20 Vision capital allocation plan, with another $1 billion deployed in Q3 towards shareholder returns, accretive growth, and balance sheet management.

Zach: These impacts were partially offset by higher volumes of LNG delivered from our two sites during the quarter.

Similarly, compared to the second quarter of this year, our production was higher due do most of the planned maintenance at both sites occurring in June.

Zach: During the third quarter, we recognized in income 563, <unk>, a physical LNG, which included 560 <unk> from our projects and three T Btu sourced from third parties.

Approximately 97% of our LNG volumes recognized in the quarter were sold in relation to term SBA or IPM agreements.

Zach: Our strong financial results continue to support meaningful progress on our 2020 vision capital allocation plan with another $1 billion deployed in the third quarter towards shareholder returns accretive growth and balance sheet management.

As of the third quarter, we've allocated over $12 billion of our $20 billion plus target as we continue to reduce our share count and enhance our capital returns.

Zach Davis: As of Q3, we've allocated over $12 billion of our $20 billion-plus target as we continue to reduce our share count and enhance our capital returns while retaining financial flexibility to fund accretive growth across our platform. All of which should position us to generate over $20 per share of run rate distributable cash flow for our shareholders later this decade. During Q3, we repurchased approximately 1.6 million shares for approximately $282 million. Through the first nine months of the year, we've deployed approximately $2 billion into our shares and reduced our share count by over 12 million shares.

Retaining financial flexibility to fund accretive growth across our platform.

All of which should position us to generate over $20 per share of run rate distributable cash flow for our shareholders. Later this decade.

During the third quarter, we repurchased approximately one 6 million shares for approximately $282 million.

Through the first nine months of the year, we've deployed approximately $2 billion into our shares and reduced our share count by over 12 million shares.

Zach Davis: We have now repurchased approximately 10% of our outstanding shares since announcing our 20/20 Vision Plan in September 2022, reducing our shares outstanding from approximately 250 million to under 225 million today in the Q. At this point, we are over halfway to our midterm goal of 200 million shares. A foundational strategy of the plan is to enable us to buy back more shares when the stock underperforms on an absolute and relative basis. The year-to-date results demonstrate the power of the plan's design. We are committed to further reducing our total shares outstanding as we completed the previous $4 billion share repurchase authorization this month, and are currently starting to work through our additional $4 billion share repurchase authorization through 2027.

Zach: We have now repurchased approximately 10% of our outstanding shares since announcing our 2020 vision plan in September 2022.

Reducing our shares outstanding from approximately $250 million to under $225 million today in the queue.

Zach: At this point, we are over halfway to our midterm goal of 200 million shares.

A foundational strategy of the plan is to enable us to buyback more shares when the stock underperforms on an absolute and relative basis.

Zach: And the year to date results demonstrate the power of the plans design.

We are committed to further reducing our total shares outstanding as we completed the previous $4 billion share repurchase authorization. This month.

And are currently starting to work through our additional $4 billion share repurchase authorization through 2027.

Zach Davis: As previously announced with our June capital allocation update, we increased our Q3 dividend by approximately 15% to $2 annualized and intend to follow through with our guidance of growing our dividend by approximately 10% annually through the end of this decade. This goal should trend us closer to a payout ratio of approximately 20% over time, which will enable us to retain the financial flexibility essential to our comprehensive and balanced long-term capital allocation plan and disciplined growth objectives. Moving to the balance sheet. During the quarter, we repaid $150 million of outstanding principal of the SPL 2025 Notes with cash on hand.

As previously announced with our June capital allocation update we increased our third quarter dividend by approximately 15% to $2 annualized and.

Zach: And intend to follow through with our guidance of growing our dividend by approximately 10% annually through the end of this decade.

Zach: This goal should trend is closer to a payout ratio of approximately 20% over time, which will enable us to retain the financial flexibility essential to our comprehensive and balanced long term capital allocation plan and disciplined growth objectives.

Moving to the balance sheet during the quarter, we repaid $150 million of outstanding principal of the SPL 2025 notes with cash on hand.

Zach Davis: We plan to repay the remaining $650 million outstanding principal of these notes with cash on hand ahead of its March 2025 maturity as we focus our debt paydown within CQP in preparation for financing the SPL expansion project. After repaying the remaining SPL 2025s, we will not have any debt maturing anywhere in the Cheniere complex until the middle of 2026. The rating agencies continue to recognize our progress on the balance sheet. Last week, S&P upwardly revised the ratings outlook at Corpus Christi Holdings or CCH to positive. As noted on our last call, we received our 22nd credit rating upgrade in Q3 when Fitch upgraded CCH to BBB+.

Zach: We plan to repay the remaining 650 million outstanding principal of these notes with cash on hand ahead of its March 2025 maturity as we focus our debt paydown within CGP and preparation for financing the SPL expansion project.

Zach: After repaying the remaining SPL 2025, we will not have any debt maturing anywhere in the cheniere complex until the middle of 2026.

Zach: The rating agencies continue to recognize our progress on the balance sheet.

Zach: Last week S&P upwardly revised the ratings outlook at Corpus Christi Holdings, where CCH to positive.

And as noted on our last call. We received our 20 <unk> credit rating upgrade in the third quarter, when Fitch upgraded CCH to Triple B plus.

The continued recognition from the rating agencies is a testament to our team's strategically managing our balance sheet and with regard to these rating agency actions in particular reflects the progress achieved on our stage three projects.

Zach Davis: The continued recognition from the rating agencies is a testament to our team strategically managing our balance sheet, and with regard to these rating agency actions, in particular, reflects the progress achieved on our stage three projects. Speaking of stage three, during the quarter, we funded approximately $400 million of CapEx on stage three, bringing total spend on the project to over $4.3 billion. With approximately $3 billion in consolidated cash and over $10 billion of overall liquidity throughout the Cheniere complex, we expect to continue equity funding the stage three CapEx while also remaining active on our buyback program as we continue to manage down our cash balances before utilizing the undrawn $3 billion CCH term loan, which we expect to eventually draw in 2025.

Speaking with stage III during the quarter, we funded approximately $400 million of Capex on stage III, bringing total spend on the project to over $4 3 billion.

Zach: With approximately $3 billion in consolidated cash and over $10 billion of overall liquidity throughout the Cheniere complex. We expect to continue equity funding the stage III Capex. While also remaining active on our buyback program as we continue to manage down our cash balances before utilizing the undrawn $3 billion.

Zach: <unk> term loan, which we expect to eventually drop in 2025.

Zach Davis: Turn now to slide 13, where I will discuss our updated 2024 guidance and initial outlook for 2025. Today, we are raising and tightening our full-year 2024 guidance ranges to $6 billion to $6.3 billion in consolidated adjusted EBITDA and $3.4 billion to $3.7 billion in distributable cash flow. A $250 million increase to the midpoint, as well as tightening of the ranges from $400 million to $300 million, or less than 5% of the midpoint of guidance.

Zach: Turning now to slide 13, where I will discuss our updated 2020 for guidance and initial outlook for 2025.

Today, we are raising and tightening our full year 2024 guidance ranges to $6 billion to $6 3 billion and consolidated adjusted EBITDA.

And $3 4 billion to $3 7 billion and distributable cash flow of $250 million increase to the midpoint as.

As well as tightening of the ranges from 400 million to $300 million.

We're less than 5% of the midpoint of guidance.

Zach Davis: Our increased guidance is close to equally attributable to optimization activities completed upstream and downstream of our facilities since the last call, as well as slightly higher production and margins than previously forecast during the quarter and into Q4. We were also able to tighten the ranges another $100 million as we are effectively sold out for the balance of this year, reducing the amount of variability in our forecast in our most contracted year to date. That being said, our guidance continues to reflect only contributions from completed or locked-in portfolio optimization activities, as we do not forecast potential contributions from future optimization opportunities, albeit likely more limited this late in the year. Of course, our results could be impacted by the timing of certain cargoes around year-end.

Our increased guidance as close to equally attributable to optimization activities completed upstream and downstream of our facilities since the last call as well as slightly higher production and margins than previously forecast during the quarter and into <unk>.

We were also able to tighten the range as another $100 million as we are effectively sold out for the balance of this year, reducing the amount of variability in our forecast and our most contracted year to date.

That being said our guidance continues to reflect only contributions from completed are locked in portfolio optimization activities and so we do not forecast potential contributions from future optimization opportunities, albeit likely more limited. This late in the year and of course, our results could be impacted by the timing of certain cargos around year.

Zach: In.

As noted on prior calls our DCF could be affected by changes in the tax code, particularly as it relates to the alternative minimum tax and the treatment of certain tax positions related to our unrealized derivatives. These.

Zach Davis: As noted on prior calls, our DCF could be affected by changes in the tax code, particularly as it relates to the alternative minimum tax and the treatment of certain tax positions related to our unrealized derivatives. These changes could impact the timing and amount of our cash tax payments this year and going forward, but should be immaterial on an NPV basis and not impact our ability to generate over $20 billion of available cash through 2026. While we do not forecast any contribution to revenues or EBITDA from stage three volumes this year, we continue to target first LNG from train one by year-end. Based on the progress achieved to date, we forecast train one to achieve substantial completion at the end of Q1 or early Q2 next year, and trains two and three to achieve substantial completion in the second half of the year.

Zach: These changes could impact the timing and amount of our cash tax payments this year and going forward, but should be immaterial on an NPV basis, and not impact our ability to generate over $20 billion of available cash through 2026.

Zach: And while we do not forecast any contribution to revenues or EBITDA from stage three volumes. This year, we continue to target first LNG from train one by year end.

Based on the progress achieved to date, we forecast train one to achieve substantial completion at the end of Q1 or early Q2 next year and trains two and three to achieve substantial completion in the second half of the year.

Zach: With this assumption, we expect to produce approximately 47 to 48 million tons of LNG in total across our two sites next year inclusive of forecast stage three volumes and a major maintenance planned at Sabine pass next year.

Zach Davis: With this assumption, we expect to produce approximately 47 to 48 million tons of LNG in total across our two sites next year, inclusive of forecast stage three volumes and a major maintenance plan at Sabine Pass next year. Though a step change from our 45 million ton run rate across our existing 9 trains in operations, the variability is based on uncertainty around specific stage three commissioning and ramp-up schedules, as well as year-end timing. Of that 47 to 48 million tons of production, we forecast over 46 to over 47 million tons of volume after commissioning, supporting 2025 EBITDA. After accounting for the approximately 43 million tons of long-term contracts already in place, we expect to have over 3 to over 4 million tons of spot volume available for CMI.

Those step change from our 45 million ton run rate across our existing nine trains in operations. The variability is based on uncertainty around specific stage, III commissioning and ramp up schedules as well as year end timing.

Of that 47 to 48 million tons of production, we forecast over 46 to over 47 million tons of volume after commissioning supporting 2025 EBITDA.

Zach: After accounting for the approximately 43 million tonnes of long term contracts already in place we expect to have over three to over 4 million tonnes of spot volume available for CMI.

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

The team has been active opportunistically selling some of that 2025 spot volume since our last call.

And we currently forecast approximately two to 3 million tons or approximately 100 to 150 <unk> of unsold open capacity in 2025.

We therefore are also forecasted a $1 change in market margin would impact EBITDA by approximately $100 million to $150 million for the full year.

Zach: Consistent with previous practice, we intend to provide official 2025 financial guidance on our February call.

Looking at curves today net backs are averaging around $7 to $8 in 2025 to the timing of our stage III trains coming online and the resulting incremental marketing volumes could drive significant variability in our expected earnings for 2025, as we grow beyond our nine train platform.

As a reminder, the stage three trains are being built with a design and technology that is new to us.

Zach Davis: As a reminder, the stage three trains are being built with a design and technology that is new to us, so the length and extent of the commissioning process is somewhat uncertain. As the initial trains start commissioning, we will gain a better sense on the specific timing of these new volumes and their contribution to our financial results next year. As with the commissioning of our first nine trains, we hope to improve the commissioning process for each subsequent train by deploying lessons learned. We expect the remaining four mid-scale trains to reach substantial completion in 2026, at which point we have several million tons of new long-term contracts starting in 2026 and 2027, keeping our platform over 90% contracted with investment-grade counterparties and take-or-pay style cash flows, and averaging approximately 95% contracted through the mid-2030s.

Zach: Lengthened the extent of the commissioning process is somewhat uncertain.

As the initial train start commissioning, we will gain a better sense on the specific timing of these new volumes and a contribution to our financial results next year.

Zach: As with the commissioning of our first nine trains we hope to improve the commissioning process for each subsequent train by deploying lessons learned.

We expect the remaining four mid scale trains to reach substantial completion in 2026 at which point, we have several million tons of new long term contracts starting in 2026, and 2027, keeping our platform over 90% contracted with investment grade Counterparties and take or pay style cash flows and averaging.

Zach: Approximately 95% contracted through the mid 2000 <unk>.

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

Earlier this year I described 2024 is likely a trough year for EBITDA is all of our long term contracts supporting the nine train platform had commenced and international gas prices began to moderate despite spot margins remaining very healthy this year, averaging $8 <unk>.

Speaker Change: As Jack mentioned, we still expect this to be the case as stage three volumes start to hit our P&L in 2025.

We remain proud of our team's unrelenting efforts to unlock additional value to support financial metrics well above our nine train run rate guidance this year.

Looking ahead to 2025 and beyond we.

Speaker Change: We will continue to leverage the vast competitive advantages afforded by our leading brownfield infrastructure platform in order to enhance the long term value delivered to shareholders and to continue to supply our customers flexible reliable and cleaner burning LNG.

That concludes our prepared remarks, thank you for your time and your interest engineering.

Zach Davis: Thank you for your time and your interest in Cheniere. Operator, we are ready to open the line for questions.

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

Operator 1: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, you can press star one to ask a question, and we do ask that you will limit your question to one question and one follow-up. If you have additional questions, then you may re-enter the queue. We will pause for a brief moment to allow everyone an opportunity to signal for questions. Our first question is coming from Jeremy Tonet with J.P. Morgan.

Operator: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, you can press star one to ask a question, and we do ask that you will limit your question to one question and one follow-up. If you have additional questions, then you may re-enter the queue. We will pause for a brief moment to allow everyone an opportunity to signal for questions. Our first question is coming from Jeremy Tonet with J.P. Morgan.

Speaker Change: Thank you and if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure your mute function is turned off.

To allow your signal to reach adequately again, you can press star one to ask a question.

Speaker Change: We do ask that you limit your questions to one question and one follow up and if you have additional questions you may reenter the queue.

Speaker Change: We will pause for a brief moment to allow everyone an opportunity to signal for questions.

And our first question is coming from Jeremy Tonet with J P. Morgan.

Jeremy Tonet: Hi, good morning.

Speaker Change: Good morning, Jeremy.

Anatol Feygin: Good morning, Jeremy.

Thanks for all the color today very helpful.

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

I was just wondering a bit on the commissioning process right now as it stands right now if you froze where the futures are where the spread is for LNG those commissioning cargos.

Speaker Change: Potential scale of reduction in cost for the project could you help us kind of think through that.

Zach: Hey, Jeremy it's Zach.

Zach Davis: Hey, Jeremy, it's Zach. I'd start first with the guidance of 47 to 48 million tons is total production, including commissioning. I mentioned that we're over 46 to over 47 million tons of basically P&L production in 2025. It's around a million tons, a little less than that, in the guidance right now that is commissioning, that's not supporting EBITDA and will offset CapEx. Because stage three is combined with trains 1 through 3, those volumes in terms of the margins on those commissioning volumes will be a mix of spot volumes and of contracted volumes. That's accounted for when we talk about spot volumes in the P&L for CMI to sell of over 3 to over 4 million tons.

I would start first with the guidance of 47 to 48 million tons as total production, including commissioning and then we.

And then I mentioned that were over 46 to over 47 million tons of basically P&L production in 2012.

25, so it's around 1 million tons, a little less than that.

In the guidance right now that is commissioning that not supporting EBITDA and will offset capex.

Because stage three is combined with trains one through three.

Those volumes in terms of the margin on those commissioning volumes will be a mix of spot volumes and of contracted volumes.

And Thats accounted for when we talk about spot volumes in the P&L for CMI to sell over three to over 4 million tonnes.

Zach Davis: As you think about around 1 million tons or 50 TBtu, we're talking about $hundreds of millions that will help offset CapEx and just be another funding source for us in the coming year.

As you think about around 1 million tonnes or 50 Btu.

We're talking about hundreds of millions of dollars that will help offset capex and just be another funding source for us in the coming year.

Got it very helpful. There are hundreds of millions of dollars. Thank you and then just wanted to I guess come back to the SPL expansion and kind of commercialization efforts at this point with the FTA authorization, how does that I guess impact discussions that you're having with.

Jeremy Tonet: Got it. Very helpful there. Hundreds of millions of dollars. Thank you. Just want to, I guess, come back to the SPL expansion and kind of commercialization efforts at this point. You know, with the FTA authorization, how does that, I guess, impact discussions that you're having with customers right now? I guess, what's your outlook for that project, and how contracted are you looking for at this point?

Zach: With customers right now and I guess, what's your outlook for that project and how contracted are you looking for at this point.

Zach: Hey, Jeremy it's Anatol good morning, So as you know we've got order of magnitude 10 million tons.

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

There are three counterparties for mid scale eight nine and then the balance for train seven and we've started on train eight at SPL.

We're taking our time now as we kind of optimize and figure out what the best path is for our brownfield advantages and we're really pursuing are these efforts with certain select counterparties and being very judicious in how we how we move that project forward as we figure out the best way to get the.

Zach: The right balance of economics returns and and contractual support but ultimately it's not going to be very different from our kind of 90% plus contracted.

Anatol Feygin: Ultimately, it's not going to be very different from our kind of 90% plus contracted, you know, 7x CapEx to EBITDA target as we navigate that. As you've heard Zach mention on previous calls, it'll probably be a phased approach. We're in very good shape. We've got great engagement. Obviously, as the world thinks through all of these challenges and as we continue to deliver now over 3,700 cargoes from our 2 facilities without missing a beat, we're in a very good position on our commercial engagements.

Seven times Capex to EBITDA target as we as we navigate that and as you've heard Zach mentioned on previous calls it will probably be a phased approach. So we're we're in very good shape. We've got great engagement, obviously as the world thinks through all of these challenges and as as we continued to deliver now over 3700 cargos.

From our two facilities without missing a beat.

We're in a very good position on our on our commercial engagements.

Speaker Change: Got it very helpful. Thank you for that.

Jeremy Tonet: Got it. Very helpful. Thank you for that.

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

Operator 2: Next question is coming from the line of Teresa Chen with Barclays.

Operator: Next question is coming from the line of Teresa Chen with Barclays.

Good morning, Thank you for taking my questions.

Teresa Chen: Morning. Thank you for taking my questions. Maybe first on the commercial front, as a follow-up to Jeremy's question. Just as your competing projects in the US Gulf Coast have seemingly continued to face delays and other challenges while stage three remains on time, on budget, how has this influenced or impacted your commercial discussions for the upcoming projects?

Maybe first on the commercial front.

Theresa Chen: As a follow up to Jeremy's question.

Just ask your <unk>.

Theresa Chen: Competing.

Theresa Chen: Projects in the U S. Gulf Coast has seemingly continue to face delays and other challenges while stage III remains on time and on budget houses influenced or impacted your commercial discussions for the upcoming projects.

Theresa Theresa. Thank you for the question and I can tell you we have a very strong.

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

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

Speaker Change: <unk> relationship with backfill that we've we've built over the last decade.

As allowed us to work very closely as a team to be sure that we deliver our projects on budget ahead of schedule and that the performance is.

Theresa Chen: As guaranteed.

Theresa Chen: That our reliability that thousand cargos at Corpus Christi. The 2700 cargos that we produced at Sabine have made antitrust job a little bit easier because we're finally being recognized as a very reliable safe provider of LNG and I'll, let I'll, let anatol.

Cover how those conversations have been going yes. Thanks Jack.

Jeremy Tonet: Yeah. Thanks, Teresa. Thanks, Jack. Anatol's job keeps getting easier and easier. You know, what we announced earlier, well, I guess last night, about the methane target. You know, we've been going down the path of these scientific kind of very process-driven assessments of our own emissions profile and all of our QMRV efforts. We've talked to you guys about how that's been recognized by our counterparties for the last couple of years, but things as transparent as establishing a methane target are another key component. We've got the reliability, we've got, as you pointed out, and Jack mentioned, the E&C, EPC execution, the reliability of our products and delivering projects on time, on budget, and serving our customers with an ever cleaner product.

Anatol Feygin: Yeah. Thanks, Teresa. Thanks, Jack. Anatol's job keeps getting easier and easier. You know, what we announced earlier, well, I guess last night, about the methane target. You know, we've been going down the path of these scientific kind of very process-driven assessments of our own emissions profile and all of our QMRV efforts. We've talked to you guys about how that's been recognized by our counterparties for the last couple of years, but things as transparent as establishing a methane target are another key component. We've got the reliability, we've got, as you pointed out, and Jack mentioned, the E&C, EPC execution, the reliability of our products and delivering projects on time, on budget, and serving our customers with an ever cleaner product.

Speaker Change: And until his job keeps getting easier and easier.

Theresa Chen: We announced.

Speaker Change: Earlier, I guess last night about the methane target we've been.

Going down the path of these.

Theresa Chen: Scientific.

Speaker Change: Got it.

Speaker Change: Very process driven assessments of our own emissions profile in all of our <unk> efforts. We've talked to you guys about how that's been recognized by our Counterparties for the last couple of years, but things as transparent as establishing a methane targets are.

Theresa Chen: Other key components. So we've got the reliability. We've got as you pointed out Jack mentioned, the E&C EPC execution of the reliability of our products and and delivering projects on time on budget and serving our customers with ever cleaner product. So.

Jeremy Tonet: Yeah, lots of tailwinds for Anatol's efforts.

Anatol Feygin: Yeah, lots of tailwinds for Anatol's efforts.

Yes lots of lots of tailwind for Anatol as efforts.

Great. Thank you and not trying to make an at home job harder, but I do have a follow up on your comments related to the re gas.

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

Theresa Chen: Outlook in Asia. So.

Related to your views on China re gas capacity coming online or Asia in General where do you think we go from here and do you think that any.

Cyclical softness over the near medium term that could potentially decelerate as pace of expansion is there any elasticity in that timeline.

Well the expansion has been so rapid that.

Anatol Feygin: Well, the expansion has been so rapid that, you know, just algorithmically, I would not be shocked if the pace of growth slowed. China's gonna be a 250+ million-ton regas capacity market. We expect it to get to about 150 million tons of imports over the next 5 to 7 years, and the rest of Asia is gonna continue to grow. You know, I'm not a fan of summarizing kind of the environment as quote, "Chindia," end quote. If you look at Asia's growth overall, those two economies are responsible. Everything else is kind of rounds up and down to very little change, and we expect them to continue to grow at very robust rates.

Just algorithmically I would not be shocked if the pace of growth slowed but China is going to be a 250 plus million ton re gas capacity market. We expect it to get to about 140, 140 150 million tons of imports over the next five to seven years and the rest of Asia is going to continue to grow you know I'm not a fan.

Summarizing kind of the environment as CT chindia end quote, but but if you look at Asia growth overall of those two economies are responsible everything else is kind of rounds up and down to two very little change and we expect them to continue to grow at a very robust.

Anatol Feygin: One of the things that we talk about that I think would be very beneficial to the market over the medium term is if, to the extent that prices moderate, as this new supply enters the market over the next 3 to 5 years, a number of gassy economies that have been really starved of product at these elevated price levels, we expect to reenter and to avail themselves of more gas. Unfortunately, they don't have the credit and the scale to have the kind of long-term contracts that afford them the stability, the stable and reliable supply that we're touting here.

Rates and one of the things that we talk about that I think would be very beneficial to the market over the medium term.

To the extent the prices moderate as this new supply enters the market over the next three to five years, a number of gassy economies that have been really starved of products at these elevated price levels, we expect to reenter and to avail themselves of more gas. Unfortunately, they don't have the the credit and the scale to <unk>.

The kind of long term contracts that afford them the stability the stable and reliable supply that that.

That were touting here, but I think I don't see any cyclical slowdown or.

Anatol Feygin: I think I don't see any cyclical slowdown or, you know, a moderation of growth rate for gas. LNG actually has grown over 5% as a CAGR over the last decade, and I think that'll continue.

A moderation of growth rates for gas, which is grown LNG actually has grown over 5% as a CAGR over the last decade, and I think that will continue.

Speaker Change: Thank you.

Teresa Chen: Thank you.

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

Operator 2: The next question is coming from Michael Bloom with Wells Fargo.

Operator: The next question is coming from Michael Bloom with Wells Fargo.

Michael Blum: Thanks, Good morning, everyone.

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

I wanted to ask about.

Michael Blum: The beat and raise from this quarter are these portfolio optimization initiatives and higher production that drove the guidance increase in 2024 is that sustainable as we look to 2025.

Zach Davis: We would hope so, but we won't know until we see it show up in the actuals. We have a budget that, like, we rigorously go through with the operations team, and then we go through with the board, and we'll be in a position to give you a good range for next year in February in terms of financial guidance. When it comes to optimization, yeah, we're the second largest operator of LNG in the world, and we have a lot of ships that we charter, and we buy a lot of gas in this country. There should be opportunities. To say what the quantum is, that would be hard to define ahead of time.

We would hope so, but we wont know until we see it show up in the actuals, we have a budget that we rigorously go through with the operations team and then we go through with the board and we'll be in a position to give you.

Michael Blum: A good range for next year in February in terms of the financial guidance.

When it comes to optimization.

Speaker Change: We're the second largest operator of LNG in the world.

And we have a lot of shifts that we charter and we buy a lot of gas in this country. So so there should be opportunities, but to say what the quantum is.

That would be hard to define ahead of time.

Zach Davis: In terms of the guidance increase this time, I'd say I'd split it three ways, on the optimization side. Upstream of the plants, there were better basis differentials that we just couldn't have forecasted earlier on, that were able to be captured. We were able to opportunistically sub-charter more of our fleet ahead of stage three coming online for the rest of the year. With some of the positions we have all over the world and a few third-party sourcing, we were able to optimize the portfolio downstream, and together, that was around $100+ million added to the guidance. On the production side, honestly, that would be hard to forecast ahead of time, considering we had a relatively smooth hurricane season.

But in terms of the guidance increase at this time I would say I'd split it three ways on.

On the optimization side upstream of the plants that were better basis differentials that we just couldnt have forecasted earlier on that we're able to be captured.

Theresa Chen: Then we were able to opportunistically.

Sub charter more of our link ahead of stage III coming online for the rest of the year and then.

Michael Blum: Some of the positions we have all over the world in a few third party sourcing.

We were able to optimize the portfolio downstream and together that was around a 100 plus million added to the guidance on.

On the production side.

Honestly that that'd be hard to forecast.

Ahead of time, considering we had a relatively smooth hurricane season.

Zach Davis: For Cheniere, the ambient temperatures were also lower. They were able to just outperform at both sites and honestly pick up from earlier in the year where production was slightly down. That alone, with $8-9 margins for the rest of this year, added another $100+ million. Hard to say if we can bake that in. I would assume in a February guidance, we wouldn't be baking that in initially.

First cheniere the ambient temperatures were also lower and.

Michael Blum: They were able to just that outperform at both sites and honestly pickup from <unk>.

Michael Blum: Our earlier in the year, where production was slightly down so.

So that alone with eight $9 margins for the rest of this year added another 100 plus million dollars.

Hard to say, we can bake that in.

And I would assume in our February guidance, we wouldn't be baking that in initially.

Okay, Great no. That's good color I appreciate it and then I was wondering if you can give us a sense of your assumptions.

Michael Bloom: Okay, great. No, that's good color. I appreciate it. I was wondering if you can give us a sense of your assumptions on the timelines of the three stage three trains that you expect to complete in 2025. Given your track record and Bechtel's track record, I mean, I realize this is a new technology, but do you think a fourth train could possibly be achieved in 2025? Thanks.

Speaker Change: On the timelines of the three stage three trains that you expect to complete in 2025 and given your track record and Bechtel track record I mean I realize this is a new technology, but do you think a fourth train could possibly be achieved in 2025.

Michael This is Jack as you know.

Anatol Feygin: Michael, this is Jack. As you know, you know, I'm pushing the organization pretty hard right now on our construction efforts. We have today over 70 operators seconded to Bechtel that are commissioning and in startup mode. I tend to be a glass is half full kind of guy, but I think guiding you to 3 trains would be enough for me to pop a bottle of champagne and celebrate. 4 trains, I think, would be a little much for us to accomplish as a team. I'm just being totally transparent and honest with you. I'll turn it over to Zach, and he can tell you what his assumptions are in his production model.

Jack Fusco: Michael, this is Jack. As you know, you know, I'm pushing the organization pretty hard right now on our construction efforts. We have today over 70 operators seconded to Bechtel that are commissioning and in startup mode. I tend to be a glass is half full kind of guy, but I think guiding you to 3 trains would be enough for me to pop a bottle of champagne and celebrate. 4 trains, I think, would be a little much for us to accomplish as a team. I'm just being totally transparent and honest with you. I'll turn it over to Zach, and he can tell you what his assumptions are in his production model.

I'm pushing the organization pretty hard right now on our construction efforts.

Jack: We have today over 70 operators secunda tobacco that are commissioning in startup mode and I tend to be a glass is half full kind of guy but.

Michael Blum: But I think our guiding you to three trains.

Michael Blum: Okay.

Would be enough for me to pop a bottle of Champagne and celebrate four trains I think would be a little much for us too.

Michael Blum: For us to accomplish.

Michael Blum: As a team and im just being totally transparent and honest with you but.

I'll turn it over to Zach and he can tell you what his assumptions are in this production model.

Zach Davis: Sure. Just for a little more clarity, on the high end, if we're gonna make it to 48 million tons of production next year, you'd have to assume that trains one, two, and three reach substantial completion by the end of Q1, Q2, and Q3, respectively. Then on the lower end, where we're closer to 47, we have decent visibility on train one, so we're hopeful that can still come online in late Q1 or early Q2. But then it would be a little bit later in the second half of the year for trains two and three to end up at the 47 million ton level. Ideally, we'll have a bit more of an understanding of how things are going by the next call.

For a little more clarity on the high end, if we're going to make it to 48 million tons of production next year.

You'd have to assume.

That trains one two and three reached substantial completion by the end of Q1, Q2 and Q3, respectively.

Michael Blum: And then on the lower end.

Michael Blum: We're closer to 47.

We have decent visibility on train one so we're hopeful that can still come online in late Q1 or early Q2.

But then it would be a little bit later in the second half of the year.

For trains two and three to end up at the 47 million ton level. So ideally, we'll have a bit more of an understanding of how things are going by the next call of even by the next call. We don't expect to have substantial completion of even train one.

Zach Davis: Even by the next call, we don't expect to have substantial completion of even train one.

Speaker Change: Very clear thank you.

Jack Fusco: Very clear. Thank you.

Operator 2: The next question is coming from Keith Stanley with Wolfe Research.

Operator: The next question is coming from Keith Stanley with Wolfe Research.

The next question is coming from Keith Stanley with Wolfe Research.

Speaker Change: Hi, good morning.

Keith Stanley: Hi, good morning.

Michael Blum: <unk>.

Speaker Change: Good morning.

Zach Davis: Good morning.

Keith Stanley: Morning. First, just curious on the 100 to 150 TBtu of open exposure. How comfortable would you be trying to hedge more of that ahead of the winter? Or do you prefer to keep that open just operationally until you have the stage three trains starting to come online?

First just curious on the 100 to 150 <unk> of open exposure.

Comfortable would you be trying to hedge more of that ahead of the winter or do you prefer to keep that open just operationally until you have the stage three trains starting to come online.

So this is zach.

Zach Davis: This is Zach. I saw a few notes from folks this morning, and I just wanna make it clear, as you think about 2025, first and foremost, it's all about the CMI spot capacity. The CMI spot capacity that we guided to is over 3 to over 4 million tons. Since the call, we were able to be opportunistic and sell some of our 2025 length, and we sold over 1 million tons in a market that was trading around $8 at the time for next year. That's locking in nicely around half a billion dollars for the company.

A few notes from folks this morning, and I just want to make it clear.

As you think about 2025 first and foremost it's all about the CMI spot capacity CMI spot capacity that we guided to is over three to over 4 million tonnes.

Speaker Change: The call.

Speaker Change: We were able to be opportunistic and sell some of our 2025, a length and we sold over 1 million tons in a market that was trading around $8 at the time for next year.

So thats locking in <unk>.

Speaker Change: <unk> nicely around the $5 billion.

Speaker Change: The company.

Zach Davis: That was mainly locking in production from the existing 9 trains, just because we have more clarity, more understanding of how those produce over time, whereas it would be very difficult for us to sell physically or even to sell hedge financially volumes that are not as certain. Some of those will have to be closer to the date of loading than to be as proactive as we have been. With all that said, Q1 and Q4 will still be our biggest production quarters, just with lower ambient temperatures and the fact that our major maintenance will happen in the summer.

That was mainly locking in pro.

<unk> from the existing nine trains.

Just because we have more clarity and more understanding of how those produced over time, whereas it would be very difficult for us to sell physically or even to sell hedge financially.

Speaker Change: Volumes that are not as certain so some of those will have to be closer to the date of loading.

Speaker Change: Then to be as proactive as we have been with all that said Q1, and Q4 will still be our biggest production quarters, just with lower ambient temperatures and the fact that our major maintenance will happen in the summer and then as you can imagine with the cadence of the trains coming online.

Zach Davis: As you can imagine, with the cadence of the trains coming online, at best, there'll be one train operating in Q2, and then ideally in the second half of the year, two more come online. Q2 is probably our lowest level of production for the year. We might have more confidence going into next year or early next year to start selling at the latter part of the year as we have more production. Assume we sold quite a bit already considering it's only October still.

At best there'll be one train operating in Q2, and then ideally in the second half of the year to more come online. So Q2 is probably our lowest level of production for the year. So we might have more confidence going into next year or early next year to start selling it.

Speaker Change: At the at the.

The latter part of the year as we have more production but.

Assume where we sold quite a bit already considering it it's only October sale.

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

Speaker Change: That all makes sense.

Speaker Change: Second question is just a market question.

What are your expectations for European demand into next year and over the medium term after after a big drop in power driven demand and this year I think you said youre seeing some stabilization in European demand.

Speaker Change: Yeah, Thanks, Steve So.

Zach Davis: Yeah. Thanks, Keith. You know, the one big issue that will play out is how the last Bcf a day or so of pipe flows through Ukraine from Gazprom play out. Our expectation, market expectation is that that does not get renewed. The delta in European gas demand is much smaller than that. We're seeing good stabilization in the larger economies in terms of industrial power. As you pointed out, it is a big swing factor if it is a robust winter period that has a couple million ton impact on the overall demand.

Anatol Feygin: Yeah. Thanks, Keith. You know, the one big issue that will play out is how the last Bcf a day or so of pipe flows through Ukraine from Gazprom play out. Our expectation, market expectation is that that does not get renewed. The delta in European gas demand is much smaller than that. We're seeing good stabilization in the larger economies in terms of industrial power. As you pointed out, it is a big swing factor if it is a robust winter period that has a couple million ton impact on the overall demand.

Speaker Change: The one big.

Issue that will play out.

How the last Bcf, a day or so of pipe flows through Ukraine from from Gazprom play out the expectation our expectation market expectation is that that does not get renewed.

Speaker Change: So the delta in European gas demand is much smaller than that we're seeing good stabilization in the larger economies in terms of industrial power as you pointed out is a big swing factor if it is a.

Speaker Change: Our robust wind period.

Speaker Change: That has a.

Speaker Change: A couple of million ton impact on the overall demand but structurally.

Zach Davis: Structurally, you know, the thing that has changed is that we don't see infrastructure being a constraint anymore, not just on the regas side, but also on pipeline and the ability to move gas intra Europe. We think that natural gas demand and hence LNG demand for Europe is going to remain fairly stable through the middle of next decade. It's more of a question mark, and we expect it to decline modestly. We expect it to stay in this, you know, kind of 120, 130 million ton market range for a number of years.

Anatol Feygin: Structurally, you know, the thing that has changed is that we don't see infrastructure being a constraint anymore, not just on the regas side, but also on pipeline and the ability to move gas intra Europe. We think that natural gas demand and hence LNG demand for Europe is going to remain fairly stable through the middle of next decade. It's more of a question mark, and we expect it to decline modestly. We expect it to stay in this, you know, kind of 120, 130 million ton market range for a number of years.

Speaker Change: The thing that has changed is that we don't see infrastructure being a constraint anymore not just on the <unk> side, but also on on pipeline and the ability to move gas intra Europe, and we think that that natural gas demand and hence LNG demand for Europe is going to remain fairly stable through the middle of next decade.

Speaker Change: Then it's more of a question Mark and we expect it to decline modestly but but.

While we expect it to stay in this.

Kind of a 120 130 million ton market range for for a number of years.

Speaker Change: Thank you.

Keith Stanley: Thank you.

Operator 2: The next question is coming from Ben Nolan with Stifel.

Operator: The next question is coming from Ben Nolan with Stifel.

The next question is coming from Ben Nolan with Stifel.

Speaker Change: Alright I appreciate it.

Ben Nolan: All right. Appreciate it. Morning, guys. I wanted to ask maybe Anatol. You talk about much higher prices in LNG and all of the potential disruptions in the Middle East and Ukraine and elsewhere, and people sort of hedging their bets, and that leading to potentially more long-term contracting. Although certainly for US operators and just generally globally, it doesn't seem like there's been a terrible amount of actual activity on the long-term side. Do you think, maybe particularly to the US, do you think your customers are maybe just waiting until after the election? I guess I would have thought a little bit more activity given all the noise out there.

Ben Nolan: Good morning, guys.

So I wanted to ask.

And so if we could be.

Speaker Change: Yes.

You talk about the much higher prices in LNG and all of the potential disruptions in eastern Ukraine elsewhere, and people sort of hedging their bet and that leading to potentially more long term contracting.

Speaker Change: Although certainly for us.

Operators and just generally globally it doesn't seem like it's a terrible amount of actual activity.

On the long term side, you think maybe particularly to the U S. Do you think.

Speaker Change: Customers are maybe just waiting until after the election or or.

I guess I would've thought a little bit more.

Activity given all the noise out there.

Alright, Thanks, Ben I think as we've discussed in previous quarters, what we're going through now is a kind of post 'twenty. Two 'twenty three fog of war period were 75 million tons were executed in the market is figuring out that.

Zach Davis: Thanks, Ben. Yeah, I think, as we've discussed in previous quarters, what we're going through now is a kind of post 2022, 2023 fog of war period where 75 million tons were executed, and the market is figuring out that it's not that easy to execute these things, right? From a timing standpoint, from a regulatory standpoint, from an economic standpoint, commercial as well. The market is thinking through how to react to that. You're absolutely right. There were only a handful of long-term transactions, you know, ours with Galp being one of 3, I think, 20-year deals in the quarter.

It's not that easy to execute these statements right from a timing standpoint from a regulatory from an economic standpoint.

Speaker Change: Commercial as well so.

Speaker Change: The market is thinking through how to react to that Youre absolutely right. There were only a handful of of long term transactions.

Ours with <unk> being one of three I think 20 year deals in the quarter. So.

Zach Davis: That is, I would say that's not a reflection of kind of market appetite for more, and I think you'll continue to see a very healthy market for projects that can be advanced economically and reliably. You're right, we're going through a period of reevaluation by customers. As Teresa said, you know, against that backdrop, my job is very easy.

Speaker Change: But that is I would say that's not a reflection of kind of market appetite for four more and I think youll continue to see a very healthy market for for projects that can be advanced economically and reliably so you're right, we're going through a period of a reevaluation by customers.

Speaker Change: As Teresa said.

Against that backdrop my job is very easy.

Got you, Okay, and then and then secondly for me is on the shipping side actually there has been a pretty sharp decline in shipping spot rates and I know you guys are primarily long term contracted and use that as an opportunity to use your net long position that as an opportunity to re contracting you have open availability, but yes.

Jean Ann Salisbury: Gotcha. Okay. Secondly for me is on the shipping side, actually. There's been a pretty sharp decline in shipping spot rates. I know you guys are primarily long-term contracted and use your net long position as an opportunity to recontract when you have open availability. Just curious if there's any way, strategically for you to maybe take advantage of an especially soft, LNG shipping market at the moment.

And there is any way.

Strategically for you to maybe take advantage of especially soft.

LNG shipping market at the moment.

Hey, Ben I guess.

Anatol Feygin: Hey, Ben. I guess the number one driver, as Zach has alluded to, is our management of that fleet and the fact that we have shipping lined up and committed for our own volumes. In many cases, like the producer transactions that we partner with as well. The team has done a great job, and one of the big drivers of optimization opportunities has been chartering out that fleet as these optimization opportunities presented themselves. We are, I think, today the second-largest charterer of LNG vessels. We have been for a number of years, by far the largest, the most dynamic player in chartering vessels in and out. You're absolutely right. There are opportunities to optimize the portfolio.

Number one drivers as <unk> has alluded to is our management of that fleet and the fact that we have shipping lined up and committed for our for our own volumes in many cases like the producer transactions that we that we partner with as well.

The team has done a great job in one of the big drivers of optimization opportunities has been chartering out that links as.

Speaker Change: These optimization opportunities presented themselves. We are I think today, the second largest charterer of LNG vessels.

Speaker Change: We have been for a number of years by far the largest.

Speaker Change: The most dynamic player in chartering vessels in and out so you're absolutely right there are opportunities to to optimize our portfolio we are.

Anatol Feygin: We are of course on the eve of commissioning stage three, and these lower day rates provide some other opportunities on that front as we await the production from train one. You know, that's one of the reasons why we don't bake into our guidance things that we have not locked in on that front, because you never know what pitch is gonna come your way, whether it'll be a $300,000 day rate, you know, one winter or, you know, $20,000 in the prompts as we're seeing today.

We are of course on the eve of commissioning stage III and these lower.

Lower day rates provide some.

Other opportunities on that front as we as we await the production from train one so.

Speaker Change: That's one of the reasons why we don't.

Speaker Change: Take into our guidance.

Speaker Change: That we have not locked in on that front, because you never know what what pitch is going to come your way, whether it'll be a 300000 day rate.

Winter or 20000 in the prompt as we're seeing today.

Speaker Change: Got it.

Jean Ann Salisbury: Got it. Okay. I appreciate it. Thank you.

Okay I appreciate it thank you.

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

Operator 2: Our next question is coming from Bob Brackett with Bernstein Research.

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

Good morning, I am looking at the 25 guide and thinking about our guide that looks like flat Sabine pass year on year, but you commented about planned major maintenance there can I infer that it's about the same scale of major maintenance was last year or so something more I should be thinking about.

Bob Brackett: Good morning. I am looking at the 25 guide and thinking about a guide that looks like flat Sabine Pass year-over-year, but you commented about planned major maintenance there. Can I infer that it's about the same scale of major maintenance as last year or is there something more I should be thinking about?

Zach Davis: Thanks, Bob. The major maintenance at Sabine's Trains 3 and 4 is going to be longer this coming year than it was this past year. However, what's offsetting that is some of the smaller debottlenecking efforts that we've already pursued, like the Fin Fans, like we've mentioned on previous calls. That's helped us get to a point where we can do such a major maintenance on two trains and still be around 45 million tons on the existing nine.

Speaker Change: Thanks, Bob So.

So the major maintenance at Sabine train three and four.

Speaker Change: Is going to be longer.

This coming year than it was this past year. However, what's offsetting that is some of the smaller debottlenecking efforts that we've already.

Speaker Change: Pursued.

Speaker Change: Fintech like we've mentioned on previous calls that has helped us get to a point, where we can do such a major maintenance onto trains and still be around 45 million tons on the existing nine.

Speaker Change: Very good thank you.

Bob Brackett: Very clear. Thank you.

Our next question is coming from Jean Ann Salisbury.

Operator 2: Our next question is coming from Jean Ann Salisbury with Bank of America.

Operator: Our next question is coming from Jean Ann Salisbury with Bank of America.

Speaker Change: Bank of America.

Hi, good morning, assuming the current path remains for the DLA to lift their permit pies. After at the environmental assessment have you heard anything from them about housekeeping permit requirements could change or what extra environmental requirements. They might be looking for it to take that permits and how this generic position for that.

Jean Ann Salisbury: Hi, good morning. Assuming the current path remains for the DOE to lift their permit pause after the environmental assessment, have you heard anything from them about how future permit requirements could change, or what extra environmental requirements they would be looking for to grant permits? How is Cheniere positioned for that, on Corpus 8 and 9 and the Sabine Pass expansion?

<unk> said in past expansion.

Speaker Change: Hi, Jan.

Anatol Feygin: Hi, Jeananne. As you know, we work really closely with the Department of Energy. There's a lot of speculation around which way the pause may head. It's clear to us that nothing's gonna happen until after next week. From that point, it could be it's pretty broad bookend on which way the ban could go. I would wait until next week, but before I give you anything concrete.

Jack Fusco: Hi, Jeananne. As you know, we work really closely with the Department of Energy. There's a lot of speculation around which way the pause may head. It's clear to us that nothing's gonna happen until after next week. From that point, it could be it's pretty broad bookend on which way the ban could go. I would wait until next week, but before I give you anything concrete.

Speaker Change: We have we've.

As you know we work really closely with the department of energy.

There is a lot of speculation around which way the.

Speaker Change: Does it.

Pause may may head, it's clear to its clear to us that nothing is going to happen until after after next week.

And then and then from that point.

Speaker Change: Could be.

It's pretty broad bookend.

Speaker Change: <unk>.

Which way the band could.

Could go so I would wait until next week.

Speaker Change: But.

Speaker Change: Before I give you anything concrete, but I would say that we are in very very good shape with a nine.

Anatol Feygin: I would say that we are in very, very good shape with eight and nine, and actually with the Sabine expansion, that it's clear that brownfield expansions are gonna be treated a lot differently than greenfield expansions going forward. I think we're in a really good position to maximize the benefits of our existing platform.

Jack Fusco: I would say that we are in very, very good shape with eight and nine, and actually with the Sabine expansion, that it's clear that brownfield expansions are gonna be treated a lot differently than greenfield expansions going forward. I think we're in a really good position to maximize the benefits of our existing platform.

And actually with the Sabine expansion that it's clear that brownfield expansions are going to be treated a lot differently than.

Then greenfield expansions going forward.

And I think we're in a really good position to maximize that.

Speaker Change: The benefits of our existing platform.

Speaker Change: That's helpful. Thank you.

Jean Ann Salisbury: That's helpful. Thank you. As a follow-up, there was a rush by US E&Ps to sign up for LNG deals the last few years, which underwrote some of Cheniere's IPM contracts. Can you speak to whether that demand is still strong, given just that the US-TTF spread has kind of come in and it's expected to come in a bit from here?

And as a follow up on there was a rush by U S. E&ps to sign up for LNG deals. The last few years, which vendor SNF scenarios IPM contracts and can you speak to whether that demand is still strong given just that the U S. <unk> is kind of come in as expected to come in a bit from here.

Hey, Julien it's Anatol.

Anatol Feygin: Hey, Jeananne, it's Anatol. You know, that appetite that we in some sense launched now five-plus years ago remains very robust. One of the dynamics that of course has played out in the interim is the consolidation has improved the credit quality, and capital discipline has improved the credit quality of that cohort. You've seen a number of transactions that are variations on that theme, shorter tenor, some deals with intermediaries that reflect the quantum of appetite for those deals.

Speaker Change: That appetite.

Speaker Change: Yes.

In some sense launched now five plus years ago remains very robust one of the dynamics that of course is played out in the interim is the consolidation has has improved the credit quality and capital discipline has improved the credit quality of <unk> of that that cohort you've seen a number of.

A number of transactions that are.

Speaker Change: Variations on that theme shorter tenor some some deals with intermediaries that that reflect the quantum of appetite for for those deals as you know we've.

Anatol Feygin: As you know, we've said that while we have very, very good engagement, we don't expect this to be a kinda double-digit number of counterparties, again, being very selective, in terms of scale, credit, and ability to physically deliver volumes into our infrastructure. There are lots of things we like about those IPM transactions, but like with everything else, we're being very methodical. The appetite to do them is multiples of what you're seeing from us.

We've said that while we have very very good engagement. We don't expect this to be a kind of a double digit number of counterparties again being very selective in terms of.

Scale credit and ability to physically deliver volumes into our infrastructure. There are lots of things, we like about those IPM transactions, but like with everything else, we're being very methodical.

<unk> appetite to do them is multiples of what youre seeing from us.

Speaker Change: That makes sense, thanks, I'll leave it there.

Zach Davis: That makes sense. Thanks. I'll leave it there.

Jean Ann Salisbury: That makes sense. Thanks. I'll leave it there.

Speaker Change: Okay.

Speaker Change: Our next question is coming from John Cai with Goldman Sachs.

Operator 2: Our next question is coming from John Mackay with Goldman Sachs.

Operator: Our next question is coming from John Mackay with Goldman Sachs.

Well thanks for the time.

John Mackay: Hey, y'all. Thanks for the time. This might be a longer question than top of the hour, but I'll take it anyway. You guys have kept your 2 to $2.50 kind of baked-in marketing range for the outer year EBITDA guidance, even though we've seen kind of, you know, EPC costs go up pretty dramatically for new projects, et cetera, through there. I guess, could you spend a second just walking us through again your kind of thought process on that, whether that, you know, implied cost of new capacity in the market could be changing? You know, what would push you guys to kind of think about moving that number?

This might be a longer question than <unk>.

The hour, but I'll take it anyway, you guys have kept your two to $2 50 kind of baked in marketing range for the outer year EBITDA guidance, even though we've seen kind of EPC costs go up pretty dramatically for new projects etcetera through there I guess could you spend a second just walking us through again.

Your kind of thought process on that whether that implied cost of new capacity in the market could be changing.

Speaker Change: What would what would push you guys to kind of think about moving that number.

Speaker Change: Yes.

I'll go first on the guidance on a.

Zach Davis: I'll go first on the guidance. On the 2 to 2.50, I think we're just trying to make it as clear as possible for you folks what we see in the run rate. Everyone can make their own assumptions considering the balance of this year is at $9 netbacks, next year is $8, year after $6, and even in 2027, we're talking about $4 netbacks today. The fact that with every dollar turn, even in the run rate, we're adding like $300 million of EBITDA. We try to give that guidance that way. In terms of SPAs, I'm gonna hand it over to Anatol.

And then two to $2 50, I think we're just trying to make it as clear as possible for you folks.

What we see in the run rate and everyone can make their own assumptions considering.

The balance of this year at $9 Netback next year's $8, you after $6 and even in 2007, we're talking about $4 net backs today, so and the fact that with every dollar churn even in the run rate, we're riding what like $300 million of EBITDA. So we tried to give that guidance that way.

In terms of SBA as I'm going to hand, it over to Anatol, but basically we are pushing the limits of that that range right now.

Zach Davis: Basically, we're pushing the limits of that range right now, and that range still works for us, specifically on these brownfield expansions, thanks to all the equipment and infrastructure we already have in place. It's a good question for some others that are trying to do greenfield. For mid-scale 8 to 9 Sabine expansion and everything else we wanna do at Corpus and Sabine, we're in a great spot that we can do that still at around seven times CapEx to EBITDA. Anatol?

And that range still works for us.

Speaker Change: Specifically on these brownfield expansion, thanks to all of the equipment and infrastructure, we already have in place.

Good question for some others that are trying to do greenfield, but for Midscale eight nine to be in expansion and everything else. We wanted to do at Corpus and Sabine.

We're in a great spot that we can do that still at around seven times capex to EBITDA, but in itself, yes. Thanks, John I think you're.

Anatol Feygin: Yeah. Thanks, John. I think your kind of fundamental premise is right, as you heard from Zach, that a things are not getting cheaper or easier, and execution risks are becoming more and more apparent to the counterparties. That said, while the market for kind of US Gulf Coast projects has reached the high end of that range, I wouldn't say that today the competitive landscape allows for, you know, breaching that meaningfully. We're still in or around that range, but at the high end. We'll see what the future brings.

Fundamental premise is right as you heard from Zack.

Things are not getting cheaper or easier and execution risks are becoming more and more apparent to to the counterparties.

Speaker Change: That said, while while the market for kind of U S. Gulf Coast projects has.

<unk> the high end of that range I wouldn't say that today the competitive landscape allows for.

Speaker Change: Breaching that meaningfully so we're still we're still in or around that range, but at the high end, we will see what what the future brings.

Alright, that's great. Thanks for the time.

John Mackay: All right. That's clear. Thanks for your time.

And our final question is coming from Craig Shere with Tuohy brothers.

Operator 2: Our final question is coming from Craig Shere with Tuohy Brothers.

Operator: Our final question is coming from Craig Shere with Tuohy Brothers.

Thanks for letting me in congratulations on the quarter.

Speaker 16: Thanks for fitting me in. Congratulations on the quarter. Zach, you know, if I'm doing the math right, even after dividend share buybacks and your stage three funding, I think you ended Q3 with more C-corp cash than you did in Q2. Of course, your construction revolver remains untapped. How do you think about growth CapEx funding into modular train 8 and 9 FID if your corporate cash balances remain well above the $1 billion mark that's kind of the long-term target?

Craig Shere: Thanks for fitting me in. Congratulations on the quarter. Zach, you know, if I'm doing the math right, even after dividend share buybacks and your stage three funding, I think you ended Q3 with more C-corp cash than you did in Q2. Of course, your construction revolver remains untapped. How do you think about growth CapEx funding into modular train 8 and 9 FID if your corporate cash balances remain well above the $1 billion mark that's kind of the long-term target?

Speaker Change: Zach.

Speaker Change: Yes.

If im doing the math right, even after dividends share buybacks and your stage III funding. Thank you under three quarter with more C Corp cash than you did in <unk>.

And of course, your construction revolver remains untapped.

How do you think about growth Capex funding and modular train eight and nine the corporate cash balances remain well above the 1 billion Mark that's kind of a long term target.

Speaker Change: Hey, Craig Thanks for the question I mean, yes, yes, the cash balance on 930 is around $3 billion on a consolidated basis.

Zach Davis: Hey, Craig. Thanks for the question. I mean, yes, the cash balance on September 30 is around $3 billion on a consolidated basis. That was around $4.5 billion going into this year. Considering we've already deployed, I think around $4.2 billion across the four pillars of capital allocation, year-to-date DCF is around $2.7 billion, that makes about the right sense. You can assume that we'll be continually deploying probably more than our DCF to work that cash balance down over time.

Speaker Change: That was around $4 $5 billion going into this year.

And considering we've already deployed.

Take around $4 2 billion and across the four pillars of capital allocation, but year to date DCF is around $2 7 billion that makes about the REIT.

Speaker Change: You can assume that we'll be continually deploying probably more than our DCF to work that cash balance down over time, but as we have this cash balance as margins are more elevated.

Zach Davis: As we have this cash balance, as margins are more elevated, we're gonna use that cash to obviously continue the buyback at a pretty good pace, as well as continue to equity fund stage three, which we've done 100% life to date. At some point, we'll have that $3 billion of liquidity from that term loan that we can use as just general liquidity for the company and still stay comfortably IG at all the entities. In the meantime, it's pretty efficient for us to use this excess cash, work it down, get closer to $1 billion-plus at some point next year.

Speaker Change: We're going to use that cash to obviously continue the buyback at in at a pretty good pace.

Speaker Change: As well as continued equity fund stage.

Speaker Change: Stage, three which we've done 100%.

Speaker Change: Life to date.

At some point, we will have that $3 billion of liquidity from that term loan that we can use as just general liquidity for the company and still stay comfortably IAG at all of the entities.

But in the meantime, it's pretty efficient for us to use this excess cash work it down and get closer to $1 billion plus.

Speaker Change: At some point next year.

Speaker Change: Alright, and last one hopefully pretty quick I want to pick up on <unk> question about the.

Speaker 16: Great. Last one, hopefully pretty quick. Wanna pick up on Jean Ann's question about DOE authorizations. If we had a Harris administration and there was more of an emissions mandate, do you see your kind of industry-leading, you know, methane intensity targets and emissions targets kind of mitigating the need for CCS projects that maybe some peers would have to do since they can't prove what they got?

Craig Shere: Great. Last one, hopefully pretty quick. Wanna pick up on Jean Ann's question about DOE authorizations. If we had a Harris administration and there was more of an emissions mandate, do you see your kind of industry-leading, you know, methane intensity targets and emissions targets kind of mitigating the need for CCS projects that maybe some peers would have to do since they can't prove what they got?

Speaker Change: <unk>.

Speaker Change: If we had a Harris administration and there was more of a emission mandate.

Speaker Change: Do you see.

Speaker Change: The industry leading.

Speaker Change: Nothing intensity targets and emission tug kind of mitigating the need for Ccs projects that may be.

Some peers would have to do since they can't prove what they got.

Anatol Feygin: You know, I don't know how to call it, Craig, but I can tell you that we continue to focus on our program in using science and real measurement data rather than hypothetical, you know, guesstimates of what emissions are.

Speaker Change: Yes.

I don't know how to call it Craig, but I can tell you that we continue to focus on our program and using science.

In real measurement data rather than hypothetical guess.

Speaker Change: Estimates of what of what emissions are and and we continue to make some very good progress not only here in the U S. But also in Europe and worldwide.

Speaker 17: We continue to make some very good progress, not only here in the US, but also in Europe and worldwide, abroad. I would expect that the clean energy transition that the Biden administration has been so focused on will continue under a Harris administration. Yes, I would expect it to be more of a focus for that administration than under a Trump administration. We'll have to see what happens next week and then go from there.

Anatol Feygin: We continue to make some very good progress, not only here in the US, but also in Europe and worldwide, abroad. I would expect that the clean energy transition that the Biden administration has been so focused on will continue under a Harris administration. Yes, I would expect it to be more of a focus for that administration than under a Trump administration. We'll have to see what happens next week and then go from there.

Speaker Change: Broad.

Speaker Change: Would expect that.

Speaker Change: Net.

That the clean energy transition that the by the administration that has been so focused on will continue under a Harris administration. So yes, I would I would expect it to be.

Speaker Change:

Speaker Change: More of a focus for that administration than under a Trump administration, but we'll have to see.

Speaker Change: What happens next week.

And then and then go from there.

Understood. Thank you.

Jack Fusco: Understood. Thank you.

Craig Shere: Understood. Thank you.

Speaker Change: Okay.

And I will now turn the call back to the company Cheniere for any closing remarks.

Operator 1: I will now turn the call back to the company, Cheniere, for any closing remarks.

Operator: I will now turn the call back to the company, Cheniere, for any closing remarks.

Speaker Change: Yes, Hi, this is Jack I just wanted to say thank you again for all of your support.

Speaker 17: Yeah, hi, this is Jack. I just wanna say thank you again for all of your support and please be safe on this Halloween night.

Zach Davis: Yeah, hi, this is Jack. I just wanna say thank you again for all of your support and please be safe on this Halloween night.

And please be safe on this Halloween night.

And this concludes today's call. Thank you for your participation you may now disconnect.

Operator 1: This concludes today's call. Thank you for your participation. You may now disconnect.

Operator: This concludes today's call. Thank you for your participation. You may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Q3 2024 Cheniere Energy Partners LP Earnings Call

Request a DemoDemo

CQP

Cheniere Energy Partners

Earnings