Cheniere Partners Reports Second Quarter 2018 Results and Reconfirms Full Year 2018 Distribution Guidance
Cheniere Energy Partners, L.P. (NYSE American: CQP):
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Summary of Second Quarter 2018 Results (in millions, except LNG
data)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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2018
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2017
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2018
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2017
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Revenues
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$
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1,407
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$
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992
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$
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3,000
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$
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1,883
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Net income
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$
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281
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$
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46
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$
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616
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$
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93
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Adjusted EBITDA1
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$
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562
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$
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283
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$
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1,221
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$
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602
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LNG exported:
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Number of cargoes
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61
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48
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128
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91
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Volumes (TBtu)
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219
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170
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463
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322
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LNG volumes loaded (TBtu)
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222
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167
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463
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321
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Summary 2018 Full Year Distribution Guidance
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2018
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Distribution per Unit
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$
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2.20
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-
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$
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2.30
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Recent Achievements
Operational
-
As of July 31, 2018, approximately 150 cargoes have been produced,
loaded, and exported from the SPL Project (defined below) in 2018. To
date, more than 400 cumulative LNG cargoes have been exported from the
SPL Project, with deliveries to 28 countries and regions worldwide.
Financial
-
In June 2018, the date of first commercial delivery was reached under
the 20-year LNG Sale and Purchase Agreement with BG Gulf Coast LNG,
LLC relating to Train 3 of the SPL Project.
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Liquefaction Project Update
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SPL Project
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Liquefaction Train
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Train 5
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Train 6
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Project Status
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Commissioning
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Permitted
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Project Completion Percentage(1)
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95.1%
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—
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Expected Substantial Completion
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1H 2019
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—
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Note: Project update excludes Trains in operation
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(1) Project completion percentage as of June 30, 2018
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Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE American:
CQP) reported net income of $281 million for the three months ended June
30, 2018, compared to $46 million for the comparable period in 2017.
Cheniere Partners reported net income of $616 million for the six months
ended June 30, 2018, compared to net income of $93 million for the
comparable period in 2017.
The increase in net income was primarily due to increased income from
operations as a result of additional natural gas liquefaction trains
(“Trains”) in operation at the SPL Project, partially offset by
increased interest expense, net of amounts capitalized.
Adjusted EBITDA1 for the three and six months ended June 30,
2018 was $562 million and $1.2 billion, respectively, compared to $283
million and $602 million for the comparable 2017 periods. The increase
in Adjusted EBITDA was primarily due to increased income from operations.
Total revenues increased $415 million during the three months ended June
30, 2018 as compared to the three months ended June 30, 2017. Total
revenues increased $1.1 billion during the six months ended June 30,
2018 as compared to the six months ended June 30, 2017. Total operating
costs and expenses increased $160 million during the three months ended
June 30, 2018, as compared to the three months ended June 30, 2017.
Total operating costs and expenses increased $573 million during the six
months ended June 30, 2018, compared to the six months ended June 30,
2017. The increases in revenues and total operating costs and expenses
for the three and six months ended June 30, 2018, as compared to the
comparable periods in 2017, were primarily driven by the timing of
completion of Trains at the SPL Project and the length of each Train’s
operations within the periods being compared.
During the three and six months ended June 30, 2018, 61 and 128 LNG
cargoes, respectively, were exported from the SPL Project, none of which
were commissioning cargoes.
SPL Project
Through Cheniere Partners, we are developing up to six Trains at the
Sabine Pass LNG terminal adjacent to the existing regasification
facilities (the “SPL Project”). Each Train is expected to have a nominal
production capacity, which is prior to adjusting for planned
maintenance, production reliability, and potential overdesign, of
approximately 4.5 million tonnes per annum (“mtpa”) of LNG, and an
adjusted nominal production capacity of approximately 4.3 to 4.6 mtpa of
LNG. Trains 1 through 4 are operational, Train 5 is undergoing
commissioning, and Train 6 is being commercialized and has all necessary
regulatory approvals in place.
Distributions to Unitholders
We will pay a cash distribution per common and subordinated unit of
$0.56 to unitholders of record as of August 6, 2018 and the related
general partner distribution on August 14, 2018.
Investor Conference Call and Webcast
Cheniere Energy, Inc. will host a conference call to discuss its
financial and operating results for the second quarter on Thursday,
August 9, 2018, at 10 a.m. Eastern time / 9 a.m. Central time. A
listen-only webcast of the call and an accompanying slide presentation
may be accessed through our website at www.cheniere.com.
Following the call, an archived recording will be made available on our
website. The call and accompanying slide presentation may include
financial and operating results or other information regarding Cheniere
Partners.
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1
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Non-GAAP financial measure. See “Reconciliation of Non-GAAP
Measures” for further details.
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About Cheniere Partners
Cheniere Partners, through its subsidiary, Sabine Pass Liquefaction, LLC
(“SPL”), is developing, constructing, and operating natural gas
liquefaction facilities at the Sabine Pass LNG terminal located in
Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four
miles from the Gulf Coast. Cheniere Partners, through SPL, plans to
construct up to six Trains, which are in various stages of development,
construction, and operations. Trains 1 through 4 are operational, Train
5 is undergoing commissioning, and Train 6 is being commercialized and
has all necessary regulatory approvals in place. Each Train is expected
to have a nominal production capacity, which is prior to adjusting for
planned maintenance, production reliability, and potential overdesign,
of approximately 4.5 mtpa of LNG and an adjusted nominal production
capacity of approximately 4.3 to 4.6 mtpa of LNG.
Through its wholly owned subsidiary, Sabine Pass LNG, L.P., Cheniere
Partners owns and operates regasification facilities at the Sabine Pass
LNG terminal, which includes pre-existing infrastructure of five LNG
storage tanks with aggregate capacity of approximately 16.9 billion
cubic feet equivalent (“Bcfe”), two marine berths that can each
accommodate vessels with nominal capacity of up to 266,000 cubic meters
and vaporizers with regasification capacity of approximately 4.0 Bcf/d.
Cheniere Partners also owns a 94-mile pipeline that interconnects the
Sabine Pass LNG terminal with a number of large interstate pipelines
through its wholly owned subsidiary, Cheniere Creole Trail Pipeline, L.P.
For additional information, please refer to the Cheniere Partners
website at www.cheniere.com
and Quarterly Report on Form 10-Q for the quarter ended June 30, 2018,
filed with the Securities and Exchange Commission.
Forward-Looking Statements
This press release contains certain statements that may include
“forward-looking statements.” All statements, other than statements of
historical or present facts or conditions, included herein are
“forward-looking statements.” Included among “forward-looking
statements” are, among other things, (i) statements regarding Cheniere
Partners’ business strategy, plans and objectives, including the
development, construction and operation of liquefaction facilities, (ii)
statements regarding expectations regarding regulatory authorizations
and approvals, (iii) statements expressing beliefs and expectations
regarding the development of Cheniere Partners’ LNG terminal and
liquefaction business, (iv) statements regarding the business operations
and prospects of third parties, (v) statements regarding potential
financing arrangements, and (vi) statements regarding future discussions
and entry into contracts. Although Cheniere Partners believes that the
expectations reflected in these forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties, and
these expectations may prove to be incorrect. Cheniere Partners’ actual
results could differ materially from those anticipated in these
forward-looking statements as a result of a variety of factors,
including those discussed in Cheniere Partners’ periodic reports that
are filed with and available from the Securities and Exchange
Commission. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. Other
than as required under the securities laws, Cheniere Partners does not
assume a duty to update these forward-looking statements.
(Financial Tables Follow)
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Cheniere Energy Partners, L.P.
Consolidated Statements of Income
(in millions, except per unit data) (1)
(unaudited)
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Three Months Ended
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Six Months Ended
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June 30,
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June 30,
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2018
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2017
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2018
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2017
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Revenues
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LNG revenues
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$
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1,155
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$
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503
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$
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2,170
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$
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995
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LNG revenues—affiliate
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178
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422
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681
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753
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Regasification revenues
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65
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65
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130
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130
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Other revenues
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9
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2
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19
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4
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Other revenues—affiliate
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—
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—
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—
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1
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Total revenues
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1,407
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992
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3,000
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1,883
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Operating costs and expenses
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Cost of sales (excluding depreciation and amortization expense
shown separately below)
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698
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577
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1,535
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1,090
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Operating and maintenance expense
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|
98
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|
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|
82
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|
193
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|
132
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Operating and maintenance expense—affiliate
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30
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|
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21
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|
56
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39
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Development expense
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1
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1
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1
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1
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General and administrative expense
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2
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2
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6
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5
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General and administrative expense—affiliate
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17
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23
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|
35
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45
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Depreciation and amortization expense
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106
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|
86
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211
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|
|
152
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Total operating costs and expenses
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952
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|
792
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2,037
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1,464
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|
|
|
|
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|
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Income from operations
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455
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|
200
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|
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|
963
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419
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|
|
|
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|
|
|
|
|
|
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Other income (expense)
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|
|
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|
|
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Interest expense, net of capitalized interest
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(184
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)
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|
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(154
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)
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(369
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)
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(284
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)
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Loss on modification or extinguishment of debt
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|
|
|
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—
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|
|
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—
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—
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(42
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)
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Derivative gain (loss), net
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3
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(3
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)
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|
11
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(3
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)
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Other income
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|
7
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|
|
|
3
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|
|
11
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|
|
3
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Total other expense
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(174
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)
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(154
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)
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(347
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)
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(326
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)
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|
|
|
|
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Net income
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$
|
281
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$
|
46
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$
|
616
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|
|
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$
|
93
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|
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|
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|
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Basic and diluted net income (loss) per common unit
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$
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0.55
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$
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(3.71
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)
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|
|
$
|
1.22
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|
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|
$
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(4.50
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Weighted average number of common units outstanding used for
basic and diluted net income (loss) per common unit calculation
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|
|
|
|
348.6
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57.1
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348.6
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57.1
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___________________
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(1)
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Please refer to the Cheniere Energy Partners, L.P. Quarterly Report
on Form 10-Q for the quarter ended June 30, 2018, filed with the
Securities and Exchange Commission.
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Cheniere Energy Partners, L.P.
Consolidated Balance Sheets
(in millions, except unit data) (1)
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June 30,
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December 31,
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2018
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2017
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ASSETS
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(unaudited)
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Current assets
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|
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Cash and cash equivalents
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$
|
—
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|
|
|
$
|
—
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Restricted cash
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|
|
|
|
1,521
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|
|
|
1,589
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Accounts and other receivables
|
|
|
|
|
241
|
|
|
|
191
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Accounts receivable—affiliate
|
|
|
|
|
19
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|
|
|
163
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|
Advances to affiliate
|
|
|
|
|
139
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|
|
|
36
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|
Inventory
|
|
|
|
|
87
|
|
|
|
95
|
|
Other current assets
|
|
|
|
|
54
|
|
|
|
65
|
|
Other current assets—affiliate
|
|
|
|
|
1
|
|
|
|
—
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|
Total current assets
|
|
|
|
|
2,062
|
|
|
|
2,139
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
|
|
15,207
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|
|
|
15,139
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|
Debt issuance costs, net
|
|
|
|
|
18
|
|
|
|
38
|
|
Non-current derivative assets
|
|
|
|
|
31
|
|
|
|
31
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|
Other non-current assets, net
|
|
|
|
|
224
|
|
|
|
206
|
|
Total assets
|
|
|
|
|
$
|
17,542
|
|
|
|
$
|
17,553
|
|
|
|
|
|
|
|
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LIABILITIES AND PARTNERS’ EQUITY
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|
|
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Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
$
|
14
|
|
|
|
$
|
12
|
|
Accrued liabilities
|
|
|
|
|
572
|
|
|
|
637
|
|
Due to affiliates
|
|
|
|
|
39
|
|
|
|
68
|
|
Deferred revenue
|
|
|
|
|
98
|
|
|
|
111
|
|
Deferred revenue—affiliate
|
|
|
|
|
—
|
|
|
|
1
|
|
Derivative liabilities
|
|
|
|
|
7
|
|
|
|
—
|
|
Total current liabilities
|
|
|
|
|
730
|
|
|
|
829
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
|
|
16,046
|
|
|
|
16,046
|
|
Non-current deferred revenue
|
|
|
|
|
—
|
|
|
|
1
|
|
Non-current derivative liabilities
|
|
|
|
|
7
|
|
|
|
3
|
|
Other non-current liabilities
|
|
|
|
|
8
|
|
|
|
10
|
|
Other non-current liabilities—affiliate
|
|
|
|
|
23
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
Partners’ equity
|
|
|
|
|
|
|
|
|
Common unitholders’ interest (348.6 million units issued and
outstanding at June 30,
2018 and December 31, 2017)
|
|
|
|
|
1,739
|
|
|
|
1,670
|
|
Subordinated unitholders’ interest (135.4 million units issued and
outstanding at June
30, 2018 and December 31, 2017)
|
|
|
|
|
(1,016
|
)
|
|
|
(1,043
|
)
|
General partner’s interest (2% interest with 9.9 million units
issued and outstanding at
June 30, 2018 and December 31, 2017)
|
|
|
|
|
5
|
|
|
|
12
|
|
Total partners’ equity
|
|
|
|
|
728
|
|
|
|
639
|
|
Total liabilities and partners’ equity
|
|
|
|
|
$
|
17,542
|
|
|
|
$
|
17,553
|
|
|
___________________
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(1)
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|
Please refer to the Cheniere Energy Partners, L.P. Quarterly Report
on Form 10-Q for the quarter ended June 30, 2018, filed with the
Securities and Exchange Commission.
|
|
Reconciliation of Non-GAAP Measures
Regulation G Reconciliation
In addition to disclosing financial results in accordance with U.S.
GAAP, the accompanying news release contains a non-GAAP financial
measure. Adjusted EBITDA is a non-GAAP financial measure that is used to
facilitate comparisons of operating performance across periods. This
non-GAAP measure should be viewed as a supplement to and not a
substitute for our U.S. GAAP measures of performance and the financial
results calculated in accordance with U.S. GAAP, and the reconciliation
from these results should be carefully evaluated.
Adjusted EBITDA is calculated by taking net income before interest
expense, net of capitalized interest, changes in the fair value and
settlement of our interest rate derivatives, taxes, depreciation and
amortization, and adjusting for the effects of certain non-cash items,
other non-operating income or expense items and other items not
otherwise predictive or indicative of ongoing operating performance,
including the effects of modification or extinguishment of debt and
changes in the fair value of our commodity derivatives. Adjusted EBITDA
is not intended to represent cash flows from operations or net income
(loss) as defined by U.S. GAAP and is not necessarily comparable to
similarly titled measures reported by other companies.
We believe Adjusted EBITDA provides relevant and useful information to
management, investors and other users of our financial information in
evaluating the effectiveness of our operating performance in a manner
that is consistent with management’s evaluation of business performance.
Management believes Adjusted EBITDA is widely used by investors to
measure a company’s operating performance without regard to items such
as interest expense, taxes, depreciation and amortization which vary
substantially from company to company depending on capital structure,
the method by which assets were acquired and depreciation policies.
Further, the exclusion of certain non-cash items, other non-operating
income or expense items and other items not otherwise predictive or
indicative of ongoing operating performance enables comparability to
prior period performance and trend analysis.
Adjusted EBITDA
The following table reconciles our Adjusted EBITDA to U.S. GAAP results
for the three and six months ended June 30, 2018 and 2017 (in millions):
|
|
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
Net income
|
|
|
|
|
$
|
281
|
|
|
|
$
|
46
|
|
|
|
$
|
616
|
|
|
|
$
|
93
|
|
Interest expense, net of capitalized interest
|
|
|
|
|
184
|
|
|
|
154
|
|
|
|
369
|
|
|
|
284
|
|
Loss on modification or extinguishment of debt
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42
|
|
Derivative loss (gain), net
|
|
|
|
|
(3
|
)
|
|
|
3
|
|
|
|
(11
|
)
|
|
|
3
|
|
Other income
|
|
|
|
|
(7
|
)
|
|
|
(3
|
)
|
|
|
(11
|
)
|
|
|
(3
|
)
|
Income from operations
|
|
|
|
|
$
|
455
|
|
|
|
$
|
200
|
|
|
|
$
|
963
|
|
|
|
$
|
419
|
|
Adjustments to reconcile income from operations to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
|
|
106
|
|
|
|
86
|
|
|
|
211
|
|
|
|
152
|
|
Loss from changes in fair value of commodity derivatives, net
|
|
|
|
|
1
|
|
|
|
(3
|
)
|
|
|
47
|
|
|
|
31
|
|
Adjusted EBITDA
|
|
|
|
|
$
|
562
|
|
|
|
$
|
283
|
|
|
|
$
|
1,221
|
|
|
|
$
|
602
|
|
|
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