Cheniere Partners Reports Third Quarter 2018 Results and Provides Updated Distribution Guidance
Raises 2018 Guidance and Provides 2019 Guidance
Raises Run Rate Production and Financial Guidance
Achieves First LNG Production From Train 5 of SPL Project
Signs EPC Contract with Bechtel for Train 6 of SPL Project and Issues
Limited Notice to Proceed
Cheniere Energy Partners, L.P. (NYSE American: CQP):
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Summary of Third Quarter 2018 Results (in millions, except LNG
data)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2018
|
|
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2017
|
|
|
2018
|
|
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2017
|
Revenues
|
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$
|
1,529
|
|
$
|
903
|
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$
|
4,529
|
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$
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2,786
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Net income
|
|
$
|
307
|
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$
|
23
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$
|
923
|
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$
|
116
|
Adjusted EBITDA1
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$
|
604
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$
|
298
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$
|
1,825
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$
|
900
|
LNG exported:
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Number of cargoes
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65
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44
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193
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135
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Volumes (TBtu)
|
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228
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|
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160
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|
|
691
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|
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482
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LNG volumes loaded (TBtu)
|
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228
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|
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162
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691
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|
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483
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Summary Distribution Guidance
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2018 Full Year Distribution Guidance
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2018
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Distribution per Unit
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$2.27 - $2.30
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2019 Full Year Distribution Guidance
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2019
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Distribution per Unit
|
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$2.35- $2.55
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Run Rate Distribution Guidance
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Run Rate2
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Distribution per Unit
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$3.30 - $3.60
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Adjusted Nominal Production Capacity per Train3 (mtpa)
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4.5 - 4.9
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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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2.
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Run rate is assumed to be the first full year of operations
for Trains 1-5 at the SPL Project.
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3.
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Includes expected impacts of planned maintenance, production
reliability, potential overdesign, and debottlenecking
opportunities.
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Recent Achievements
Strategic
-
In November 2018, Sabine Pass Liquefaction, LLC (“SPL”) entered into
an Engineering, Procurement, and Construction contract with Bechtel
Oil, Gas and Chemicals, Inc. (“Bechtel”) for Train 6 of the SPL
Project (defined below). SPL also issued limited notice to proceed to
Bechtel to commence early engineering, procurement, and site works.
Operational
-
As of October 31, 2018, more than 215 cargoes have been produced,
loaded, and exported from the SPL Project (defined below) in 2018. To
date, more than 475 cumulative LNG cargoes have been exported from the
SPL Project, with deliveries to 29 countries and regions worldwide.
-
In September 2018, feed gas was introduced to Train 5 of the SPL
Project as part of the commissioning process, and first LNG production
from Train 5 occurred in October 2018.
Financial
-
In September 2018, we issued an aggregate principal amount of $1.1
billion of 5.625% Senior Notes due 2026 (the “2026 CQP Senior Notes”).
Net proceeds of the offering, after deducting commissions, fees and
expenses, were used to prepay all of the outstanding indebtedness
under our credit facilities (the “CQP Credit Facilities”). After
applying the proceeds from this offering, only a $115 million
revolving credit facility remains as part of the CQP Credit
Facilities, and both the 2026 CQP Senior Notes and our outstanding
$1.5 billion of 5.250% Senior Notes due 2025 became unsecured.
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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98.5%
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—
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Expected Substantial Completion
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1Q 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 September 30, 2018
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Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE American:
CQP) reported net income of $307 million for the three months ended
September 30, 2018, compared to net income of $23 million for the
comparable period in 2017. Cheniere Partners reported net income of $923
million for the nine months ended September 30, 2018, compared to net
income of $116 million for the comparable period in 2017. The increases
in net income were primarily due to increased income from operations as
a result of additional natural gas liquefaction trains (“Trains”) in
operation at the SPL Project and decreased loss on modification or
extinguishment of debt, partially offset by increased interest expense,
net of amounts capitalized.
Adjusted EBITDA1 for the three and nine months ended
September 30, 2018 was $604 million and $1.8 billion, respectively,
compared to $298 million and $900 million for the comparable 2017
periods. The increase in Adjusted EBITDA was primarily due to increased
income from operations.
Total revenues increased $626 million during the three months ended
September 30, 2018 as compared to the three months ended September 30,
2017. Total revenues increased $1.7 billion during the nine months ended
September 30, 2018 as compared to the nine months ended September 30,
2017. Total operating costs and expenses increased $331 million during
the three months ended September 30, 2018, as compared to the three
months ended September 30, 2017. Total operating costs and expenses
increased $904 million during the nine months ended September 30, 2018,
compared to the nine months ended September 30, 2017. The increases in
revenues and total operating costs and expenses for the three and nine
months ended September 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 nine months ended September 30, 2018, 65 and 193
LNG cargoes, respectively, were exported from the SPL Project, none of
which were commissioning cargoes.
SPL Project
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,
potential overdesign, and debottlenecking opportunities, of
approximately 4.5 million tonnes per annum (“mtpa”) of LNG and a run
rate adjusted nominal production capacity of approximately 4.5 to 4.9
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
$0.58 to unitholders of record as of November 5, 2018 and the related
general partner distribution on November 14, 2018.
Investor Conference Call and Webcast
Cheniere Energy, Inc. will host a conference call to discuss its
financial and operating results for the third quarter on Thursday,
November 8, 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.
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, potential overdesign, and
debottlenecking opportunities, of approximately 4.5 mtpa of LNG and a
run rate adjusted nominal production capacity of approximately 4.5 to
4.9 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, 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 September 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’ financial and operational guidance, 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.
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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
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Revenues
|
|
|
|
|
|
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|
|
LNG revenues
|
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$
|
1,249
|
|
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$
|
723
|
|
|
$
|
3,419
|
|
|
$
|
1,718
|
|
LNG revenues—affiliate
|
|
|
205
|
|
|
|
111
|
|
|
|
886
|
|
|
|
864
|
|
Regasification revenues
|
|
|
66
|
|
|
|
65
|
|
|
|
196
|
|
|
|
195
|
|
Other revenues
|
|
|
9
|
|
|
|
3
|
|
|
|
28
|
|
|
|
7
|
|
Other revenues—affiliate
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
2
|
|
Total revenues
|
|
|
1,529
|
|
|
|
903
|
|
|
|
4,529
|
|
|
|
2,786
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
Cost of sales (excluding depreciation and amortization expense shown
separately below)
|
|
|
756
|
|
|
|
490
|
|
|
|
2,291
|
|
|
|
1,580
|
|
Operating and maintenance expense
|
|
|
113
|
|
|
|
73
|
|
|
|
306
|
|
|
|
205
|
|
Operating and maintenance expense—affiliate
|
|
|
31
|
|
|
|
31
|
|
|
|
87
|
|
|
|
70
|
|
Development expense
|
|
|
1
|
|
|
|
1
|
|
|
|
2
|
|
|
|
2
|
|
General and administrative expense
|
|
|
3
|
|
|
|
5
|
|
|
|
9
|
|
|
|
10
|
|
General and administrative expense—affiliate
|
|
|
18
|
|
|
|
18
|
|
|
|
53
|
|
|
|
63
|
|
Depreciation and amortization expense
|
|
|
107
|
|
|
|
87
|
|
|
|
318
|
|
|
|
239
|
|
Impairment expense and loss on disposal of assets
|
|
|
8
|
|
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
Other
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
Total operating costs and expenses
|
|
|
1,037
|
|
|
|
706
|
|
|
|
3,074
|
|
|
|
2,170
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
492
|
|
|
|
197
|
|
|
|
1,455
|
|
|
|
616
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest expense, net of capitalized interest
|
|
|
(183
|
)
|
|
|
(153
|
)
|
|
|
(552
|
)
|
|
|
(437
|
)
|
Loss on modification or extinguishment of debt
|
|
|
(12
|
)
|
|
|
(25
|
)
|
|
|
(12
|
)
|
|
|
(67
|
)
|
Derivative gain (loss), net
|
|
|
2
|
|
|
|
1
|
|
|
|
13
|
|
|
|
(2
|
)
|
Other income
|
|
|
8
|
|
|
|
3
|
|
|
|
19
|
|
|
|
6
|
|
Total other expense
|
|
|
(185
|
)
|
|
|
(174
|
)
|
|
|
(532
|
)
|
|
|
(500
|
)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
307
|
|
|
$
|
23
|
|
|
$
|
923
|
|
|
$
|
116
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per common unit
|
|
$
|
0.60
|
|
|
$
|
(1.10
|
)
|
|
$
|
1.82
|
|
|
$
|
(4.12
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common units outstanding used for basic
and diluted net income (loss) per common unit calculation
|
|
|
348.6
|
|
|
|
247.2
|
|
|
|
348.6
|
|
|
|
121.2
|
|
___________________________
(1)
|
|
Please refer to the Cheniere Energy Partners, L.P. Quarterly Report
on Form 10-Q for the quarter ended September 30, 2018, filed with
the Securities and Exchange Commission.
|
|
|
|
|
|
|
|
|
Cheniere Energy Partners, L.P.
|
Consolidated Balance Sheets
|
(in millions, except unit data) (1)
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
2018
|
|
|
|
2017
|
|
ASSETS
|
|
(unaudited)
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
|
|
1,457
|
|
|
|
1,589
|
|
Accounts and other receivables
|
|
|
224
|
|
|
|
191
|
|
Accounts receivable—affiliate
|
|
|
22
|
|
|
|
163
|
|
Advances to affiliate
|
|
|
189
|
|
|
|
36
|
|
Inventory
|
|
|
88
|
|
|
|
95
|
|
Other current assets
|
|
|
55
|
|
|
|
65
|
|
Total current assets
|
|
|
2,035
|
|
|
|
2,139
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
15,282
|
|
|
|
15,139
|
|
Debt issuance costs, net
|
|
|
15
|
|
|
|
38
|
|
Non-current derivative assets
|
|
|
25
|
|
|
|
31
|
|
Other non-current assets, net
|
|
|
179
|
|
|
|
206
|
|
Total assets
|
|
$
|
17,536
|
|
|
$
|
17,553
|
|
|
|
|
|
|
LIABILITIES AND PARTNERS’ EQUITY
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
13
|
|
|
$
|
12
|
|
Accrued liabilities
|
|
|
503
|
|
|
|
637
|
|
Due to affiliates
|
|
|
53
|
|
|
|
68
|
|
Deferred revenue
|
|
|
119
|
|
|
|
111
|
|
Deferred revenue—affiliate
|
|
|
—
|
|
|
|
1
|
|
Derivative liabilities
|
|
|
6
|
|
|
|
—
|
|
Total current liabilities
|
|
|
694
|
|
|
|
829
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
16,059
|
|
|
|
16,046
|
|
Non-current derivative liabilities
|
|
|
2
|
|
|
|
3
|
|
Other non-current liabilities
|
|
|
10
|
|
|
|
11
|
|
Other non-current liabilities—affiliate
|
|
|
23
|
|
|
|
25
|
|
|
|
|
|
|
Partners’ equity
|
|
|
|
|
Common unitholders’ interest (348.6 million units issued and
outstanding at September 30, 2018 and December 31, 2017)
|
|
|
1,759
|
|
|
|
1,670
|
|
Subordinated unitholders’ interest (135.4 million units issued and
outstanding at September 30, 2018 and December 31, 2017)
|
|
|
(1,008
|
)
|
|
|
(1,043
|
)
|
General partner’s interest (2% interest with 9.9 million units
issued and outstanding at September 30, 2018 and December 31, 2017)
|
|
|
(3
|
)
|
|
|
12
|
|
Total partners’ equity
|
|
|
748
|
|
|
|
639
|
|
Total liabilities and partners’ equity
|
|
$
|
17,536
|
|
|
$
|
17,553
|
|
___________________________
(1)
|
|
Please refer to the Cheniere Energy Partners, L.P. Quarterly Report
on Form 10-Q for the quarter ended September 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 nine months ended September 30, 2018 and 2017 (in
millions):
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Net income
|
|
$
|
307
|
|
|
$
|
23
|
|
|
$
|
923
|
|
|
$
|
116
|
|
Interest expense, net of capitalized interest
|
|
|
183
|
|
|
|
153
|
|
|
|
552
|
|
|
|
437
|
|
Loss on modification or extinguishment of debt
|
|
|
12
|
|
|
|
25
|
|
|
|
12
|
|
|
|
67
|
|
Derivative loss (gain), net
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(13
|
)
|
|
|
2
|
|
Other income
|
|
|
(8
|
)
|
|
|
(3
|
)
|
|
|
(19
|
)
|
|
|
(6
|
)
|
Income from operations
|
|
$
|
492
|
|
|
$
|
197
|
|
|
$
|
1,455
|
|
|
$
|
616
|
|
Adjustments to reconcile income from operations to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
107
|
|
|
|
87
|
|
|
|
318
|
|
|
|
239
|
|
Loss (gain) from changes in fair value of commodity derivatives, net
|
|
|
(10
|
)
|
|
|
14
|
|
|
|
37
|
|
|
|
45
|
|
Impairment expense and loss on disposal of assets
|
|
|
8
|
|
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
Legal settlement expense
|
|
|
7
|
|
|
|
—
|
|
|
|
7
|
|
|
|
—
|
|
Adjusted EBITDA
|
|
$
|
604
|
|
|
$
|
298
|
|
|
$
|
1,825
|
|
|
$
|
900
|
|
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