Cheniere Reports Second Quarter 2018 Results and Provides Full Year 2018 Guidance Update
Cheniere Energy, Inc. (NYSE American: LNG):
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Summary of Second Quarter 2018 Results (in millions, except LNG
data)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2018
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2017
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% Change
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2018
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2017
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% Change
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Revenues
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$
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1,543
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$
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1,241
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24
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%
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$
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3,785
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$
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2,452
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54
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%
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Net income (loss)1
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$
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(18
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)
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$
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(285
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)
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$
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339
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$
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(231
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)
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Consolidated Adjusted EBITDA2
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$
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531
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$
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371
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43
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%
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$
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1,438
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$
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854
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68
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%
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Weighted average number of common shares outstanding—basic
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242.8
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232.5
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239.2
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232.4
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Weighted average number of common shares outstanding—diluted
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242.8
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232.5
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241.7
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232.4
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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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27
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%
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128
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91
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41
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%
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Volumes (TBtu)
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219
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170
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29
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%
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463
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322
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44
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%
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LNG volumes loaded (TBtu)
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222
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167
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33
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%
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463
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321
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44
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%
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Summary 2018 Full Year Guidance (in billions)
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2018
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Consolidated Adjusted EBITDA2
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$
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2.3
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-
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$
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2.5
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Distributable Cash Flow2
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$
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0.40
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-
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$
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0.55
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Recent Highlights
Strategic
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In May 2018, we made a positive Final Investment Decision (“FID”) with
respect to Train 3 of the CCL Project (defined below), and issued full
notice to proceed to Bechtel Oil, Gas and Chemicals, Inc.
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In June 2018, we filed an application with the Federal Energy
Regulatory Commission (“FERC”) with respect to Corpus Christi Stage 3
(defined below), consisting of seven midscale liquefaction Trains with
an expected aggregate nominal production capacity of approximately 9.5
million tonnes per annum (“mtpa”).
Operational
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As of July 31, 2018, approximately 150 cargoes have been produced,
loaded, and exported from the SPL Project (defined below) year to
date. To date, more than 400 cumulative LNG cargoes have been exported
from the SPL Project, with deliveries to 28 countries and regions
worldwide.
Financial
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For the six months ended June 30, 2018, we achieved Consolidated
Adjusted EBITDA of over $1.4 billion and Distributable Cash Flow of
over $350 million.
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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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In June 2018, we reached a definitive agreement with Cheniere Energy
Partners LP Holdings, LLC (“Cheniere Partners Holdings”) (NYSE
American: CQH) under which we will acquire all of the publicly-held
shares of Cheniere Partners Holdings not already owned by us in a
stock for share transaction pursuant to which the Cheniere Partners
Holdings’ shareholders will receive a fixed exchange ratio of 0.4750
shares of Cheniere common stock for each outstanding publicly-held
share of Cheniere Partners Holdings. The transaction is expected to
close by the end of third quarter 2018, subject to customary closing
conditions. Upon consummation of the transaction, Cheniere Partners
Holdings will merge with and into a wholly owned subsidiary of
Cheniere.
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In June 2018, Cheniere Corpus Christi Holdings, LLC (“Corpus Christi
Holdings”) amended and restated its existing working capital facility
to increase total commitments to $1.2 billion. The working capital
facility is intended to be used for loans and the issuance of letters
of credit for certain working capital requirements related to
developing and placing into operation the CCL Project.
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In May 2018, Corpus Christi Holdings amended and restated its existing
credit facilities to increase total commitments under the credit
facilities to $6.1 billion. The proceeds will be used to fund a
portion of the costs of developing, constructing, and placing into
service the three Trains and the related facilities of the CCL Project
and the Corpus Christi Pipeline, as well as for related business
purposes.
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Liquefaction Projects Update
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SPL Project
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CCL Project
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Liquefaction Train
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Train 5
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Train 6
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Train 1
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Train 2
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Train 3
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Project Status
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Commissioning
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Permitted
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Commissioning
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Under Construction
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Under Construction
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Project Completion Percentage(1)
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95.1%
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—
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Stage 1 - 89.9%
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28.7%(2)
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Expected Substantial Completion
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1H 2019
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—
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1H 2019
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2H 2019
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2H 2021
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Note: Projects update excludes Trains in operation
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(1) Project completion percentages as of June 30, 2018
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(2) Engineering 61.4% complete, procurement 47.3% complete, and
construction 2.9% complete as of June 30, 2018
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Cheniere Energy, Inc. (“Cheniere”) (NYSE American: LNG) reported a net
loss1 of $18 million, or $0.07 per share (basic and diluted),
for the three months ended June 30, 2018, compared to a net loss of $285
million, or $1.23 per share (basic and diluted), for the comparable 2017
period. The decrease in net loss was primarily due to increased income
from operations as a result of additional Trains in operation at the SPL
Project, increased derivative gain, decreased loss on modification or
extinguishment of debt, and decreased net income attributable to
non-controlling interest, partially offset by increased interest
expense, net of amounts capitalized.
Cheniere reported net income1 of $339 million, or $1.42 per
share (basic) and $1.40 per share (diluted), for the six months ended
June 30, 2018 compared to a net loss of $231 million, or $0.99 per share
(basic and diluted), for the comparable 2017 period. The increase in net
income was primarily due to increased income from operations as a result
of additional Trains in operation at the SPL Project, increased
derivative gain, and decreased loss on modification or extinguishment of
debt, partially offset by increased interest expense, net of amounts
capitalized.
Consolidated Adjusted EBITDA2 for the three and six months
ended June 30, 2018 was $531 million and $1.4 billion, respectively,
compared to $371 million and $854 million for the comparable 2017
periods. The increase in Consolidated Adjusted EBITDA was primarily due
to increased income from operations.
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. One cargo exported from the SPL Project and
sold on a delivered basis was in transit as of June 30, 2018.
“Our results for the second quarter of 2018 reflect strong operational
performance and continued robust and durable LNG market pricing,” said
Jack Fusco, Cheniere’s President and Chief Executive Officer. “The
second quarter was highlighted by the achievement of a positive FID on
Train 3 at the CCL Project, which reinforces our position as the leader
in U.S. LNG. We continue to see significant opportunities in the market
today, and we are leveraging our world-class LNG platform to deliver on
our growth plans.”
LNG Volume Summary
The following table summarizes the volumes of operational and
commissioning LNG that were loaded from the SPL Project and for which
the financial impact was recognized on our Consolidated Financial
Statements during the three and six months ended June 30, 2018:
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Three Months Ended June 30, 2018
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Six Months Ended June 30, 2018
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(in TBtu)
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Operational
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Commissioning
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Operational
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Commissioning
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Volumes loaded during the current period
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222
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—
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463
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—
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Volumes loaded during the prior period but recognized during the
current period
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11
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—
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43
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—
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Less: volumes loaded during the current period and in transit at the
end of the period
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(3
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)
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—
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(3
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)
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—
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Total volumes recognized in the current period
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230
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—
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503
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—
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In addition, during the three and six months ended June 30, 2018, we
recognized the financial impact of 10 TBtu of LNG and 21 TBtu of LNG,
respectively, on our Consolidated Financial Statements related to LNG
cargoes sourced from third parties.
Summary of Financial Performance
Second Quarter 2018 Results
Our financial results are reported on a consolidated basis. Our
ownership interest in Cheniere Energy Partners, L.P. (“Cheniere
Partners”) (NYSE American: CQP) as of June 30, 2018 consisted of
100% ownership of the general partner of Cheniere Partners
and 91.9% ownership interest in Cheniere Partners Holdings which owned
a 48.6% limited partner interest in Cheniere Partners as of June 30,
2018.
Total revenues increased $302 million and $1.3 billion during the three
and six months ended June 30, 2018 as compared to the respective 2017
periods. Total operating costs and expenses increased $240 million and
$900 million during the three and six months ended June 30, 2018,
compared to the respective 2017 periods. The increases in revenues and
total operating costs and expenses for the three and six months ended
June 30, 2018, compared to the respective 2017 periods, 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.
Selling, general and administrative expense included share-based
compensation expenses of $20 million and $38 million for the three and
six months ended June 30, 2018, respectively, compared to $13 million
and $25 million for the comparable 2017 periods.
Net income attributable to non-controlling interest decreased $138
million and $13 million during the three and six months ended June 30,
2018 as compared to the three and six months ended June 30, 2017,
primarily due to the non-recurrence of non-cash amortization of the
beneficial conversion feature on Cheniere Partners’ Class B units that
occurred during the comparable periods in 2017. Net income attributable
to non-controlling interest during the three and six months ended June
30, 2017 included approximately $294 million and $378 million due to
amortization of the beneficial conversion feature on Cheniere Partners’
Class B units. Partially offsetting this decrease was a higher
non-controlling percentage interest due to the conversion of Cheniere
Partners’ Class B units to Cheniere Partners’ common units in August
2017, and an increase in income recognized by Cheniere Partners and
Cheniere Partners Holdings.
Capital Resources
As of June 30, 2018, we had cash and cash equivalents of $874 million
available to us. In addition, we had current and non-current restricted
cash of $2.4 billion designated for the following purposes: $846 million
for the SPL Project, $678 million for the CCL Project, $675 million for
restricted purposes under the terms of Cheniere Partners’ credit
facilities and $198 million for other restricted purposes.
Liquefaction Projects
SPL Project
Through Cheniere Partners, we are developing up to six natural gas
liquefaction 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 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.
CCL Project
We are developing three Trains near Corpus Christi, Texas (the “CCL
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 mtpa of LNG.
Train 1 is undergoing commissioning, and Trains 2 and 3 are under
construction.
Corpus Christi Stage 3
We are developing up to seven midscale liquefaction Trains adjacent to
the CCL Project (“Corpus Christi Stage 3”), each with an expected
nominal production capacity, which is prior to adjusting for planned
maintenance, production reliability, and potential overdesign, of
approximately 1.4 mtpa of LNG. The total expected nominal production
capacity of the seven midscale Trains is approximately 9.5 mtpa of LNG.
In June 2018, we filed an application with FERC to site, construct, and
operate Corpus Christi Stage 3.
Investor Conference Call and Webcast
We will host a conference call to discuss our financial and operating
results for the second quarter of 2018 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.
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1
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Net income (loss) as used herein refers to Net income (loss)
attributable to common stockholders on our Consolidated Statements
of Operations.
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2
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Non-GAAP financial measure. See “Reconciliation of Non-GAAP
Measures” for further details.
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About Cheniere
Cheniere Energy, Inc., a Houston-based energy company primarily engaged
in LNG-related businesses, owns and operates the Sabine Pass LNG
terminal in Louisiana. Directly and through its subsidiary, Cheniere
Energy Partners, L.P., Cheniere is developing, constructing, and
operating liquefaction projects near Corpus Christi, Texas and at the
Sabine Pass LNG terminal, respectively. Cheniere is also exploring a
limited number of opportunities directly related to its existing LNG
business.
For additional information, please refer to the Cheniere 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” within the meanings of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. 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’s 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’s LNG terminal and
pipeline businesses, including liquefaction facilities, (iv) statements
regarding the business operations and prospects of third parties, (v)
statements regarding potential financing arrangements, (vi) statements
regarding future discussions and entry into contracts, and (vii)
statements regarding the anticipated completion of the proposed
transaction with Cheniere Partners Holdings and the timing thereof.
Although Cheniere 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’s 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’s 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 does not assume a
duty to update these forward-looking statements.
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Cheniere Energy, Inc.
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Consolidated Statements of Operations
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(in millions, except per share data)((1))
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(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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$
|
1,442
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$
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1,171
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$
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3,608
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$
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2,314
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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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33
|
|
|
|
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4
|
|
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43
|
|
|
|
|
7
|
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Other—related party
|
|
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3
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|
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|
|
1
|
|
|
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4
|
|
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|
1
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Total revenues
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|
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1,543
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|
|
|
|
1,241
|
|
|
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3,785
|
|
|
|
|
2,452
|
|
|
|
|
|
|
|
|
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Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales (excluding depreciation and amortization expense shown
separately below)
|
|
|
|
873
|
|
|
|
|
692
|
|
|
|
|
2,051
|
|
|
|
|
1,316
|
|
Operating and maintenance expense
|
|
|
|
147
|
|
|
|
|
117
|
|
|
|
|
287
|
|
|
|
|
195
|
|
Development expense
|
|
|
|
3
|
|
|
|
|
1
|
|
|
|
|
4
|
|
|
|
|
4
|
|
Selling, general and administrative expense
|
|
|
|
73
|
|
|
|
|
61
|
|
|
|
|
140
|
|
|
|
|
115
|
|
Depreciation and amortization expense
|
|
|
|
111
|
|
|
|
|
90
|
|
|
|
|
220
|
|
|
|
|
160
|
|
Restructuring expense
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
6
|
|
Impairment expense and loss on disposal of assets
|
|
|
|
—
|
|
|
|
|
6
|
|
|
|
|
—
|
|
|
|
|
6
|
|
Total operating costs and expenses
|
|
|
|
1,207
|
|
|
|
|
967
|
|
|
|
|
2,702
|
|
|
|
|
1,802
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
|
336
|
|
|
|
|
274
|
|
|
|
|
1,083
|
|
|
|
|
650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of capitalized interest
|
|
|
|
(216
|
)
|
|
|
|
(188
|
)
|
|
|
|
(432
|
)
|
|
|
|
(353
|
)
|
Loss on modification or extinguishment of debt
|
|
|
|
(15
|
)
|
|
|
|
(33
|
)
|
|
|
|
(15
|
)
|
|
|
|
(75
|
)
|
Derivative gain (loss), net
|
|
|
|
32
|
|
|
|
|
(36
|
)
|
|
|
|
109
|
|
|
|
|
(35
|
)
|
Other income
|
|
|
|
10
|
|
|
|
|
5
|
|
|
|
|
17
|
|
|
|
|
7
|
|
Total other expense
|
|
|
|
(189
|
)
|
|
|
|
(252
|
)
|
|
|
|
(321
|
)
|
|
|
|
(456
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes and non-controlling interest
|
|
|
|
147
|
|
|
|
|
22
|
|
|
|
|
762
|
|
|
|
|
194
|
|
Income tax benefit (provision)
|
|
|
|
3
|
|
|
|
|
(1
|
)
|
|
|
|
(12
|
)
|
|
|
|
(1
|
)
|
Net income
|
|
|
|
150
|
|
|
|
|
21
|
|
|
|
|
750
|
|
|
|
|
193
|
|
Less: net income attributable to non-controlling interest
|
|
|
|
168
|
|
|
|
|
306
|
|
|
|
|
411
|
|
|
|
|
424
|
|
Net income (loss) attributable to common stockholders
|
|
|
$
|
(18
|
)
|
|
|
$
|
(285
|
)
|
|
|
$
|
339
|
|
|
|
$
|
(231
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to common stockholders—basic
|
|
|
$
|
(0.07
|
)
|
|
|
$
|
(1.23
|
)
|
|
|
$
|
1.42
|
|
|
|
$
|
(0.99
|
)
|
Net income (loss) per share attributable to common
stockholders—diluted
|
|
|
|
(0.07
|
)
|
|
|
|
(1.23
|
)
|
|
|
$
|
1.40
|
|
|
|
$
|
(0.99
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding—basic
|
|
|
|
242.8
|
|
|
|
|
232.5
|
|
|
|
|
239.2
|
|
|
|
|
232.4
|
|
Weighted average number of common shares outstanding—diluted
|
|
|
|
242.8
|
|
|
|
|
232.5
|
|
|
|
|
241.7
|
|
|
|
|
232.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Please refer to the Cheniere Energy, Inc. Quarterly Report on Form
10-Q for the quarter ended June 30, 2018, filed with the Securities
and Exchange Commission.
|
|
|
|
|
Cheniere Energy, Inc. Consolidated Balance Sheets (in
millions, except share data)(1)
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
ASSETS
|
|
|
(unaudited)
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
874
|
|
|
|
$
|
722
|
|
Restricted cash
|
|
|
|
2,386
|
|
|
|
|
1,880
|
|
Accounts and other receivables
|
|
|
|
278
|
|
|
|
|
369
|
|
Accounts receivable—related party
|
|
|
|
2
|
|
|
|
|
2
|
|
Inventory
|
|
|
|
233
|
|
|
|
|
243
|
|
Derivative assets
|
|
|
|
37
|
|
|
|
|
57
|
|
Other current assets
|
|
|
|
156
|
|
|
|
|
96
|
|
Total current assets
|
|
|
|
3,966
|
|
|
|
|
3,369
|
|
|
|
|
|
|
|
|
Non-current restricted cash
|
|
|
|
11
|
|
|
|
|
11
|
|
Property, plant and equipment, net
|
|
|
|
25,760
|
|
|
|
|
23,978
|
|
Debt issuance costs, net
|
|
|
|
97
|
|
|
|
|
149
|
|
Non-current derivative assets
|
|
|
|
107
|
|
|
|
|
34
|
|
Goodwill
|
|
|
|
77
|
|
|
|
|
77
|
|
Other non-current assets, net
|
|
|
|
309
|
|
|
|
|
288
|
|
Total assets
|
|
|
$
|
30,327
|
|
|
|
$
|
27,906
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
29
|
|
|
|
$
|
25
|
|
Accrued liabilities
|
|
|
|
1,382
|
|
|
|
|
1,078
|
|
Current debt
|
|
|
|
137
|
|
|
|
|
—
|
|
Deferred revenue
|
|
|
|
99
|
|
|
|
|
111
|
|
Derivative liabilities
|
|
|
|
81
|
|
|
|
|
37
|
|
Total current liabilities
|
|
|
|
1,728
|
|
|
|
|
1,251
|
|
|
|
|
|
|
|
|
Long-term debt, net
|
|
|
|
26,782
|
|
|
|
|
25,336
|
|
Non-current deferred revenue
|
|
|
|
—
|
|
|
|
|
1
|
|
Non-current derivative liabilities
|
|
|
|
24
|
|
|
|
|
19
|
|
Other non-current liabilities
|
|
|
|
59
|
|
|
|
|
59
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value, 5.0 million shares authorized,
none issued
|
|
|
|
—
|
|
|
|
|
—
|
|
Common stock, $0.003 par value
|
|
|
|
|
|
|
Authorized: 480.0 million shares at June 30, 2018 and December 31,
2017
|
|
|
|
|
|
|
Issued: 260.7 million shares and 250.1 million shares at June 30,
2018 and December 31, 2017, respectively
|
|
|
|
|
|
|
Outstanding: 248.1 million shares and 237.6 million shares at June
30, 2018 and December 31, 2017, respectively
|
|
|
|
1
|
|
|
|
|
1
|
|
Treasury stock: 12.6 million shares and 12.5 million shares at June
30, 2018 and December 31, 2017, respectively, at cost
|
|
|
|
(394
|
)
|
|
|
|
(386
|
)
|
Additional paid-in-capital
|
|
|
|
3,664
|
|
|
|
|
3,248
|
|
Accumulated deficit
|
|
|
|
(4,288
|
)
|
|
|
|
(4,627
|
)
|
Total stockholders’ deficit
|
|
|
|
(1,017
|
)
|
|
|
|
(1,764
|
)
|
Non-controlling interest
|
|
|
|
2,751
|
|
|
|
|
3,004
|
|
Total equity
|
|
|
|
1,734
|
|
|
|
|
1,240
|
|
Total liabilities and equity
|
|
|
$
|
30,327
|
|
|
|
$
|
27,906
|
|
|
|
|
|
|
|
|
(1)
|
|
Please refer to the Cheniere Energy, Inc. 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 Reconciliations
In addition to disclosing financial results in accordance with U.S.
GAAP, the accompanying news release contains non-GAAP financial
measures. Consolidated Adjusted EBITDA and Distributable Cash Flow are
non-GAAP financial measures that we use to facilitate comparisons of
operating performance across periods. These non-GAAP measures 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 reconciliations from these results should
be carefully evaluated.
Consolidated Adjusted EBITDA represents net income (loss) attributable
to Cheniere before net income attributable to the non-controlling
interest, interest, taxes, depreciation and amortization, adjusted for
certain non-cash items, other non-operating income or expense items, and
other items not otherwise predictive or indicative of ongoing operating
performance, as detailed in the following reconciliation. Consolidated
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 Consolidated 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. We believe Consolidated 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 items not otherwise
predictive or indicative of ongoing operating performance enables
comparability to prior period performance and trend analysis.
Consolidated Adjusted EBITDA is calculated by taking net income (loss)
attributable to common stockholders before net income attributable to
non-controlling interest, 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, impairment expense and loss on disposal of
assets, changes in the fair value of our commodity and foreign currency
exchange (“FX”) derivatives and non-cash compensation expense. We
believe the exclusion of these items enables investors and other users
of our financial information to assess our sequential and year-over-year
performance and operating trends on a more comparable basis and is
consistent with management’s own evaluation of performance.
Distributable Cash Flow is defined as cash received, or expected to be
received, from Cheniere’s ownership and interests in CQP, CQH and Corpus
Christi Holdings, cash received (used) by Cheniere’s integrated
marketing function (other than cash for capital expenditures) less
interest, taxes and maintenance capital expenditures associated with
Cheniere and not the underlying entities. Management uses this measure
and believes it provides users of our financial statements a useful
measure reflective of our business’s ability to generate cash earnings
to supplement the comparable GAAP measure.
We believe Distributable Cash Flow is a useful performance measure for
management, investors and other users of our financial information to
evaluate our performance and to measure and estimate the ability of our
assets to generate cash earnings after servicing our debt, paying cash
taxes and expending sustaining capital, that could be used for
discretionary purposes such as common stock dividends, stock
repurchases, retirement of debt, or expansion capital expenditures.
Management uses this measure and believes it provides users of our
financial statements a useful measure reflective of our business’s
ability to generate cash earnings to supplement the comparable GAAP
measure. Distributable Cash Flow 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.
Non-GAAP measures have limitations as an analytical tool and should not
be considered in isolation or in lieu of an analysis of our results as
reported under GAAP, and should be evaluated only on a supplementary
basis.
Consolidated Adjusted EBITDA
The following table reconciles our Consolidated 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 (loss) attributable to common stockholders
|
|
|
$
|
(18
|
)
|
|
|
$
|
(285
|
)
|
|
|
$
|
339
|
|
|
|
$
|
(231
|
)
|
Net income attributable to non-controlling interest
|
|
|
|
168
|
|
|
|
|
306
|
|
|
|
|
411
|
|
|
|
|
424
|
|
Income tax provision (benefit)
|
|
|
|
(3
|
)
|
|
|
|
1
|
|
|
|
|
12
|
|
|
|
|
1
|
|
Interest expense, net of capitalized interest
|
|
|
|
216
|
|
|
|
|
188
|
|
|
|
|
432
|
|
|
|
|
353
|
|
Loss on modification or extinguishment of debt
|
|
|
|
15
|
|
|
|
|
33
|
|
|
|
|
15
|
|
|
|
|
75
|
|
Derivative loss (gain), net
|
|
|
|
(32
|
)
|
|
|
|
36
|
|
|
|
|
(109
|
)
|
|
|
|
35
|
|
Other income
|
|
|
|
(10
|
)
|
|
|
|
(5
|
)
|
|
|
|
(17
|
)
|
|
|
|
(7
|
)
|
Income from operations
|
|
|
$
|
336
|
|
|
|
$
|
274
|
|
|
|
$
|
1,083
|
|
|
|
$
|
650
|
|
Adjustments to reconcile income from operations to Consolidated
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
|
111
|
|
|
|
|
90
|
|
|
|
|
220
|
|
|
|
|
160
|
|
Loss (gain) from changes in fair value of commodity and FX
derivatives, net
|
|
|
|
65
|
|
|
|
|
(5
|
)
|
|
|
|
102
|
|
|
|
|
28
|
|
Total non-cash compensation expense
|
|
|
|
19
|
|
|
|
|
7
|
|
|
|
|
33
|
|
|
|
|
11
|
|
Impairment expense and loss on disposal of assets
|
|
|
|
—
|
|
|
|
|
5
|
|
|
|
|
—
|
|
|
|
|
5
|
|
Consolidated Adjusted EBITDA
|
|
|
$
|
531
|
|
|
|
$
|
371
|
|
|
|
$
|
1,438
|
|
|
|
$
|
854
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Adjusted EBITDA and Distributable Cash Flow
The following table reconciles our actual Consolidated Adjusted EBITDA
and Distributable Cash Flow to Net income (loss) attributable to common
stockholders for the three and six months ended June 30, 2018 and
forecast amounts for full year 2018 (in billions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
June 30, 2018
|
|
|
Full Year 2018
|
Net income (loss) attributable to common stockholders
|
|
|
$
|
(0.02
|
)
|
|
|
$
|
0.34
|
|
|
|
$
|
0.2
|
|
|
-
|
|
|
0.4
|
|
Net income attributable to non-controlling interest
|
|
|
|
0.17
|
|
|
|
|
0.41
|
|
|
|
|
0.7
|
|
|
-
|
|
|
0.7
|
|
Income tax provision (benefit)
|
|
|
|
(0.00
|
)
|
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
0.0
|
|
Interest expense, net of capitalized interest
|
|
|
|
0.22
|
|
|
|
|
0.43
|
|
|
|
|
|
|
|
|
|
0.9
|
|
Loss on modification or extinguishment of debt
|
|
|
|
0.02
|
|
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
0.0
|
|
Derivative loss (gain), net
|
|
|
|
(0.03
|
)
|
|
|
|
(0.11
|
)
|
|
|
|
|
|
|
|
|
0.0
|
|
Other expense (income)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
(0.0
|
)
|
Income from operations
|
|
|
$
|
0.34
|
|
|
|
$
|
1.08
|
|
|
|
$
|
1.8
|
|
|
-
|
|
$
|
2.0
|
|
Adjustments to reconcile income from operations to Consolidated
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
|
0.11
|
|
|
|
|
0.22
|
|
|
|
|
|
|
|
|
|
0.5
|
|
Loss from changes in fair value of commodity and FX derivatives, net
|
|
|
|
0.07
|
|
|
|
|
0.10
|
|
|
|
|
|
|
|
|
|
0.0
|
|
Total non-cash compensation expense
|
|
|
|
0.02
|
|
|
|
|
0.03
|
|
|
|
|
|
|
|
|
|
0.0
|
|
Consolidated Adjusted EBITDA
|
|
|
$
|
0.53
|
|
|
|
$
|
1.44
|
|
|
|
$
|
2.3
|
|
|
-
|
|
$
|
2.5
|
|
Distributions/dividends to CQP/CQH non-controlling interest
|
|
|
|
(0.15
|
)
|
|
|
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
(0.60
|
)
|
SPL and CQP cash retained and interest expense
|
|
|
|
(0.31
|
)
|
|
|
|
(0.77
|
)
|
|
|
|
|
|
|
|
|
(1.30
|
)
|
Cheniere interest expense and income tax
|
|
|
|
0.00
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
(0.05
|
)
|
Cheniere Distributable Cash Flow
|
|
|
$
|
0.08
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.40
|
|
|
-
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Totals may not sum due to rounding.
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180809005103/en/
Copyright Business Wire 2018