Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cheniere Energy Partners LP (NYSE:CQP) reported strong financial results for 2024, with a net income of approximately $3.3 billion and distributable cash flow of $3.73 billion.
• The company achieved record LNG production of approximately 45 million tons in 2024, accounting for over 10% of the global LNG supply.
• Cheniere Energy Partners LP (NYSE:CQP) successfully completed turnarounds at both Sabine Pass and Corpus Christi, maintaining top quintile safety performance.
• The company increased its dividend by 15% to $2 per share annualized and announced a $4 billion share repurchase authorization.
• Cheniere Energy Partners LP (NYSE:CQP) is progressing well with its Corpus Christi Stage 3 project, with Train 1 commissioning on schedule and first LNG production achieved in December 2024.

Negative Points

• The global LNG market remains tight due to limited supply growth and geopolitical tensions, impacting pricing and demand dynamics.
• Cheniere Energy Partners LP (NYSE:CQP) faces challenges from geopolitical developments, such as the Russia-Ukraine conflict, which could affect long-term contract discussions with European customers.
• The company anticipates variability in earnings for 2025 due to the timing and ramp-up of the first three trains of Corpus Christi Stage 3.
• Cheniere Energy Partners LP (NYSE:CQP) is exposed to potential changes in the tax code, which could impact cash tax payments and distributable cash flow.
• The company is navigating a competitive market for long-term SPAs, with cost pressures not fully aligned with the increased pricing for new contracts.

Q & A Highlights

• Warning! GuruFocus has detected 9 Warning Sign with CQP.

Q: How have recent geopolitical developments, particularly between Russia and Ukraine, impacted Cheniere's view on US LNG and commercial discussions for long-term contracts with European customers? A: Jack Fusco, President and CEO, emphasized the importance of energy security and diversity highlighted by the conflict. Anatole Tolfain, EVP and Chief Commercial Officer, noted that Europe's call for additional LNG was clear, with 86% of Cheniere's cargos in January going to Europe. The geopolitical environment is favorable, with support from the US administration and Europe, which is likely to announce the cessation of Russian energy imports. This backdrop makes Cheniere's reliable and flexible LNG offerings an ideal solution for navigating uncertainties.

Q: What is Cheniere's perspective on the US's trade deficits with LNG importers in Asia, and do you expect an acceleration in commercial development in that region? A: Jack Fusco recalled a similar situation during President Trump's first term, which led to a long-term energy contract with China. Anatole Tolfain added that there is a strong pull from Asia for gas and LNG, with the US offering destination flexibility and reliability. Cheniere has had repeat engagements with China and other Asian customers, and these factors are seen as tailwinds for the company.

Q: How has the early Trump administration impacted Cheniere's expectations on regulatory and permitting processes, and how does this affect new capacity and contracting discussions? A: Jack Fusco described the administration's approach as refreshing, with strong and clear communication. The regulatory certainty is crucial for Cheniere's complex and capital-intensive projects. The administration's focus on energy dominance is expected to support Cheniere's growth and contracting efforts.

Q: Can you provide details on the volume sensitivity in the 2025 guidance, particularly regarding Stage 3 volumes? A: Zach Davis, EVP and CFO, explained that Cheniere has guided to 47 to 48 million tons of LNG production in 2025, with Stage 3 expected to contribute 1 to 2 million tons. The high end of the range assumes three trains are operational by early Q4, while the low end assumes only two trains reach substantial completion.

Q: What are the current trends in long-term SPA pricing, and how are cost pressures affecting these agreements? A: Anatole Tolfain noted that while the market is competitive, Cheniere is confident in leveraging its reliability and operational performance to extract a premium. The company is at or above the top end of its historical pricing range, reflecting increased costs, but remains committed to meeting investment parameters and utilizing brownfield advantages.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.