Cheniere Energy, Inc. (AMEX:LNG) Q4 2022 Earnings Call Transcript

Sean Morgan: Hey, thanks guys for taking the question. So I think one thing that obviously the market’s been a little bit surprised by the scale and scope of Sabine Pass and I think that’s going to be a positive surprise as we kind of go through the next couple of weeks in terms of people sort of reevaluating CQP growth. But CQP has historically been very attuned to the investors. They’re attuned to sort of the distribution. It looks like with the guidance now, you’re basically maintaining most of this variable distribution component along with your sort of base distribution. So how do you sort of thinking about how you’re balancing future CapEx to scope out and grow Sabine Pass with kind of the distribution mandate that you have?

Anatol Feygin: Sure I mentioned it a little earlier on, but the fact that we came out last year with the base plus variable DPU was for this purpose to give us the flexibility at some point down the line, we can go back to the base distribution and decide how much is variable that we’re willing to distribute out and hold on to the rest as we build accretive projects that clearly meet all our investment parameters. So right now we’re talking about a four to $4 to $4.25 DPU for €˜23. Our base distribution is $3.10. So there’s at least a $1 or so in there of variable distribution. And that’s because look, we’re not going to be spending all that much money on this project during development, maybe 100 plus million dollars. And if you count for a few hundred million dollars of debt pay down, yes, we can to pay over $4.

But when it comes down to it, in a few years, say €˜25, €˜26, €˜27 timeframe, yes, we would ramp down that dollar of incremental variable distribution so that we could live within cash flows and just fund the project steadily over time with that cash flow and the debt.

Sean Morgan: Thanks, Jack. That’s really helpful. And then on the expansion, I think this is going to be pretty exciting for LNG investors as well. Sort of puts that growth catalyst back on the table that’s maybe been a little bit lacking since Stage 3 kind of went in everyone’s model. So question on the existing CMI marketing agreement between SPL and CMI, will that be enforced for the 20 million Sabine Pass expansion as well? And sort of if that’s the case, what are we looking at in terms of sort of incremental volumes to CMI on a run rate basis, that’d be like three to five Mtpa per year once it’s sort of commercialized and done and dusted.

Jack Fusco : A few things there in that question, but the agreement between CMI and both projects are consistent, and it would be the same for the expansions at Sabine and the expansions at Corpus that would pay up to $3 to take the volumes around the world. So that’s answer number one. And then the second question was how much volume this year? Yes, in terms of how much volume, we’re going to stick to our parameters. We’re not going to FID if we don’t hold ourselves to the same parameters we’ve done in the past. So we’re talking about 90% contracted when it’s all done and dusted. Meaning that, yes, there’s going to be a couple of million tons, two to three, let’s say, of open capacity added to the CMI coffers to manage over time, but that’s about it.

Sean Morgan: Okay, thanks. Obviously, we don’t want to over promise, but future debottleneck is kind of where I was getting to that higher range. But understood that you guys don’t like to over promise, so we’ll just leave it at that.

Operator: And we’ll take our next question from the line of John Mackay with Goldman Sachs.