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

John Mackay: Hey, thanks for the time. Maybe just thinking about the, I guess, new kind of boil-off unit proposed for this expansion and then also the CCS that you’re going to tie into it. Is this — are both of those options at Corpus on the existing footprint and kind of once the Stage 3 is online, or if not, maybe, why not maybe difference between two sites or something.

Jack Fusco : They are at Corpus. Corpus is a little bit different. It’s not currently in our plans, neither the CCS or the boil-off gas unit right now. So it would require us to file with FERC and get approval for those. But we hope to get the technology down at Sabine, get comfortable with it, all aspects of it, and then roll it out to the rest of our facilities and Corpus would be our next choice.

John Mackay: Thanks for that. And you touched on this a little bit earlier, but just going back for getting all this gas to Sabine going to kind of require longer, higher pipeline access. Just are your customers and I know it’s early days, but are your customers kind of looking at that, at your ability to secure that feed gas before they’re willing to commit to it? Or is that track record kind of good enough there.

Jack Fusco : John, today we bought 7.5 Bcf from 70 different producers throughout all of North America, including Canada, and we delivered it to our facilities and it will be processed and loaded up on two tankers and shipped off. So this is a blip in the grand scheme of things. We, as you know, we’re the largest purchaser of physical gas in the US and the largest holder of gas transport pipeline. We like touching all of the basins. Because we have to deliver the molecule, so you should expect us to come up with a creative solution.

Operator: And the last question comes from the line of Craig Shere with Tuohy Brothers.

Craig Shere: Hi. Thanks for fitting me in. I just have one. As we think longer term about this one to one ratio for capital allocation, when you’re an FID-ing projects at perhaps 3x EBITDA, which should be further balance sheet stabilizing, does that particularly if there are large projects, does that alter the longer term need for the one to one ratio?

Zach Davis: Want to correct the 3x EBITDA first. Well, it is around 3x, give or take, when we can build on a CapEx to EBITDA at 6x, and we do 50:50. But again, that alone is, yes, going to be pretty helpful to delever the story over time as we get through construction. But mind you, construction is going to take four to five years where we’re going to have the debt before the EBITDA shows up. So we’re going to be pretty mindful of that, that we continue to look just as good on a Bloomberg screen as we do today as we build these projects. So the one to one is going to continue. Clearly, we need to catch up on the buyback over the coming quarters and year plus to get back to one to one. And then you could see us follow through with that cadence through that 2026 time frame that was the capital allocation guidance in September, and we’ll go from there. But this way we can build these multibillion dollar projects accretively and still look pretty darn good on an LTM basis.