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Cheniere Energy (CQP) Announces $1B Senior Notes Offering

Zacks Equity Research

Midstream energy player, Cheniere Energy Partners, L.P. CQP, announced plans to offer senior notes with a principal amount of $1 billion. The notes are expected to mature by 2025.

It is to be noted that net proceeds – after eliminating commissions and expenses related to the offering – will likely be utilized by the partnership for prepaying part of its term loan under outstanding credit facilities.

Issuing notes to prepay term loan reflects weakness in the partnership’s operations. Investors should know that since 2012, Cheniere Energy’s free cash flow has mostly been negative. On top of that, long-term debt has ballooned to $16,000 million from roughly $2,167 million from 2012-end.

Also, the partnership’s pricing performance fails to impress. Cheniere Energy has lost 6.5% year to date versus the 1.9% improvement of its industry.

Cheniere Energy is a Delaware limited partnership and is the owner of Sabine Pass LNG terminal. The LNG unit is situated on the Sabine Pass Channel in western Cameron Parish, stretching over 1,000 acres. At the LNG terminal, the partnership is constructing natural gas liquefaction plants.

Presently, Cheniere Energy carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months. 

A few better-ranked players in the energy sector are TransCanada Corporation TRP, Transmontaigne Partners LP TLP and Range Resources Corporation RRC. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Calgary, Canada, TransCanada is a midstream energy firm in North America. The company delivered an average positive earnings surprise of 4.06% over the last four quarters.

Transmontaigne – headquartered in Denver, CO – is involved in the transportation and storage of refined petroleum products. The firm pulled off an average positive earnings surprise of 6.60% over the last four quarters.

Based in Fort Worth, TX, Range Resources is an independent oil and gas company, engaged in the exploration, development and acquisition of U.S. oil and gas resources. The company’s 2017 earnings are estimated to grow 116.5%.

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