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Cheniere Partners (CQP) Marginally Up Since Q3 Earnings Beat

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·5 min read
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Cheniere Energy Partners, L.P.’s CQP units have marginally increased since it reported strong third-quarter results on Nov 4. The partnership has increased quarterly cash distribution from 66.50 cents per unit to 68 cents. The distribution hike signals its operational strength to investors.

It reported third-quarter 2021 earnings per unit of 69 cents, beating the Zacks Consensus Estimate of 66 cents. Also, the earnings figure improved from a loss of 8 cents per unit in the year-ago period.

Revenues of $2,324 million were higher than the year-ago level of $982 million and beat the Zacks Consensus Estimate of $2,231 million.

The strong quarterly results were supported by increased LNG volumes delivered and higher prices. With massive energy demand recovery around the world, thanks to multiple vaccine rollouts, Cheniere Energy Partners’ export volumes witnessed a major uptick.

Cheniere Energy Partners, LP Price, Consensus and EPS Surprise

Cheniere Energy Partners, LP Price, Consensus and EPS Surprise
Cheniere Energy Partners, LP Price, Consensus and EPS Surprise

Cheniere Energy Partners, LP price-consensus-eps-surprise-chart | Cheniere Energy Partners, LP Quote

Operations

Cheniere Energy Partners sent 86 cargoes in the third quarter, up from 36 in the year-ago period. Total LNG volumes loaded in the quarter were recorded at 308 trillion British thermal units (TBtu), higher than the year-ago level of 122 TBtu.

Adjusted EBITDA for the third quarter was recorded at $738 million, up from the year-ago level of $352 million. Profits increased for the third quarter due to a rise in the volumes of LNG delivered and increased prices per MMBtu of LNG delivered.

Costs and Expenses

The cost of sales for the quarter was $1,342 million, up from the year-ago period’s $454 million. Operating and maintenance expenses marginally increased to $148 million from $146 million in third-quarter 2020.

Total costs and expenses for the quarter were recorded at $1,708 million, significantly up from $830 million in the September quarter of 2020.

Cash Flow

Cheniere Energy Partners generated an operating net cash flow of $1,667 million for the first nine months of 2021, higher than the year-ago level of $1,333 million. The partnership currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Balance Sheet

As of Sep 30, 2021, the partnership had only $1,713 million in cash and cash equivalents, up from $1,239 million at second quarter-end. Cheniere Energy Partners had a net long-term debt of $17,171 million, higher than $16,935 million at second quarter-end. Also, its net current debt stands at $944 million. It had a massive long-term debt to capitalization of 96.7%.

Guidance

Cheniere Energy Partners reiterated its full-year 2021 guidance for distribution per unit in the range of $2.60-$2.70, indicating an increase from the 2020 figure of $2.59. For 2022, it expects distributions to rise to $3-$3.25 per unit.

The SPL Project Train 6 was 97.1% complete at third quarter-end. Full work on the train is expected to be completed by first-quarter 2022, ahead of the previous schedule. It expects current distributable cash flow per unit in the range of $3.75-$3.95. Its parent organization, Cheniere Energy, Inc. LNG has also provided an exciting outlook for the future.

Even though Cheniere Energy Partners beat on earnings due to a recovery in energy demand, Cheniere Energy missed third-quarter earnings estimates. Cheniere Energy now expects 2021 distributable cash flow in the range of $1.8-$2.1 billion, which is likely to further rise to $3.1-$3.6 billion in 2022.

LNG shipments for export from the United States have been robust for months on the back of environmental reasons and record higher prices of the super-chilled fuel elsewhere. As such, Cheniere Energy expects adjusted EBITDA for 2021 within $4.6-$5 billion, which should further increase to $5.8-$6.3 billion next year.

Final Words

The energy spectrum has improved drastically with growing demand around the world, as economies are trying to reach normalcy. The improvement is evident from the performance of firms like Cheniere Energy Partners, MPLX LP MPLX, Kinder Morgan, Inc. KMI and others.

Like Cheniere Energy Partners, MPLX reported strong third-quarter results, thanks to increased contributions from logistics and storage operations as well as the gathering and processing business. Increased pipeline throughputs and natural gas liquids prices buoyed its third-quarter results.

For 2021, MPLX expects total capital spending of $650 million, lower than the previously mentioned $800 million due to increased efficiency. It expects to continue generating excess free cash flow, which will enhance financial flexibility, including the ability to return incremental capital to unitholders.

The rebound in fuel demand is attributing to year-over-year higher earnings and strong revenues for companies like Kinder Morgan. The company continues to project distributable cash flow (DCF) and adjusted EBITDA for this year at $5.4 billion and $7.9 billion, respectively. The firm anticipates 2021 net income at $1.7 billion.

Kinder Morgan’s third-quarter DCF was $1,013 million. For this year, the company expects to announce a dividend payout of $1.08 per share, indicating a year-over-year increase of 3% that signals its growing operational strength.


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