Cheniere's (LNG) Q3 Earnings Improve Y/Y, Sales Beat Estimates
Cheniere Energy Inc. LNG reported third-quarter 2023 adjusted earnings per share of $7.03, showcasing a significant improvement from the year-ago quarter’s recorded loss of $9.54 per share. This outperformance can be primarily attributed to an 88.2% year-over-year decrease in costs and expenses.
Revenues totaled $4.2 billion, which beat the Zacks Consensus Estimate of $3.9 billion. This was primarily due to gas export revenues of $4 billion, which beat the Zacks Consensus Estimate by 6%. However, the top line decreased 53% from the year-ago quarter’s level of $8.9 billion. This decline was primarily driven by decreasing LNG sales.
Cheniere reported an adjusted EBITDA of $1.7 billion, which beat our estimate of $1.4 billion. Distributable cash flow (DCF) totaled $1.17 billion. In the reported quarter, the company shipped 152 cargoes compared with 156 in the year-ago period. Total volume of LNG exported came in at 548 trillion British thermal units (TBtu) compared with 559 TBtu in the comparable period of 2022.
The company declared a quarterly cash dividend of 43.5 cents per common share (up 10.1% from the prior-year quarter’s level), payable on Nov 17, 2023, to shareholders of record at the close of the business on Nov 9, 2023.
Costs & Balance Sheet
Costs and expenses amounted to $1.4 billion for the third quarter, down 88.2% from the prior-year quarter’s level.The reported figure missed our prediction of $2.6 billion.
As of Sep 30, 2023, Cheniere had approximately $3.9 billion of cash and cash equivalents. Its net long-term debt amounted to $23.4 billion.
As of the same date, the company reported a cost (recovery) of sales of $556 million.
Guidance
The company expects adjusted EBITDA in the $8.3-$8.8 billion range for 2023.
It also expects DCF to be in the band of $5.8-$6.3 billion and CQP Distribution per Unit to be in the $4.00 -$4.25 range.
Project Updates
Sabine Pass Liquefaction Project (SPL)
Cheniere operates six natural gas liquefaction trains for a total production capacity of about 30 million tons per annum (mtpa) of LNG at the Sabine Pass LNG terminal (the SPL Project).
SPL Expansion Project
Cheniere Partners is developing an expansion of the SPL Project, which could produce up to 20 mtpa of LNG. The company has entered the pre-filing review process with FERC and contracted Bechtel to provide the Front-End Engineering and Design.
CCL Project
Cheniere operates three natural gas liquefaction trains at the Corpus Christi LNG terminal, with a total production capacity of approximately 15 mtpa of LNG.
CCL Stage 3 Project
Cheniere is building an expansion to the Corpus Christi LNG terminal that will add seven midscale trains with a production capacity of more than 10 mtpa of LNG.
CCL Midscale Trains 8 & 9 Project
The company is developing two midscale LNG trains with a total production capacity of 3 mtpa adjacent to the CCL Stage 3 Project. It has filed applications with FERC and the Department of Energy to site, construct and operate the trains, as well as export LNG to FTA and non-FTA countries.
Zacks Rank and Key Picks
Currently, Cheniere carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like Liberty Energy Inc. LBRT, sporting a Zacks Rank #1 (Strong Buy), and CVR Energy, Inc. CVI and Delek US Holdings, Inc. DK, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Liberty Energy is valued at $3.41 billion. LBRT currently pays a dividend of 20 cents per share, or 0.99% on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to North American onshore exploration and production companies.
CVR Energy is valued at $3.28 billion. In the past year, its shares have lost 19%.
CVI currently pays a dividend of $2 per share or 6.13% on an annual basis. Its payout ratio currently sits at 30% of earnings.
Delek US Holdings is worth approximately $1.69 billion. DK currently pays a dividend of 94 cents per share, or 3.61% on an annual basis.
The company operates in the integrated downstream energy business in the United States and it does so under three segments — refining, logistics and retail.
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