Q4 2023 Cheniere Energy Inc Earnings Call

Participants

Anatol Feygin; Executive VP & Chief Commercial Officer; Cheniere Energy, Inc.

Jack A. Fusco; President, CEO & Director; Cheniere Energy, Inc.

Randy Bhatia; VP of IR; Cheniere Energy, Inc.

Zach Davis; Executive VP & CFO; Cheniere Energy, Inc.

Benjamin Joel Nolan; MD; Stifel, Nicolaus & Company, Incorporated, Research Division

Brian Patrick Reynolds; Analyst; UBS Investment Bank, Research Division

Jeremy Bryan Tonet; Senior Analyst; JPMorgan Chase & Co, Research Division

John Ross Mackay; Research Analyst; Goldman Sachs Group, Inc., Research Division

Spiro Michael Dounis; Research Analyst; Citigroup Inc., Research Division

Theresa Chen; Research Analyst; Barclays Bank PLC, Research Division

Tristan James Richardson; Analyst; Scotiabank Global Banking and Markets, Research Division

Presentation

Operator

Good day, and welcome to the Cheniere Energy Fourth Quarter 2023 Earnings Call and Webcast. Today's conference is being recorded. At this time, I'd like to turn the conference over to Randy Bhatia. Please go ahead.

Randy Bhatia

Thanks, operator. Good morning, everyone, and welcome to Cheniere's Fourth Quarter and Full Year 2023 Earnings Conference Call. The slide presentation and access to the webcast for today's call are available at cheniere.com.
Joining me this morning are Jack Fusco, Cheniere's President and CEO; Anatol Feygin, Executive Vice President and Chief Commercial Officer; Zach Davis, Executive Vice President and CFO; and other members of Cheniere's senior management.
Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements and actual results could differ materially from what is described in these statements. Slide 2 of our presentation contains a discussion of those forward-looking statements and associated risks. In addition, we may include references to certain non-GAAP financial measures, such as consolidated adjusted EBITDA and distributable cash flow.
A reconciliation of these measures to the most comparable GAAP measure can be found in the appendix to the slide presentation. As part of our discussion of Cheniere's results, today's call may also include selected financial information and results for Cheniere Energy Partners, L.P., or CQP. We do not intend to cover CQP's results separately from those of Cheniere Energy, Inc.
The call agenda is shown on Slide 3. Jack will begin with operating and financial highlights, Anatol will then provide an update on the LNG market, and Zach will review our financial results and 2024 guidance. After prepared remarks, we will open the call for Q&A.
I'll now turn the call over to Jack Fusco, Cheniere's President and CEO.

Jack A. Fusco

Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review a successful 2023 and discuss our outlook for what is setting up to be a very busy and promising 2024. In 2023, we drove exceptional results across the key strategic priorities of the company and we did so while reinforcing our track record on safety, execution and operational reliability.
I'm extremely proud of my 1,600 Cheniere colleagues across operations, engineering and construction, origination and others who continue to be driven by excellence and take pride in solidifying Cheniere as best-in-class across our platform. We made significant strides despite some persistent macro headwinds and increased uncertainty in 2023, each largely driven by conflict, geopolitics in the evolving regulatory landscape, particularly right here in America. I'll touch on the latter in a moment.
But the macro backdrop for LNG today provides blind yet clear reminder of the criticality of secure and stable energy supply in the value of a reliable and customer-focused operator who consistently delivers on its promises to its global stakeholders.
Please turn to Slide 5. While I'll renew some key operational and financial achievements from the fourth quarter and full year 2023 and introduce our 2024 financial guidance. We generated consolidated adjusted EBITDA of approximately $1.65 billion in the fourth quarter, bringing our full year total to approximately $8.8 billion the high end of our most recent guidance range.
We generated approximately $1.1 billion of distributable cash flow in the fourth quarter and $6.5 billion for the full year, which is above the high end of our guidance range. Looking back at the original guidance provided for 2023, we beat the midpoint of each of those guidance ranges by over $500 million, once again illustrating the volatile nature of current global natural gas markets and the value of Cheniere's platform to monetize that volatility last year.
For the fourth quarter, we generated approximately $1.4 billion of net income, bringing the full year total to approximately $9.9 billion. Strategically, 2023 was another year marked by significant accomplishments across the entire platform, and I'll highlight just a few of them here. First and foremost, we continue to execute on the company's long-term objectives with safety at the foundation of our actions.
And in 2023, we once again demonstrated this by achieving a total recordable incident rate of 0.10, which is well within the top decile for industrial producers. We achieved this while simultaneously operating the second largest LNG platform in the world and being deep in construction on a 10-plus million ton per annum expansion project.
These safety results are a source of tremendous pride for me and that pride should be felt by all the company's stakeholders. We produced and recorded a record 169 LNG cargoes in the fourth quarter, bringing the total to a record 637 cargoes for the full year. Total production was in line with our forecast of about 45 million tons, inclusive of the successful major maintenance turnaround at Sabine passed over the summer.
Europe remained the premium market for U.S. cargoes across 2023, a 73% of the volume produced at our facilities was delivered to Europe. 5 new long-term customer contracts commenced over the course of 2023, representing approximately 3.7 million tons per annum. And earlier this month, we commenced our 1.1 million ton per annum PETRONAS contract, which was tied to Train 6 on the very first day of the DFCD window holding to our standard of always meeting our customer commitments.
On the E&C front, Corpus Christi Stage 3 is progressing on an accelerated time line, and we continue to forecast first LNG production from Train 1 at the end of this year. In 2023, we advanced total project completion to over 50%. I'm extremely pleased with the progress we continue to make together with Bechtel on Stage 3, and I'm optimistic for further schedule improvements over time.
We took some important steps last year in preparation for Stage 3 to commence commissioning and operations. Construction on the ADCC pipeline being built from Aqua Dulce to support Stage 3 is progressing well and the pipeline is expected to be in service in the third quarter in advance of Train 1's accelerated startup.
In addition, in the second half of last year, we purchased for approximately $100 million an existing 400-megawatt power plant in Corpus Christi, which is located in our property in order to help mitigate risks associated with our increased power purchasing needs once Stage 3 commences operations. These milestones, coupled with the construction progress on the project reinforces my confidence in Stage 3's time line, improving over time with first LNG this year and meaningful LNG production added to our portfolio in 2025.
Our commercial momentum continued in 2023 as LNG buyers, the world over help get the commercialization of the SPL expansion project off to an incredibly promising start. We have signed long-term agreements with 6 counterparties across Asia, Europe and Canada, for an aggregate of over 6.5 million tons per annum, effectively commercializing all of Train 7.
We are encouraged by the market's early reception, especially since the majority of these counterparties are repeat customers. I view it as a recognition of the value of Cheniere's reputation. We are focused on furthering development of the project in 2024 across commercialization, regulatory and financing work streams with a focus on submitting our full permit application with the FERC before the end of this quarter.
Throughout 2023, Zach and his team continue to execute on the 2020 Vision capital allocation plan, making significant progress across the key pillars of the plan, debt reduction, capital return and disciplined growth investments. We've paid down over $1 billion of debt and achieved investment-grade ratings throughout our structure. We bought back almost 10 million shares for approximately $1.5 billion in declared dividends of $1.66 per share, and we invested approximately $1.5 billion into Stage 3.
We've made great strides on the comprehensive plan since announcing it in late 2022.
And now turning our focus and attention to 2024, I am pleased to introduce our 2024 financial guidance of $5.5 billion to $6.0 billion in consolidated adjusted EBITDA, $2.9 billion to $3.4 billion in distributable cash flow and $3.15 to $3.35 per unit distribution of CQP.
We again are forecasting annual results that are above the midpoint of our run rate 9 Train guidance, and our expected results this year have a tremendous amount of visibility given on how highly contracted we are. On the CQP distribution guidance consistent with the prior messaging, we intend to maintain the 310 base distribution and it just a variable component beginning in 2024 in order to begin preserving some cash and fortifying the CQP balance sheet as the SPL expansion project gains momentum.
Zach will provide more details on the '24 guidance in a few minutes.
Turn now to Slide 6, where I will address the DOE news in our response. As you're all aware, the Department of Energy recently announced it would suspend making determinations on authorizations for LNG exports to non-free trade agreement countries, pending an update to the economic and environmental analysis underpinning its public interest determination methodology.
While this decision does not currently impact our expansion projects or our FERC processes, at Sabine Pass and Corpus Christi, it does introduce regulatory and permitting uncertainty into the U.S. LNG industry as a whole. I firmly believe that a fair and transparent regulatory framework is essential for the future development of natural gas infrastructure in the United States, particularly liquefaction capacity, given the scale of investment, commercial support and time required to bring these projects online.
With that said, we believe we will secure all necessary regulatory approvals for mid-scale Trains 8, 9 and the SPL expansion project within our expected time lines as we have for more than a decade under multiple administrations. To be clear, the DOE action has not slowed down our expansion projects at either site. We are full steam ahead on Corpus Christi Trains 8 and 9 in the SPL expansion project development.
We expect to file the FERC application for SPL very soon. The Corpus Christi Trains 8 and 9 are in advanced stages in the FERC approval process. The environmental assessment for Trains 8 and 9 is scheduled for receipt by the end of March, and we just received a letter of determination from FEMSA, a key agency in the FERC process last week. We remain confident that our previous time lines won't be materially impacted and we will maximize the efficiency with having Bechtel on-site already through Stage 3.
Having spent the last 8 years at Cheniere, I have never been more confident in the critical role of U.S. LNG in the global energy market. And I firmly believe the DOE studies will come to the same conclusion given: one, the importance of long-term energy security; two, the opportunities for global decarbonization through coal to gas switching for power generation in the critical role that dispatchable gas-fired power plants plays in backstopping intermittent renewables; three, low and stable domestic natural gas prices and of course; four, for the incredible economic benefits created in the communities where we live and work.
Global energy markets are calling for additional LNG supply. The U.S. is significantly advanced (inaudible) answer this call with our abundant and low-cost natural resources, flexibility and affordability of U.S. volumes and until recently, the reliability and certainty of the U.S. regulatory regime.
Gulf Coast LNG positions the U.S. as a leader in facilitating energy security and worldwide emissions reductions. This is a generational opportunity, something we should be proud of and working to maximize, not restrict.
With that, I'll hand it over to Anatol to discuss the LNG market. Thank you all again for your continued support of Cheniere.

Anatol Feygin

Thanks, Jack, and good morning, everyone. The global LNG market continued to rebalance throughout '23 as Europe navigated its energy crisis and Asia adapted to the delicate new market equilibrium amid some regional economic headwinds. Global LNG trade grew by approximately 3% from '22, adding 10.5 million tons of supply to the overall market. Aside from 2020, global supply growth has not been this low since 2011 through 2015 period.
Nevertheless, this increase in supply was broadly matched by an increase in Asian demand, which grew approximately 4% year-over-year to approximately 263 million tons per annum as the region furthers its post-pandemic return. On the supply side, only one new train came online in '23 globally, the third train at Tangguh LNG in Indonesia. Most of the growth in LNG output last year actually came from the continued ramp-up of existing projects in the U.S.
The U.S. exported 86 million tons last year, becoming the world's largest exporter in 2023, ahead of Australia and Qatar for the first time, and more than half of those volumes were produced by Cheniere. In the fourth quarter alone, U.S. exports reached record highs of nearly 24 million tons contributing to the global markets rebalancing.
Despite persistent geopolitical address globally and the continued phaseout of Russian pipe gas in Europe, spot price levels have decreased this winter compared to last year due to a combination of mild weather, macroeconomic fundamentals, high storage levels and sufficient LNG supply availability.
In the fourth quarter, TTF averaged $13.66 an M and JKM $14.97, both significantly lower than levels seen in the previous 2 years, and both have continued to trend down through the first quarter of this year. Henry Hub benchmark also decreased in the fourth quarter, falling to an average of $2.88 an M. For the full year 2023, TTF monthly settlement prices averaged $13.73 in MMBtu over 66% lower year-over-year and 4.6% lower than 2021.
Similarly, the '23 average settlement price for JKM decreased 53% year-over-year to an average of $16.13 while the Henry Hub average settlement price was $2.74, down approximately 59% from $6.64 in 2022 during the height of the energy crisis in Europe.
Let's address the regional dynamics on the next page. With more than 65% of all U.S. LNG volumes in 2023 flowing in Europe, the region's underground storage inventories remained elevated throughout the year, easing concerns about physical market tightness amid further reductions in all other sources of gas supply to the region. Total gas supply to Europe fell 56 bcm year-on-year due mostly to the continued reduction in Russian flows, as well as heavy upstream maintenance in Norway further affecting pipe gas supply.
Nonetheless, storage levels ended the calendar year at 86% full the second highest level for the period since storage data became available in 2011. Meanwhile, gas demand in the region's key markets continued to drop, declining by 9% year-on-year in 2023, following a 12% reduction in 2022. The power sector accounted for nearly half of these reductions amid relatively mild temperatures, continued conservation efforts improving nuclear performance and growth in renewable generation.
And aside from Germany, industrial demand reductions appear to have bottomed out in '23 throughout the region. In Asia, as I mentioned, LNG demand grew by 4% or 9 million tons year-on-year, thanks to resurgence in demand from China and other emerging economies throughout Asia. Most of the uptick in Asia's demand was largely due to a rebound in China's economy, which resulted in a 7.5% year-on-year increase in gas consumption. It was up 27 bcm.
Despite a 13 bcm increase in domestic gas output and the scheduled 7 bcm ramp-up in the Power of Siberia flows last year, China's reliance on LNG remained high at 25% of total gas supply. The country's imports rebounded by about 12% to 71 million tons last year, about 8.5 million tons below the peak 2021 levels. We continue to expect gradual but continued growth in gas consumption that will increase the call on LNG going forward.
In addition to China, an approximately 8.5 million ton year-on-year increase in South and Southeast Asia imports also contributed to growing global demand last year. Thailand and India led the charge as LNG spot prices moderated and demand for gas-fired power generation reached record levels in India. Additionally, 3 new receiving terminals started in this region, given the nascent import markets in the Philippines and Vietnam access to LNG, which we believe will help power their economies for years to come.
LNG demand growth in Asia was partially offset by the reduced demand for LNG in Japan due to lower electricity demand and increased nuclear availability. In Japan, 2 nuclear reactors restarted in '23, increasing available nuclear capacity to the highest level since the Fukushima disaster in 2011.
This is a structural trend in Japan that we expect will continue to impact gas-fired power generation and consequently, LNG imports over time.
Let's move to the next slide where we'll consider the outlook for gas in these and other economies. As discussed, global gas demand in '23 remained relatively flat, growing by 20 bcm or 0.5% amid tight global supplies and historically elevated prices.
In contrast, global demand for coal was up 1.4% on the back of increased use in emerging and developing economies. Given the DOE action related to climate that Jack already discussed, it's worth highlighting here the simple fact that for the second year in a row, global coal consumption hit a new all-time record.
Coal-fired power generation increased in '23 despite continued coal-to-gas switching in the U.S., notable declines in Europe and significant growth in renewable generation overall, which rose over 22% globally. As shown in the lower left, more than half of the power demand growth in China and India in '23 was supplied by coal.
Coal-fired generation from these 2 nations alone increased by 419 terawatt hours, which is roughly equivalent to the total power generation for the entire country of France and more than 80% of the entire growth in renewable power generation seen last year. While China and India remain committed to growing gas as a primary energy source in their respective economies, tight gas supplies and higher-than-normal global LNG prices in recent years, have impacted the pace of potential gas consumption growth in these developing economies.
More broadly, coal remains the largest source of power generation globally and represents about 2/3 of power sector emissions and about 1/4 of total emissions globally. With power demand expected to double by 2050, any hope of achieving global decarbonization and clean energy targets will require further displacement of coal use wherever possible, especially in countries like China and India.
As Jack noted, natural gas holds a critical role in helping achieve these goals over the coming decades, which we expect will result in robust increases in demand for natural gas over that period as shown by the outlooks on the central chart. The fast-growing economies in the Asia Pacific region are expected to play the greatest role in powering gas demand beyond the 2040s.
When demand from Europe and the developed world could possibly be in modest decline and regional gas supplies in Asia further deplete.
The outlook for global gas demand should remain robust going into the second half of the century because natural gas is an affordable, reliable and sustainable solution that will serve to displace coal and support the deployment of intermittent renewable energy sources. As such, in '23 alone, we have executed over 6.5 million tons per annum of long-term agreements representing over 119 million tons in aggregate volume of LNG between 2026 and 2050.
The majority of which are with repeat customers and are structured to meet each customer's unique long-term objectives. These investment-grade counterparties include North American producers, portfolio players and Asian and European end users, all of which seek secure, cleaner and affordable and flexible supply.
Our customers sign up for decades of LNG from Cheniere because they believe in the long-term role of natural gas, and they believe in Cheniere's ability to deliver the LNG reliably and responsibly. Looking ahead to '24 as the market continues to stabilize and achieve the stable pricing necessary to ensure market access and adoption, we anticipate our premium products will continue to have broad-based appeal.
With that, I'll turn the call over to Zach to review our financial results and guidance.

Zach Davis

Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our fourth quarter and full year 2023 results and key financial accomplishments and introduce our financial guidance for 2024.
Turning to Slide 12. For the fourth quarter and full year 2023, we generated net income of approximately $1.4 billion and $9.9 billion, consolidated adjusted EBITDA of approximately $1.65 billion and $8.8 billion and distributable cash flow of approximately $1.1 billion and $6.5 billion, respectively.
With today's results, our full year consolidated adjusted EBITDA results were at the high end of our most recent guidance range, and we exceeded the high end of the range on distributable cash flow mainly attributed to higher margins captured on open capacity and optimization upstream and downstream of the plants.
In addition, we have now reported positive net income on a quarterly and cumulative trailing 4-quarter basis, 5 quarters in a row. As compared to 2022, our fourth quarter and full year 2023 results continue to reflect a higher proportion of our LNG being sold under long-term contracts with less volumes being sold into short-term markets as well as the further moderation of international gas prices relative to what we experienced in 2022.
These impacts were partially offset by certain portfolio optimization activities that our teams were able to achieve throughout the year.
During the fourth quarter and full year, we recognized an income 618 and 2,353 TBtu of physical LNG, respectively, which included 607 and 2,318 TBtu from our projects a record for the full year and 11 and 35 TBtu sourced from third parties, respectively.
Approximately 90% and 87% of these LNG volumes recognized in income were sold under long-term SPA or IPM agreements with initial terms greater than 10 years, respectively.
While we have many significant achievements to highlight from 2023, I'm particularly proud of my team's focused execution on our 2020 vision capital allocation plan.
We deployed approximately $5 billion towards balance sheet management, shareholder returns and accretive growth in 2023 alone, while maintaining strong available liquidity going into this year. In aggregate, since updating our capital allocation plan in September 2022, with a target of $20 billion of cash deployment through 2026 and $20 per share of run rate DCF we have now deployed over $8 billion.
Execution under the plan got off to a fast start in early 2023 when we achieved investment-grade ratings at both of our parent entities bringing the entire Cheniere complex to investment-grade status. And in June, we issued our inaugural corporate investment-grade bond, placing $1.4 billion of unsecured notes at CQP.
These milestones follow approximately $8 billion of deleveraging over the last 3 years from approximately $32 billion of debt at our peak to now under $24 billion. During the fourth quarter, we repaid $50 million of long-term indebtedness, further redeeming a portion of the senior secured notes due in 2024 at SPL and bringing our total long-term debt paydown for the year to approximately $1.2 billion.
We plan to address the remaining balance of the SPL 2024 notes with cash on hand within CQP early this year after which point we will have addressed all maturities in the complex for the year. We have already begun strategizing around the 2025 maturities we have at both SBL and CCH. And as always, we will evaluate opportunities to efficiently refinance or delever throughout the year.
The buyback plan is working as designed and enabling us to be opportunistic. During the fourth quarter and full year 2023, we repurchased an aggregate of approximately 2 million and 9.5 million shares of common stock for approximately $339 million and $1.5 billion, respectively. As the share price has provided greater opportunities so far this year compared to the fourth quarter 2023, deployment under the share repurchase plan has accelerated.
And year-to-date, or in just 1.5 months or so, we have already deployed nearly $500 million, which is more than we did in any quarter in 2023, repurchasing almost 3 million shares so far bringing our total shares outstanding to under 235 million currently. We will continue deploying the now under $2 billion remaining under the plan over the next year or so, with the expectation we will get to the cumulative 1:1 share repurchase to debt paydown ratio and complete the current $4 billion authorization ahead of its 3-year window, at which point, the focus will primarily be on updating the buyback plan again with the Board, while maintaining our IG balance sheet across the complex as we prepare for our accretive growth initiatives at Corpus and Sabine in the coming years.
We also declared $1.66 per common share in dividends for 2023, a nearly 15% increase year-over-year having increased our quarterly dividend by 10% in Q3, consistent with our stated target of 10% annual dividend growth. Over time, we intend to steadily increase our overall payout ratio as our platform grows while still maintaining the financial flexibility essential to our capital allocation plan and growth objectives.
During the quarter, we funded approximately $467 million of CapEx at our Stage 3 project, bringing total spend to approximately $1.5 billion for the year and a little over $3 billion in total for the project. While front-loading the equity spend has enabled considerable interest savings, we still have over $3 billion available on our CCH term loan that we plan to utilize over time as the project progresses towards full completion in 2026.
And we expect to spend between $1.5 billion and $2 billion in Stage 3 CapEx this year.
Turn now to Slide 13, where I will discuss our 2024 guidance and outlook for the year. Today, we are introducing our full year 2024 guidance ranges of $5.5 billion to $6 billion in consolidated adjusted EBITDA and $2.9 billion to $3.4 billion in distributable cash flow.
As we've been clear about on recent calls, 2024 represents our most contracted year-to-date as all contracts signed to underpin our existing 45 million ton platform have commenced as well as some bridging volumes tied to contracts signed in support of our growth projects. It's likely 2024 will represent a trough year for EBITDA after being down sequentially since 2022, and as we expect to move upward post 2024 as Stage 3 commences and eventually reaches run rate in 2026 and beyond.
With very little unsold capacity remaining throughout the year, these ranges largely reflect our 9 trains run rate guidance adjusted for a higher proportion of volumes sold under long-term contracts or bridging volume as well as some forward selling of spot cargoes at higher international gas prices.
These positive adjustments are partially offset by the prepayment and cancellation of the Chevron TUA and some incremental O&M costs related to our planned maintenance program. We expect to produce approximately 45 million tons of LNG this year, inclusive of planned maintenance at both sites.
We remain optimistic we will achieve first LNG from Train 1 of Stage 3 this year, but that would not impact our revenues or EBITDA in 2024 as it will likely remain in commissioning through year-end.
In terms of portfolio optimization activities, we include any such transactions already completed in the guidance, but we do not forecast additional (technical difficulty) 2022.
(inaudible) Remains on track as we continue to execute on the plan this year. And credit goes to our commercial team who have sold our 2% open capacity going into this year, which has come down from 50 TBtu to 15 TBtu since the November call, highlighting that despite the recent drop in global gas indices, our EBITDA forecast remains above the $5.5 billion midpoint of our 9-train run rate guidance.
As always, our results could be impacted by the timing of certain cargoes around year-end as well as incremental margin from further optimization, upstream and downstream of our facilities. Our distributable cash flow for 2024 could also be affected by any changes in the tax code under the IRA. However, the guidance provided today is based on the current IRA tax law guidance and assumes we qualify for the minimum corporate tax of 15% this year.
As the year progresses, we will likely tighten our ranges consistent with what we've done in the last 2 guidance cycles.
At CQP, our full year 2024 distribution guidance range is $3.15 to $3.35 per common unit, which maintains our base distribution of $3.10 and a variable distribution of between $0.05 and $0.25. As we have discussed publicly for the last year, by adjusting the variable component of our base plus variable distribution this year, we are preserving cash and balance sheet capacity at CQP in anticipation of funding the $10-plus billion SPL expansion project according to our disciplined capital investment parameters, which call for financing the project 50% with cash flow while maintaining investment-grade ratings at both SPL and CQP, all within the traditional MLP structure.
This deep view guidance keeps us on our previously assumed FID time line and should be viewed as an indication of our confidence in the attractiveness and viability of the SPL expansion project. In the near term, deleveraging at CQP or SPL can be considered early investments in the SPL expansion project until we are in a position to formally sanction the project, raise financing and begins construction, which we plan for in 2026.
We expect the accretive SPL expansion project could increase the run rate distributable cash flow at CQP to over $5 per unit, a win not only for CQP unitholders, but LNG shareholders as well. Since we are in the high splits of the MLP, meaning approximately 75% of the incremental cash flow would accrue to CEI and further meaningfully increase our run rate DCF per share target over time as it was not baked into the original 2020 vision.
Looking beyond this year, the Cheniere story remains the same. Our highly contracted business model is built upon long-duration, fixed fee, investment-grade take-or-pay style cash flows, which underpinned the $40 billion natural gas infrastructure platform we operate today. As we pursue brownfield expansions, our approach will be consistent with that of the first over 55 million tons adhering to our disciplined investment parameters so that our cash flows and our value proposition remain insulated from whatever transitory supply and demand imbalances may occur over the next decade plus.
Our company provides investors with exposure to LNG the theme more so than the commodity, and it is inherent stability and long-term visibility in our contracted cash flows, growth and shareholder returns that should enable us to continue to deliver meaningful value to our stakeholders for decades to come.
That concludes our prepared remarks. Thank you for your time and your interest in Cheniere. Operator, we are ready to open the line for questions.

Question and Answer Session

Operator

(Operator Instructions)
We'll go first to John Mackay with Goldman Sachs.

John Ross Mackay

I appreciate the color you guys gave on the '24 guide and that you're already above the kind of 9 Train run rate. But maybe you could just spend another minute talking through what kind of gets you to the low end of the range versus the high end of the range. It's about the same $500 million ranges you gave for '23, but there were more open volumes unsold at that point. So maybe just kind of walk through those dynamics.

Zach Davis

John, it's Zach. And I'll just say the $500 million range is basically, we're keeping the same cadence that we've had for the last couple of years with the $500 million. It's still under 10% of the EBITDA. But it's safe to assume that we're going to start right now around the midpoint of that range. And from there, I would say there's a few variables even though the open capacity is so small and $1 CMI move in margins is only $15 million.
With most of the year still ahead of us, $1 move in Henry Hub can move EBITDA in the lifting margin by around $100 million and just year-end timing of deliveries, that can move things around $100 million as well even though a lot of those end-of-year cargoes are even locked in at pretty attractive rates by the team.
When it comes to the upside and downside to the high end and low end, on the low end, it would really have to be something unforeseen today operationally that got us that close to the low end, considering how locked in we are.
So it would be maybe a longer maintenance cycle than we even had last year, which we don't foresee or a tougher hurricane season or something of that sort.
On the upstream -- on the upside, I'd just say we've been very clear from the get-go. We don't guide on optimization, upstream and downstream of the plants that's not locked in. So as that accrues, ideally through the year, even though margins are lower, Henry Hub is lower and volatility has moderated that should help us get to the upside. And then yes, we'll stay optimistic on seeing if we can get a couple more cargoes out through the course of the year.

John Ross Mackay

I appreciate all that detail. Maybe just a follow-up and maybe this one is for Anatol. There's been obviously, a lot of focus in the market on kind of the next 3, 3.5 years for the LNG market with U.S. and Qatar supply coming online and the demand picture maybe not warming up as fast as we would have hoped. I understand the kind of long-term dynamics you talked about earlier in the call. But maybe just spend a couple of minutes walking through what you see as this kind of medium-term outlook. And maybe what the supply-demand balance looks like around the back half of this decade?

Anatol Feygin

Sure. Thanks, John. Thanks for the questions. I'll start kind of in reverse order. The market will grow what the supply allows it to grow, right? So the 10.5 million tons was a function of that supply coming into the market and being placed where it was most needed at the margin. The things that are encouraging to us, and we see as kind of inexorable trends are the commitments to gas and the investments in long-dated infrastructure.
Not a month goes by that we don't add a couple of regas terminals and things like gas-fired power plants are very difficult to get -- turbines are difficult to get for years, and that is a function of the deployment of that infrastructure globally. So we prefer a world where LNG is in those high single, low double-digit rates where returns for us are attractive but reasonable and the consumers can get their hands on these attractive Btus.
And as we mentioned in the prepared remarks, are competitive with coal and other generation sources. So we remain very optimistic. You'll see volumes going into South and Southeast Asia. You'll see the marginal kind of elastic demand come back into the market. We're already seeing that even in the early days post the Chinese New Year. And we think that these are trends that will last for decades and decades to come.
And we have kind of those commercial -- the commercial engagements with those types of counterparties that are continuing at pace. So we think the market will enjoy absorbing this volume and whether it comes online, on schedule or if things are modestly delayed as they have been historically, we think that the market will show robust growth and ability to absorb this next wave.

Operator

We'll go next to Jeremy Tonet with JPMorgan.

Jeremy Bryan Tonet

Just wanted to kind of unpack a little bit more on your earlier comments there. When you talked about beating the midpoint of the prior guidance range, I don't know if it's $0.5 billion or so. Just wondering what type of quantum of optimization Cheniere has been able to realize because of volatility in the market, both upstream and downstream operations, what that number looks like?

Zach Davis

It's been in the hundreds of millions of dollars, Jeremy, in terms of the optimization and I'd say, hundreds of millions of dollars, both in the upstream and downstream side. Mind you, Henry Hub was significantly up in '22, moderated a bit last year and it's even further down today.
So we'll see how much can be there. And then on the other side, yes, we have a ton of IPM deals, DES deals. So we'll optimize those as we see fit and subcharter out any of our length in our shipping portfolio, which in the past has added hundreds of millions of dollars, mind you, even that market has moderated as well in terms of the volatility. But when you add those 2 things together, it would really take -- yes, great execution and some opportunistic moments throughout the year for us to get to the high end of the range.

Jeremy Bryan Tonet

Got it. So just to be clear there, then hundreds of millions of dollars of synergies or optimization rather, upstream and downstream, both we've seen historically. And that's not really baked into the guidance as we see it today because the guidance really just locks in what you've already locked down. Is that the right way to think about things?

Zach Davis

Yes, that's right. We were pretty clear for quite some time now as we thought about this year, it would be the closest we would be to run rate. And considering how proactive we were going into this year and now that we're only down to 15 TBtu, we're still above the midpoint of the run rate range for 9 trains, and we don't even have TUA from Chevron anymore. So this is where we expected it to be. It was baked into the 2020 vision and the $20-plus billion of cash flow through '26. And we'll see how things play out on the optimization side, but it's not baked into this guidance today.

Jeremy Bryan Tonet

Got it. Very helpful. So a lot of upside potential but not baked into the guide. Very clear there.

Operator

We'll go next to Brian Reynolds with UBS.

Brian Patrick Reynolds

Maybe to talk about just the distribution cut on the variable side. If you could just help talk about sizing and timing of that and ultimately, how it relates to translating into the 15 mtpa expansion, assuming like an [8.50] build. So it seems like there's still a little bit of a variable component in the guidance above that 3.1 kind of run rate. So just kind of curious how you came to that number? And how we should think about prefunding just given it could be $10 billion to $15 billion for the SPL expansion?

Zach Davis

Sure. So as we thought about the variable adjustment, I would say, over the last 2 years, we were incredibly efficient with our cash inside the CQP. And with the distributions, including the variable being over $4 both years, we probably distributed out almost $700 million more than even the run rate DCF per unit guidance that we give.
So now it's time as we're getting closer to officially filing with the FERC for the Sabine expansion and are targeting that 2026 FID that we're going to start retaining some of the cash and bringing down the variable, we're saving around, let's say, $700 million and a large portion of that will actually just go into paying down a bit of debt that's coming due, giving us this flexibility financially to add leverage capacity once we FID the project, stay with that, let's say, 50-50 debt to equity during construction and maintain the base distribution throughout while still being investment grade at Sabine and CQP.
So we're trying to thread a needle there. And to do that, we need to start planning now. Mind you, some of the cash that's retained is also going into development of supporting the feed and getting Sabine expansion ready for FID. And there's even $100 million or so baked in there for debottlenecking purposes. We think we've found some ways to get to the higher end of the 4.9 to 5.1 range on the first exchange that hopefully can pay dividends to us in the coming years.
So there's a few things in there, but it is mainly debt pay down in the near term to add leverage capacity and flexibility in the long term. Mind you, it's still $2 billion of distributions coming out of CQP this year with $1.2 billion of that going into -- going to CEI. But if we can pull all this off and build this project and get to that over to $5 DPU, we're talking about almost $2 billion of consolidated EBITDA, and we're talking about almost $1 billion of DCF to CEI. So it's a win-win for all parties.

Brian Patrick Reynolds

Right. Makes sense. Appreciate all that. My second question, just around maybe further optimization. I know for the SPL expansion, it seems like there's some capital efficiency and optimization opportunities with boil off gas and some other things. But as we think about the existing asset base, I think you talked about 45 mtpa kind of being a good run rate. It seems like '23 was above that.
As we look ahead of 2024, have we squeezed out all the optimization on the existing asset base? Or are there some new technologies or engines that could help kind of further drive efficiencies and optimization on the existing asset base going forward?

Jack A. Fusco

Brian, this is Jack. And while we're not going to guide upwards of the 45 million tons today, I'm always amazed at what my operations folks can deliver. So whether it's optimizing the trains or our maintenance schedule, we -- they have just constantly outperformed. So we're looking now, as Zach mentioned, $100-or-so million dollars for debottlenecking. One of the things I find really promising is we're looking at a new technology of our fin fans.
Those are the fans that we use to cool the refrigerants that liquefy the natural gas. And we think there's a big opportunity there. So we'll be trying that out in earnest this year, and I hope to have more news for you on later calls.

Operator

We'll go next to Theresa Chen with Barclays.

Theresa Chen

Going back to Jack's comments on the evolving regulatory backdrop. With respect to the DOE pause, I'm just curious how this impacted conversations with customers, both within the context of commercializing your expansion projects, but also in relation to the broader commitment, that the U.S. government has to LNG exports and the perception of your global customers and the credibility and competitiveness of the U.S. LNG industry. Any salient commercial color you can provide would be great.

Jack A. Fusco

Theresa, I think I'm going to just start with some overall comments, and then I'll turn it over to Anatol, but I have to say this isn't really new. We've been through multiple administrations here at Cheniere. We've been through multiple studies on the public interest in exporting America's natural gas.
What is shocking and new is over the last 8 years, I think Cheniere has proven all the benefits to America and to our allies over exporting U.S. LNG. And I find it appalling that we need scientists to tell us theoretically using theories and hypotheses of the benefits or not. But as you know, we know that they are -- those benefits are factual. They're proven, they were witnessed by the world. So I really look forward to seeing this study's report.
I look forward to the comment period so we can get the record straight and accurate. I'm hopeful that cooler heads ultimately prevail. And that the facts will be evident and this pause will be a distant memory.
But with that, I'll turn it over to Anatol, and he can tell you a little bit about what our conversations have been with our customers.

Anatol Feygin

Yes. Thanks, Jack, and thanks, Theresa. Just to pick up where Jack left off. This is the third time that DOE is doing this study. And I would say, to Jack's point, the first 2 are a distant memory as the U.S. goes from kind of mid-90s of million tons per annum of capacity today to close to 200 million tons. We still think really believe that the U.S. will be the market's first 200 million-ton exporter, and we will navigate this with the DOE.
A lot of the things that we have been doing for the last 4, 5 years on our LCA and on our environmental science and tracking the emissions profiles providing the cargo mission tags are all things that are new in the equation and then, of course, just the quantum of LNG exports from the U.S. and gas dedicated to LNG exports is a new component in this equation.
So we -- to Jack's point, we look forward to DOE's methodical kind of science-based review and updating its profile, but we are confident and we relay the same answer to our customers and our commercial engagements that we are confident that Cheniere will be able to navigate whatever comes out of the DOE and continue to prosecute expansions on our time line.
So this is not new. Every time there is a pivot, whether that is a modest pivot or a more major pivot, we have these discussions. But we've navigated them for a decade plus and are confident we'll continue to do so. And that's exactly the message that we give to our customers, and we obviously firmly believe that.

Theresa Chen

And Anatol, going back to your comments related to the elasticity benefits in the market currently as price-sensitive buyers increase interest. Can you elaborate on that? And what do you think the magnitude of that demand can be if prices remain low?

Anatol Feygin

Yes. Look, the market -- it's hard to say that these are kind of unprecedented dynamics in the sense that the amount of infrastructure that has been brought online over the last 3 to 5 years is unprecedented over that period. So we talk about the amount of liquefaction capacity that's coming online in the back half of this decade. But again, not a month goes by that there's not a new regas terminal.
Europe added 5, Southeast Asia has added 4. Europe will now add Alexandroupolis in Greece in the coming days or weeks. So the ability to consume this volume enormous, and we are approaching a scale now relative to the current 400 million tons of exports, which obviously will grow of almost 1,300 million tons per annum of import capacity. So markets like India, which have rebounded strongly as prices moderate, are now in a position to import more than twice as much volume as it imported in '23.
That was not a position that India was in early 2020 when prices were low, and it was a price elastic consumer. So I think you'll see that price elastic demand function really surprised to the upside as Philippines, Thailand, Vietnam, India, et cetera, are all in a position to take meaningful incremental volumes. So quite optimistic on that front.
And I think we all see these liquefaction numbers coming. And again, historically, they have surprised to the downside in terms of schedule and utilization. So we'll see how the world rebalances, but it certainly has the capacity to consume essentially whatever number you think will be added to the supply side.

Operator

We'll go next to Spiro Dounis with Citi.

Spiro Michael Dounis

I wanted to go back to the 2020 vision, if we could, Zach. Just we're about 1.5 years into that program. And you mentioned tracking on or even ahead of plan to date. But I guess if we just shift the focus of the forward outlook and think about that outlook for '25 -- sorry, '24 through '26. How does that compare to what you envisioned back in 2022 as you sort of set that $20 billion target. I imagine some puts and takes since then Stage 3 may be coming on early. I'm not sure where you had the LNG curve then. Just trying to understand how much conservatism be imputed there?

Zach Davis

Sure. So I would just say we're still at $20-plus billion of available cash through '26, and there are some puts and takes. We've made some more money in years like the past year. This year was always planned to be highly contracted. And then we assumed guaranteed completion dates for Stage 3 meaning not even -- Train 7 wasn't even going to come online until 2027 outside of that period of time.
So all in, we're still over $20 billion. We've deployed over $8 billion. So about 40% in about 30% of the time. But the main thing to focus on is really that excess cash and how we're going to deploy that going forward. And as you can tell with some of the debt paydown, which will be less than we even did this year, staying inside of CQP. CEI is going to mainly be focused on catching up on the buy back and completing the equity funding of Stage 3.
At this point, we've done over $2 billion of buybacks, but we've done over $3.5 billion of debt pay down. So there's still a $1.5 billion, give or take, that still needs to occur for that catch-up of the 1:1. So we'll be pretty focused on that this year. Case in point, the program was set up to be opportunistic at times like this, and that's why the shares outstanding is trickling down.
And by the end of the year or early next year, yes, we'll probably have to upsize the plan again and keep on marching on this long-term path to eventually 200 million shares in the long-term run rate.

Spiro Michael Dounis

Got it. That's helpful, Zach. Second question, just given your, I think, the largest and one of the largest buyers of natural gas. Just curious how you're thinking about the supply over the next few years. I think right now, producers understandably retrenching just given where pricing is. At the same time, we're hearing from some midstream companies that there are pockets of shortages in the Mid-Atlantic, just due to the rise in data centers and other types of electric needs.
So curious as you think about that outlook when all the LNG capacity comes online in the next few years, do you think the producers are going to be able to stand up and sort of deliver on that supply?

Anatol Feygin

Thanks, Spiro. This is Anatol. I'll jump in. Look, we're very comfortable with and confident in the resource and the economics of developing that resource in this nation. The challenge we have, which we've highlighted multiple times for years is building infrastructure, and I think it's going to be a long time before anybody attempts another Mountain Valley pipeline or equivalent out of what is an incredible resource in the Northeast, in the Marcellus and Utica.
That said, you know us and we take very seriously and as sacrosanct, gas supply and the infrastructure needed to supply our facilities for decades to come. And that's one of many reasons why the U.S. Gulf Coast is our home, and we're very confident that Louisiana, Texas, Mid-Continent can continue to develop the resource and the infrastructure necessary to get it to us.
Jack mentioned the ADCC pipeline that's moving well. Obviously, Permian continues to grow, and we'll need more intrastate infrastructure. We will need more interstate infrastructure as you probably saw we filed for together with our SPL applications. So we're confident that the Gulf Coast will continue to be well supplied, but obviously would prefer that other resource in the country was able to get to market as well.

Operator

We'll go next to Tristan Richardson with Scotiabank.

Tristan James Richardson

Just one for me this morning. Following up on a prior question about distribution levels at CQP. I mean I think the philosophy of a base plus variable is relatively new, going back to 2022. But is there a potential here that you could rethink that philosophy in -- with the focus on retaining more cash in anticipation of the proposed SPLX?

Zach Davis

I think what we planned in 2022 was planned for distributing out a lot of cash efficiently in '22 and '23 and then being in a position where we can do a mega project inside an MLP. So when we set the 310 distribution as the base, we intend to hold that. Obviously, this year, we're actually even above that. We had enough cash to be able to meet our objectives going into developing and preparing for the Sabine expansion.
And so we're going to distribute that out to CEI and our unitholders. But when it comes down to FID in the project in the next couple of years, the goal is to maintain the base distribution, stay investment grade everywhere and fund the project within cash flow. So this all kind of works, which is pretty amazing for an MLP, but one with 6 trains fully up and running, it works quite well.
And then as you think about the 310 base distribution or the 325 this year, yes, again, we're still talking about $2 billion of distributions and an over 6% yield. So we were cognizant of making sure that, that was competitive and kept us going in the right direction with our unit holders and our own stake in CQP.

Tristan James Richardson

I appreciate it, Zach. And then maybe just a follow-up on the '24 guide. I think you -- in the prepared comments, you highlighted a higher proportion of bridging volumes just one of sort of the upward items in the guide versus the 9 train run rate. Can you talk about how maybe mechanically bridging blames work and how that can kind of contribute more to that upside?

Zach Davis

Sure. Those bridging volumes are basically long-term contracts that helped us underpin our FID Stage 3 that have already begun before Stage 3 has begun. So those bridging volumes are in our 200 to 250 range and why we went into this year, 97%, 98% contracted. So when we think about the bridging volumes, though, in the context of having some near-term volumes on a 15- to 20-year deal.
If the curve is liquid, we will get value for the curve and blend it over the 20 years over the 15 years. So those margins are incrementally up to a deal that might start with a CP of a train up and running but we're only talking about nickels and dimes here.

Operator

We'll take our final question from Ben Nolan with Stifel.

Benjamin Joel Nolan

Well, for my first one, as we think about how the year plays out and appreciating that virtually everything is fixed, is there going to be any sort of cadence to how the EBITDA and the cash flow comes through? Or should it be pretty linear do you think?

Zach Davis

It's never perfectly linear. We produced more in the winter months at the site. So with that, you should expect slightly more EBITDA in the colder quarters versus the summer or the shoulder seasons. But basically, it should be a year of $5.5 billion to $6 billion of EBITDA and why we don't guide on a quarterly basis. But we expect 45 million tons and we are now 99% contracted and the optimization, we -- I'm not forecasting that today. So that's probably the only thing that could create some variability quarter-to-quarter.

Benjamin Joel Nolan

Okay. I appreciate that. And then for my follow-up, just on the regulatory side, obviously, this is the third time we've been going through this process. Curious if you guys think the hurdle is getting increasingly more challenging for new projects? Or is it -- do you think that all of this rhetoric is changing how Washington thinks about the business?

Jack A. Fusco

No. Well, first, the hurdle has always been higher, right? This is a very capital-intensive business. It takes years to get one of these across the finish line. It's a balancing act between capital cost and SBAs and contracted amounts and financings and everything else. We make it look easy, Ben, but it's not. On the -- the only positive thing in the past was the regulatory certainty around America and contract sanctity.
And while I think this is politically motivated, I'm hopeful that at the end of the day, we go back to where we were before, which is we let the market dictate which projects will survive and which ones won't. And that's where we've always been, and the market has been extremely efficient at who they're going to bet on. And I would bet on Cheniere every single day.
Thank you all for all of your support.

Operator

That will conclude today's call. We appreciate your participation.