Results: Cheniere 1q26
Strong execution, excellent buyback discipline
Original review: Cheniere Energy - LNG Export Major
Tag for finding my other articles on this stock: LNG
Key takeaways
EBITDA and DCF guide increased; execution excellent as usual; buyback executed with real discipline, averaging $202 in a quarter that saw the stock range from $194 to $297.
Thesis and valuation update
Minor increase in 5y cash flows likely but no substantive change.
At last closing price of $240 my (simple) DCF shows a 15% IRR through 2030. Caveat: this assumes buybacks are at the current share price.
Notes
Ebitda $2.3bn, DCF $1.7bn. Net income negative due to noncash charges related to the accounting mismatch on their IPM contracts.
Bought back 2.7m shares for $535m ($202). Opportunistic. Overage on DCF or delays in FIDs = more buybacks.
Paid down $250m of debt.
Issued $1bn of 2036 notes at 5.2% and $750m of 2056 notes at 6%, their inaugural 30-year issuance. Used some proceeds to prepay $550m facility.
Increasing FY guide to $7.25-7.75bn ebitda (up $500m) and $4.75-5.25bn DCF (up $400m) on higher production, higher marketing margins, and optimisation efforts. Also locked in 1mt of 2027 CMI volumes at good margins.
Project progress
CCL Stage 3 project 97% complete. Train 5 substantial completion achieved in March and T6&7 on track for summer and fall - each a few weeks ahead of the schedule assumed in the initial guidance. First LNG at T6 imminent.
T8/9 and debottlenecking project now 37% complete.
Phase 1 expansions at SP and CC on track - “the most compelling risk-adjusted infrastructure investment opportunities on the Gulf Coast or maybe all of North America”.
After Phase 1 expansions, CC probably the focus, advantaged by having 500 acres of unused land with access to water, next to their power plant, and only 40 miles from their Sinton station for gas supply. SP has land, but it’s wetlands.
Hormuz/Qatar
Demonstrates the value of geopolitically stable supply and the role of flexible US volumes in balancing the market - most Qatari supply goes to Asia so US cargoes rerouted there. These benefits are reflected in current commercial negotiations.
13mtpa of supply off the market for up to 5 years.
Also likely to see delays to new capacity planned for Qatar and UAE.
2026 is much tighter than thought and 27 “more structurally constrained”.
Thanks for reading - if you enjoyed reading this please like and restack, and do get in touch if you have questions.
Pete
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