Original review: Cheniere Energy - LNG Export Major
Tag for finding my other articles on this stock: LNG
Key takeaways
FY EBITDA and DCF guide increased again; execution excellent as usual with capacity expansions ahead of schedule; bought back 1% of the company at $250/share.
Thesis and valuation update
No substantive thesis change, but yet more excellent execution.
My basic DCF suggests a 15% IRR through 2030 at a share price of $240. This assumes buybacks are at the current share price but the tool has worked well for me. I continue to own a tracker having, annoyingly, missed the opportunity to add below $230.
Notes
Ebitda $1.8bn, DCF $1.2bn.
FY guide up to $7.9-8.4bn of ebitda (+$650m), $5.3-5.8bn DCF (+$550m). Most of the increase is extra production from a variety of resiliency and debottlenecking initiatives, being sold into a disrupted market with high spot prices.
Bought back 2.2m shares (1% of co) for $550m = $250/share.
Corpus Christi Stage 3 is almost complete well ahead of schedule: Train 6 substantial completion was in June and T7 commissioning has started.
Midscale Trains 8/9 is also ahead of schedule.
Signed a lump sum EPC contract with Bechtel for Sabine Expansion Phase 1. This is a 5mtpa train (same as the first 6 at SP) plus 1mtpa of debottlenecking for $4.7bn. Expect regulatory approvals later this year and FID in early 2027.
Market conditions:
Flexible portfolios, destination optionality and demand-side adjustments have allowed the market to absorb a meaningful supply shock, but higher prices, Europe’s slower storage rebuild, and continued geopolitical uncertainty all point to a market that remains precariously balanced.
Chinese flexibility has mostly buffered the Iran war shock but they are likely close to their limit - they won’t let themselves develop the inventory problem that Europe has.
Issued $1bn of 2036 notes and $750m of 2056 notes at CQP and redeemed $1.5bn of senior secured notes, further reducing secured liabilities.
Long term contracting - negotiations have to balance energy security concerns, Cheniere’s exceptional reliability record, and the fact that 10mtpa of newly FID’d capacity is trying to find a home.
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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I was considering CPQ but walked away because of leverage