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    Cheniere Pivots to Black in Second Quarter

Summary

Cargo cancellations improved margins and net income

by: Dale Lunan

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Natural Gas & LNG News, Americas, Daily Digest, Liquefied Natural Gas (LNG), Premium, Editorial, Corporate, Financials, News By Country, United States

Cheniere Pivots to Black in Second Quarter

US LNG infrastructure developer and marketer Cheniere Energy said August 6 it had net income of $197mn in Q2 2020, reversing a net loss of $114mn incurred in the same period last year. Adjusted Ebitda for the period more than doubled, to $1.4bn from $615mn.

Cheniere attributed the increased earnings primarily to higher total margins, which rose mostly due to accelerated revenues recognised for cancelled LNG cargoes and an increase in margins per mn Btu of LNG delivered to customers. Margins per mn Btu of delivered LNG were higher due to an increase in the proportion of higher-margin long-term contracts, partially offset by decreased market pricing for short-term cargoes sold.

During the three and six months ended June 30, Cheniere recognised $708mn in revenues associated with cancelled cargoes, of which $458mn would have otherwise been recognised subsequent to June 30.

“We delivered strong results for the second quarter of 2020, despite the challenging LNG market environment and continued global impact of the Covid-19 pandemic, which further proves the resiliency and strength of Cheniere’s business model,” CEO Jack Fusco said. “Despite continued market challenges, our visibility on achieving our financial goals for the year is unchanged, and today we are reconfirming our full year 2020 guidance of $3.8-$4.1bn in consolidated adjusted Ebitda and $1.0-$1.3bn in distributable cash flow.”

During the quarter, Cheniere exported 78 cargoes, representing some 274 trillion Btu (TBtu) of LNG, down from 104 cargoes representing 361 TBtu of LNG in Q2 2019. As of July 31, the company said, more than 1,175 cumulative cargoes totaling more than 80mn mt have been exported from its two export terminals.

At its Sabine Pass terminal in Louisiana, construction of Train 6 is nearly 64% complete, with substantial completion expected in the second half of 2022. At the Corpus Christi Liquefaction project in Texas, the third 5mn mt/yr train is 90.5% complete and in the commissioning phase.