Cherniere expects more long-term LNG supply deals

Cheniere Energy said high prices and an "extremely volatile" global market are driving more long-term supply contracts. 

Russia's attack on the Ukraine sent European gas prices up 40% on Thursday, a signal that LNG will remain a critical part of Europe's energy mix, said Chief Commercial Officer, Anatol Feygin. 

Even before the invasion, LNG demand had soared, sending prices late last year to record highs on supply shortages and a shift to gas from more polluting fuels. LNG suppliers rely on long-term contracts to finance new plants.

"Strong demand could allow the company to make a FID—in the near term—on a major expansion at its Corpus Christi, Texas plant," said Chief Executive Jack Fusco. That expansion would add 10 MMtpy of fuel capacity.

"More than 200 MMt of contracted LNG volumes will expire over the next decade, with about 100 MMt of LNG contracts needing to be replaced between 2026 and 2030," Feygin said. "Two-thirds of contracts signed by Cheniere last year were with Asian buyers, 45% of which were from China."

Cheniere on Thursday raised its earnings outlook by about 20% on stronger margins and expected volume gains from new capacity. Its shares rose 6.8% to $127.02 in mid-day trading on the optimistic outlook. 

Cheniere forecast an adjusted profit for this year of as much as $7.5 B, up from an earlier outlook for up to $6.3 B. It expects an up to $1.2 B increase in distributable cash flow, the company said.

The outlook was well above Wall Street estimates for adjusted 2022 earnings of $6.4 B, sending Cheniere's shares up more than 6% to $126.50 in pre-market trading. 

For the quarter ended Dec. 31, the company's loss attributable to shareholders widened to $1.3 B from $194 MM in the same quarter a year ago. 

Cheniere said it exported a record 153 LNG cargoes during 4Q, compared to 130 in 4Q of 2020. For its full year, it exported 566 cargoes, up 45% from 2020.

4Q net loss was $1.32 B, wider than the $194 MM loss a year ago. Results include a $1.3 B hit from derivative losses and an increased tax provision, the company said. 

(Reporting by Marcy de Luna; editing by Jason Neely, Tomasz Janowski and David Gregorio) 

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