Cheniere Energy, Inc.

And welcome to the Chenier Energy Inc. Q1 2022 earnings call and webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Randy Battia. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to Chenier's first quarter 2022 earnings conference call. The slide presentation and access to the webcast for today's call are available at Chenier.com. Joining me this morning are Jack Fusco, Chenier's President and CEO, Anatole Fagan, Executive Vice President and Chief Commercial Officer, and Zach Davis, Executive Vice President and CFO. 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 Chenier's results, today's call may also include selected financial information and results for Chenier Energy Partners LP or CQP. We do not intend to cover CQP's results separately from those of Chenier Energy, Inc. The call agenda is shown on slide three. Jack will begin with operating and financial highlights, Anatole will then provide an update on the LNG market, and Zach will review our financial results and guidance. After prepared remarks, we will open the call for Q&A. I will now turn the call over to Jack Fusco, Chenier's President and CEO.

Thank you, Randy. Good morning, everyone. Thanks for joining us today, and thank you all for your continued support of Chenier. I'm pleased to be here this morning to review our first quarter 2022 achievements and discuss our further improved 2022 outlook. Before we begin, I'd like to spend a moment discussing the tragic situation that continues to unfold in Ukraine since we last spoke in February. Our thoughts and prayers are with the people of Ukraine and broader Europe as they navigate these volatile and uncertain times. At Chenier, we build strong relationships with and support the communities in which we live and work, and that includes those who we supply LNG. Since the beginning of the year, over 75% of cargoes produced by Chenier have landed in Europe. That amounts to over 150 cargoes of LNG, and we are just beginning. As Europe looks to reduce its dependency on Russian energy supplies, and the administration looks to support our allies, the relevance and criticality of energy security and the role of LNG and natural gas as a reliable, flexible, and cleaner burning fuel has never been more evident to customers and governments the world over. We have been active participants in the US-EU Task Force on Energy Security, and we believe that increased cooperation around the world is essential to ensure our allies and partners, along with our customers, have access to energy in the months and years ahead. For these reasons, I have challenged our operations teams to do everything possible to safely and responsibly produce as much LNG as possible through our continued operational excellence programs, which we will address in more detail this morning. Now, please turn to slide five, where I will review some key operational and financial highlights from the first quarter, as well as introduce our upwardly revised guidance ranges. For the first quarter, we generated consolidated adjusted EBITDA of $3.2 billion and distributable cash flow of $2.5 billion, both of which benefited from the early completion and accelerated ramp-up of Sabine Pastrain 6 and were further supported by sustained higher market margins throughout the quarter. Looking ahead to the remainder of 2022, I'm pleased to announce that we are once again significantly raising our full-year 2022 EVA DAC and distributable cash flow guidance. We now forecast 2022 consolidated adjusted EVA DAC of $8.2 to $8.7 billion, and distributable cash flow of $5.5 to $6 billion. Both increases are driven by sustained higher margins on open volumes due to higher than forecasted global LNG prices across the year, increased expected volumes from both maintenance optimization and accelerated ramp-up of Sabine Pass Drain 6, as well as an increase in lifting margins driven by higher domestic natural gas prices. Zach will address guidance in more detail in a few minutes. Specifically, on our operational excellence program, our efforts there to unlock low or no-cost incremental volume through maintenance optimization or de-bottlenecking efforts continue to be very successful. Over the last few weeks, our operations and maintenance planning teams have further optimized or planned maintenance activities for 2022, resulting in an increase in forecast production of approximately 30 TBTU or eight cargoes of LNG, all of which is expected to be sold by CMI. We are pleased to be able to support our customers and leverage our LNG platform and our operations and maintenance expertise to unlock incremental volumes of LNG for a market that so clearly needs it. We appreciate the recognition by the administration and our regulators that US LNG is essential now and in the years to come, and with the support from the DOE and FERC and the recent orders authorizing additional export volumes from our projects. We will continue to pursue further optimization and de-bottlenecking opportunities to increase our volumes to meet the rising worldwide demand for LNG. During the quarter, our teams continued to achieve milestones in terms of development, execution operations, and financial results. In partnership with Bechtel, not only did Sabine Pass Train 6 reach substantial completion over a year ahead of guaranteed schedule, but following substantial completion, our team was able to bring Train 6 to full utilization and stable operations well ahead of plan, which along with General production outperformance across the portfolio also contributed to our financial results this quarter, with a few additional cargoes supporting our increased guidance for the year. Shortly after substantial completion of Train 6, we announced the signing of our fully wrapped lump sum turnkey EPC contract for Bechtel for Corpus Christi Stage 3. We issued Bechtel limited notice to proceed in order to commence early engineering, procurement, and site mobilization and preparation works while we finalize the financing ahead of reaching FID, which we expect to occur this summer. I'm extremely proud of the seamless operations and continued excellence achieved by our Chenier team. During the quarter, we safely produced, loaded, and delivered a record number of volumes across our platform, thanks to our continued focus on operational excellence and portfolio optimization. On the contracting front, we announced increases in extensions to our existing long-term contracts with EOG and Ange, both of which reinforce the value of our commercial platform and the sustained long-term demand for LNG and natural gas in the global energy markets. And just this morning, we announced a new 15-year IPM agreement at Corpus Christi Stage 3 with ARC Resources, one of the largest natural gas producers in Canada. The signing of this contract once again demonstrates our ability to provide innovative, flexible solutions for our global customer base, and this IPM agreement further enables Canadian gas to reach international markets. Each of these agreements support the sanctioning of Stage 3 and reflect the urgency in the global market for investments in new LNG capacity as customers from around the world look to secure long-term supply, which Anatole will discuss in more detail shortly. Finally, in terms of our financial strategy, Zach and his team are executing on our long-term capital allocation plan faster than originally forecast due to the sustained higher margins, accelerating our initial debt pay down timeline, returning capital to shareholders and unit holders, and currently in the process of raising the financing and have a formal sanctioning of stage three. Turn now to slide six for an update on the significant progress we have achieved in our climate and sustainability initiatives. In April, we announced our latest QMRV program that builds upon our existing study with natural gas producers and LNG shipping providers, now applying that methodology and rigor to examining the greenhouse gas emissions associated with the delivery of natural gas to our facilities. As part of the program, we announced a collaboration with several of our key midstream infrastructure providers, including Kinder Morgan, Williams, MPLX, DT Midstream, and Crestwood, as well as multiple emission detection technology providers and leading academic institutions to improve the overall understanding of greenhouse gas emissions and further deployment of advanced monitoring technologies and protocols across midstream infrastructure that's part of our value chain. From here, we expect to commence a similar QMRV program specific to our liquefaction equipment. We expect these robust QMRV programs to improve the data and transparency of emissions throughout the LNG value chain to help maximize the climate benefits and environmental competitiveness of U.S. natural gas engineers LNG. These QMRV programs are built upon our climate and sustainability principles and support or broader climate strategy initiatives, especially our cargo emission tags, which we'll begin providing to our customers this year. Now, please turn to slide seven, while I provide a brief update on Corpus Christi Stage 3. As I mentioned a moment ago, during the quarter, we finalized the EPC contract with Bechtel for Stage 3, and we released them to begin early work under a limited notice to proceed. And you can see early visual progress on Stage 3 site preparations in the slide. We are pleased to have the contract finalized in Stage 3 underway with pricing consistent with what we've communicated to the investment community over the past few years. We expect to announce the FID of Corpus Christi Stage 3 soon after we finalize the financing of the project, which is currently in process. Once completed, Corpus Christi Stage 3 is expected to provide the global market with over 10 million tons of incremental LNG per year. The development of additional LNG capacity is ever more critical as countries work to secure reliable and affordable energy supplies for the long term in support of both energy security and environmental priorities. As such, we continue to develop opportunities to leverage infrastructure at both of our existing brownfield sites for further LNG capacity additions. Both Sabine Pass and Corpus Christi possess significant in-place infrastructure that puts capacity additions at those sites at a significant cost advantage relative to Greenfield development. We look forward to sanctioning stage three sometime this summer, and coming back to you after that with our plans for further LNG capacity growth, which would be supported by Brownfield Economics and underpinned by long-term contracts consistent with our investment parameters. With that, I want to reiterate my gratitude to the entire Chenier team for their work to ensure the reliability of our LNG during these unprecedented times in our industry. I will now turn the call over to Anatole, who will provide an update on the LNG market.