Cheniere Energy, Inc.

Thanks, operator. Good morning, everyone, and welcome to Chenier's first quarter 2023 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, Zach Davis, executive vice president and CFO, and other members of Chenier's senior management. 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 2023 guidance. After prepared remarks, we will open the call for Q&A. I will now turn the call over to Jack Fusco, Schneer's President and CEO.

Thank you, Randy. Good morning, everyone. Thanks for joining us this morning as we review our first quarter results and improve 2023 outlook. As you can see from the results, we have continued our exceptional performance from 2022, and our improved outlook for the rest of this year is reflected in our increased guidance ranges. The first quarter was highlighted by excellent performance across Chenier's platform, from operations to project execution to capital allocation and origination. While we are not yet able to share specific details, last week we executed a new long-term SPA with an investment-grade Asian end-user that is linked to the SPL expansion project. This is an exciting signal that we are already gaining early commercial momentum on our recently announced expansion plans at Sabine Pass. We look forward to providing more detail on this SPA in the near future. Please turn to slide 5 where I will review key operational and financial highlights from the first quarter of 2023 and introduce our upwardly revised annual financial guidance. We generated consolidated adjusted EBITDA of approximately $3.6 billion in the first quarter, and distributable cash flow of nearly $3 billion. This first quarter benefited from a number of discrete factors which drove EBITDA and DCF higher, which Zach will address in a few minutes. During the first quarter, Zach and his team continued to make excellent progress on our capital allocation plan. We paid down nearly $900 million of debt and solidified investment grade ratings across the Chenier Complex. as we discussed on this past February call. We bought back over 3 million shares for about $450 million and paid our quarterly dividend of 39.5 cents. So in total, almost $1.5 billion in capital return during the quarter, plus another approximately $550 million invested at Stage 3 for our future growth. Operationally in the first quarter, we picked up right where we left off last year, further reinforcing Chenier's status as a leading global operator, reliably producing LNG with safety at the foundation of every action we take. We set a new quarterly record, exporting 167 cargoes of LNG in the first quarter, surpassing our prior record, which was set in the fourth quarter of last year. Looking ahead to the balance of 2023, as I mentioned before, our forecast has improved. We're raising full-year guidance by $200 million on both EBITDA and distributable cash flow. Our new ranges are $8.2 to $8.7 billion in EBITDA and $5.7 to $6.2 billion in DCF. The increase is mainly driven by the team capturing and locking in higher margins, both upstream and downstream of our facility. Zach will provide more color on the increase and preemptively answer your questions on guidance in a few minutes. Turn now to slide six, where I will update you on the status of our expansion projects. Corpus Christi stage three, which is under construction. Corpus Christi mid-scale trains eight and nine, which is now in the FERC process. And SPL expansion, which is in the pre-filing with FERC. First, on Corpus Christi stage three. Destruction is ramping up as is headcount on the site, which is now approximately 750 workers, and we expect this to grow rapidly as we begin to transform from site preparation and groundwork into mechanical works over the coming months. Over 7,000 piles have been driven, and soil stabilization is effectively complete. The foundations are beginning to be poured. Piping and spools have begun to arrive, and we expect to receive the first coal box at site next month, and its installation is an important construction milestone for Stage 3. Overall, EPC progress is currently 28.7%, which is well ahead of plan. While construction is only 3.4% complete, early construction activities are already tracking ahead of schedule, increasing my confidence in schedule outperformance and potentially having more volumes in 2025 and possibly the entire 7 train project being completed by the end of 2026, months ahead of the guaranteed schedule. Next, on Corpus Christi mid-scale trains 8 and 9, in line with what we told you last year when we pre-filed this project, we submitted the full application to FERC on trains 8 and 9 in late March. We are optimistic about the permitting process for this project given its distinct advantages of being identical to the Stage 3 trains, being fully commercialized with credit-worthy counterparties, and not requiring significant supporting infrastructure, and the synergy of Bechtel already being mobilized on the site. We look forward to working with FERC and all relevant stakeholder agencies and regulators on a smooth and transparent review process. Moving on to the Sabine Pass expansion project, which we revealed on our call back in February. I'm extremely excited about developing this major 20 million ton expansion, which has the ability to leverage our massive infrastructure position at Sabine Pass for economically advantaged incremental capacity. We have submitted the prefiling documents to FERC. We recently signed a contract with Bechtel for the feed work related to this large scale project, including for the carbon capture component. Commercially, The project is already gaining traction. As I highlighted earlier, last week we executed an SBA of approximately 0.4 million tons per annum for over 20 years with an investment-grade Asian end-user for LNG volumes delivered through 2047. Most of the volumes associated with the SBA are subject to FID of Train 1 of the Sabine Pass expansion project. We are excited to have already signed an SBA link to the project and to be building commercial momentum as we progress development. We progress these project developments in an environment marked by cost inflation, rising interest rates, and extremely competitive LNG markets. These realities not only underscore the importance of Chenier's competitive advantages, but also a resolute commitment to the investment parameters that guide our disciplined approach to capital investment. As you have heard me say before, We are not in the FID business. Our focus is on long-term value creation. We are developing these projects with the same discipline, rigor, and high standards that form the foundation of our existing infrastructure platform. We are extremely excited about our organic growth prospects, and we continue to target market-leading project returns on a risk-adjusted basis that our investors and stakeholders have come to expect from Chenier. Thank you all again for your continued support of Cheniere. I will now turn the call over to Anatole, who will provide an update on the LNG market.

Thanks, Jack, and good morning, everyone. Please turn to slide eight. LNG production in the first quarter reached new highs as global reliability improved, with record monthly exports of 36 million tons in March. Following a period of outages across various plants worldwide, year-over-year increases in production were achieved in Norway, Australia, and Qatar in particular. In Norway, the Hammerfest facility was offline in Q1 last year, and in Australia, Prelude was shut down after loss of power in December 21 and did not restart until April of last year. And in Qatar, two megatrains were undergoing major plant maintenance in Q1 last year. Exports from the U.S. were broadly flat year over year as Freeport LNG restarted production in February after having been offline since June of last year. While the uptick in global LNG production over the past few months has helped to balance the market and further stabilize price levels throughout the first quarter, we expect limited overall supply growth this year as few new projects are scheduled to come online in the next 18 months. Until then, we expect supply and demand to remain precariously balanced and sensitive to supply disruptions, weather, and demand shocks. We remain optimistic that the U.S. will continue to be a critical source of flexible supply in the market. U.S. flows to Europe continued to remain strong in Q1, helping ease market pressures and contributing to moderating prices. In fact, approximately 80% of cargoes produced by our two sites were delivered to Europe in the first quarter. The TTF monthly settlement prices averaged approximately $19.50 per MMBTU in the first quarter of 23, 35% lower year-on-year. Similarly, the JKM average settlement price decreased by 16% year-on-year to an average of approximately $26 per MMBTU. While both pricing indices are markedly lower than last year, global gas benchmarks remain at elevated levels. T1 marked an inflection point for average quarterly global gas prices, as J-CAM surpassed TTF for the first time since Russia invaded Ukraine last year. Chenier's value proposition, built on market-leading reliability, is of course further enhanced by a stable and affordable commodity. In the U.S., in March, the Henry Hub front-month contract price fell below $2 on MMBTU for the first time since September of 2020. Henry Hub averaged approximately $3.40 in Q1, and the front-month contract is now trading in the mid-$2 per MMBTU. Following the elevated pricing in North American gas markets last year, a production response led to a more normalized pricing environment, underscoring the abundance and relative affordability of Gulf Coast LNG. Now let's turn to slide 9 to address current European dynamics in some more detail. Europe has closed out this winter with gas inventories at or near the high end of its five-year range, thanks in part to record mild weather and, of course, sustained LNG flows. LNG imports remained robust, increasing 8% year over year, despite labor strike activity affecting several French terminals in March. U.S. exports to Europe increased approximately 4% year on year in Q1 and about 15% quarter over quarter. The addition of five FSRUs over the past few months across the Netherlands, Germany, and Finland helped increase LNG import capacity and reduce locational price spreads. However, mild weather coupled with significant demand reduction efforts by European consumers resulted in a 12% year-on-year decline in gas demand in Europe's key gas markets in Q1. Gas burn in the power market remained suppressed in Q1, down 15% year-on-year, although elevated coal and emissions pricing could present opportunities for fuel switching. As mentioned, with storage levels above the five-year average this year, Europe is positioned well as it looks to replenish supplies ahead of the 2023-24 winter season. While further reductions in Russian piped gas remain a risk, much of this volume was already lost in the demand response last year. Nevertheless, despite the European market's advantaged position coming out of the second warmest winter on record, The shortfall in Russian supply should remain an ongoing challenge for the global balance until new supply is dispatched. Longer term, forecasts indicate European LNG imports will remain stable at elevated levels despite net zero rhetoric and policy-induced pressure on the demand outlook for European gas. Leading LNG consultants predict that LNG demand in Europe will increase through the end of the decade before stabilizing above the 100 million ton level through 2040 and possibly beyond. Let's now turn to slide 10 to discuss Asia. Demand in Asia remains stable with overall LNG flows flat relative to Q1 last year and up 4% quarter on quarter. The demand decline observed over the last year in certain key Asian markets, India, Pakistan, Bangladesh, and China, to name a few, has narrowed considerably as spot prices continue to moderate this quarter. Demand response in these price sensitive markets, especially with further moderation in prices, normalized weather, and a pickup in economic activity will be a key determinant of market tightness in the medium term. As shown in the middle chart, Korea's imports were up 7% in Q1 due to nuclear maintenance, curtailed coal burn, and LNG inventory replenishment. However, elevated storage levels and the expected startup of a new 1.3 gigawatt nuclear plant in Q4 could impact spot buying from Korea in the upcoming months. In Taiwan, imports rose 4% in Q1, driven by reduced coal-fired generation during the winter and the decommissioning of a nuclear reactor in March. Thailand also grew imports 7% in Q1 in order to cover declines in both domestic output and pipeline imports from Myanmar. In contrast, LNG imports in Japan remained weak amid high inventory levels and improved nuclear availability year on year. Nevertheless, lower Japanese imports and reduced demand in China and India balanced the gains in Korea and other parts of Asia. In China, Q1 LNG imports were down 3%, or half a million tons year on year, but we have observed some green shoots in leading indicators for demand growth as economic activity continues to pick up post-lockdowns. With GDP expanding 4.5% year on year in the first quarter, China's gas demand grew 5.6% year on year in March, and LNG imports rose 14% year-on-year in March, marking the first positive increase in over a year. A potential increase in industrial gas demand from a 56% month-on-month rise in new home sales could provide further tailwinds for LNG demand later this year. Despite the recent weakness in Chinese LNG consumption, we believe China's long-term fundamentals remain strong, and the nation is on track to become the first 100 million ton LNG market before the end of the decade. China's significant investment in natural gas infrastructure, from pipelines to regas terminals to gas-fired power generation capacity, coupled with its active role in the long-term contracting market, has demonstrated the region's commitment to natural gas as a long-term solution. As we've discussed before, we expect the immense economic growth and energy evolution forecasted for the Asia region to underpin decades of growth in LNG demand. driving the need for substantial investment in new liquefaction capacity. The over 20-year SPA, recently signed with an investment-grade Asian buyer that Jack mentioned, is linked to the SPL expansion project and further evidences the global need for long-term reliable gas supply. The SPL expansion project is a major source of prospective new LNG supply, and we look forward to building on this commercial momentum, developing the project according to our high standards, and ultimately enhance Chenier's capabilities to provide the market with reliable, flexible, and cleaner burning LNG supply for decades to come. With that, I'll turn the call over to Zach to review our financial results and guidance.