Cheniere Energy, Inc.

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 two 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 to Q&A. I now turn the call over to Jack Fusco, Chenier's President and CEO.

Thank you, Randy. Good morning, everyone, and thanks for joining us today as we review our second quarter results in improved full-year 2023 outlook. Following a record-breaking year for the LNG industry, activity levels, particularly in the U.S., remain elevated with significant commercial momentum and multiple projects having reached FID this year as energy consumers worldwide looked at secure, cost-competitive, reliable natural gas supply in pursuit of achieving evolving energy, economic, and environmental policies and goals. Such activity confirms liquefied natural gas as a preferred clean energy solution, underscoring its critical long-term role in the global energy mix. Recently, the short-term global gas benchmarks have been volatile as markets try to adjust to a multitude of factors like weather, storage, and economic growth that drive all commodity businesses. With over 150 million tons under construction globally and expected to come online over this decade, we expect pockets of volatility in the future as the market adjusts and absorbs this new supply. Cheniere is built to thrive in this volatility. As a highly contracted nature of our cash flow profile ensures visibility in our returns while maintaining some exposure to the upside, when markets dislocate, like they did last year. At Chenier, our focus is centered on the long-term fundamentals for natural gas worldwide, and today those fundamentals remain as strong as ever. With the global LNG market expected to nearly double by 2040, hundreds of millions of tons of new LNG capacity will need to be developed to meet this demand. And our platform is ideally set up to enable us to creatively capture our fair share please turn to slide five where i will review key operational financial highlights from the second quarter 2023 and introduce our upwardly revised full year financial guidance the second quarter was once again highlighted by excellent performance across the chenier platform first and foremost a relentless focus on operational excellence continues to set us apart and the successful completion of our planned maintenance at both Sabine Pass and Corpus Christi during the quarter further reinforces our execution capabilities and our stellar operating reputation that our long-term customers expect and appreciate. Also during the quarter, our commercial momentum on the SPL expansion project accelerated with three new long-term SBAs in support of that project. And on project execution, Bechtel continues to progress Corpus Christi Stage 3, well ahead of schedule, increasing my optimism for that project being completed ahead of the guaranteed dates. We generated consolidated adjusted EBITDA of approximately $1.9 billion in the second quarter, distributable cash flow of approximately $1.4 billion, and net income of approximately $1.4 billion. These outstanding financial results are the product of our safe, stable and reliable operations at our facilities. Those operations resulted in the export of 149 cargoes in the second quarter, down from the record levels we've set in recent quarters due to the planned maintenance that was performed. And I'll review the major turnaround at Sabine Pass in more detail in a minute. Looking ahead to the balance of 2023, Our forecast has improved slightly. Today we are raising our full year guidance ranges by $100 million to 8.3 to 8.8 billion of consolidated adjusted EBITDA and 5.8 to 6.3 billion of DCF. The increase is mainly driven by the release of the remaining few cargoes that have been reserved for origination this year, as well as some optimization and subchartering activity. Zach will provide more color on the guidance but we have excellent visibility into the balance of the year and we're confident in our ability to finish the year within these new ranges. During the second quarter, Zach and his team continued to progress in our comprehensive capital allocation plan. We paid down another 200 plus million of long-term debt. We bought back over 2 million shares for 337 million and we paid our quarterly dividend of 39 and a half cents. In addition, We opportunistically refinance our next debt maturity, enabling further financial flexibility and doing so in a cost-efficient manner. On Stage 3, we continue to equity fund that project, investing approximately $200 million during the quarter and over $2 billion to date. As I mentioned on the last earnings call, certain construction activities on Stage 3 are taking place ahead of plan, and I remain optimistic. and schedule out performance and potentially having more LNG volumes in 2025 and possibly the entire 7 train project complete by the end of 2026. Stage three is over 38% complete and the construction activities continue to ramp up as we now have nearly 1000 personnel on site. Back during the second quarter, the first structural still was erected, an important milestone for stage three as construction activities and the project begins to take shape. Anatole and his team were also extremely busy in the second quarter as we signed three new long-term SPAs, which are expected to support the SPL expansion project. The SPAs are with Korea Southern Power and repeat customers Equinor and E&N, and represent a mix of FOB and DES terms. The SPAs aggregate to just under 4 million tons per annum, each with a certain amount of volume tied to an FID of the first train of the SBL expansion project. While it is early, the diversity of this growing credit-worthy contract portfolio speaks to not only the strength and the long-term fundamentals of the LNG market, but also the value the LNG market places on Chenier specifically. Turn now to slide six. You might recall last year we sanctioned Corpus Christi Stage 3 with a diverse portfolio of FOB, DES, and IPM contracts signed with customers from Asia to Europe to North America, featuring utility end users and portfolio players alike. Our customer portfolio is a result of continuous commercial innovation and a customer-focused strategy that prioritizes collaboration and tailored energy solutions for our customers. We expect the contract portfolio on the SPL expansion project to reflect similar diversity. In our early progress with COSPO, Equinor, and E&N, all investment-grade counterparties certainly support that. We are extremely excited about the commercial momentum we have gained on the SPL expansion project in such a short time, and I'm optimistic there's more long-term business to do in support of the project this year. We look forward to continuing to build on the contract portfolio that features the breadth, depth, and scale that sets us apart from the competition. Turn now to slide seven. I'll provide some details around the major maintenance turnaround we completed on Sabine Pass Trains 1 and 2 during the quarter. This was the largest maintenance turnaround we have completed yet at Chenier. And first and foremost, I'm proud to say the event was completed successfully, on schedule, and most importantly, with zero recordable or lost time injuries. The turnaround was successful not only in terms of the important maintenance work executed on Trains 1 and 2, but also as it provides a foundation and some significant lessons learned as we conduct planning for future large-scale maintenance turnarounds. During the month of June, Trains 1 and 2 at SBO were offline for about 25 days. In approximately a 25-day span, We had an incremental approximate 1400 personnel on site at Sabine Pass. Those personnel completed approximately 10,000 total tasks across 2000 work orders, with all of that work requiring over 2250 permits to be issued. To have an effort like that completed in under four weeks speaks to the enormous amount of planning and preparation ahead of time. as well as an excellent execution and coordination throughout the event. I'd like to recognize all those involved, especially our Chenier personnel and our longtime equipment partners at Baker Hughes for delivering outstanding results and further reinforcing Chenier's reputation for successful execution and demonstrating our safety first culture from start to finish. The success of this major turnaround provides enormous benefits to Cheniere as well as our customers as we will use our experiences to inform maintenance planning in the future as well as with the goal of remaining a world-class operator in the eyes of the LNG industry, employees and stakeholders alike. Stable and reliable operations have never been more critical as energy security concerns have become a significant priority around the world and our dependable operations continue to grow as a distinct competitive advantage. Last month at the LNG 2023 Industry Conference in Vancouver, energy security and reliable LNG operations were primary themes in the hallways and in the presentations on the main stage. I was proud to hear many of our long-term customers acknowledge and thank Cheniere specifically for being such a reliable and responsible LNG supplier. The value of that track record is clearly being demonstrated, evidenced by not only the financial results and guidance we reported this morning, but also by the 4 million tons per annum of contracts we signed this quarter. We will continue to press this and our many other competitive advantages as we commercialize additional capacity on the Sabine Pass expansion project. On that note, I'll hand it over to Anatole to further address the LNG market and our commercial strategy. Thank you all again for your continued support of Chenier.

Thanks, Jack, and good morning, everyone. Throughout the second quarter, international gas benchmarks continued to moderate, briefly returning to single-digit territory as global inventory levels reached historic highs amid mild weather and tepid macroeconomic activity in most of the key demand centers. Although the extreme prices and volatility of 22 appear to be in the rearview mirror, prices remain above historical norms, and the market continues to react to news of any potential disruption. June CTF contract settled at $7.75 in MMBTU, the lowest monthly settlement since April of 21, but ticked higher more recently, settling July at $11.30 due to extended maintenance in Norway. Similarly, J-CAM delivery prices dropped from about $14 in MIBTU for April to settle around $9.60 an M for July and back up around $11.90 in MIBTU for August, thanks to cooling demand load, LNG outages, and summer maintenance. In the U.S., mild weather and production growth kept Henry Hub prices below $3 an M during the quarter, incentivizing coal-to-gas switching, which, along with lower renewables generation and coal retirement, has significantly increased power sector demand, helping balance the market. Strong summer cooling demand, along with the return of LNG facilities for maintenance, has provided modest support to prices, with the August contract settling just below $2.50 an hour. While concerns about near-term market tightness have moderated amid softened near-term fundamentals and continued uncertainty around the pace of China's recovery, we still view the market to be structurally tight and delicately balanced over the next few years as very limited new supply is set to enter the market globally, leaving further potential for upside risks going forward. With that in mind, let's now turn to slide nine to address regional dynamics in more detail, starting with Europe. During the second quarter, Europe's LNG imports continued to grow year on year despite ongoing efforts to reduce gas consumption. LNG flows to Europe grew 9% year on year, or 2.7 million tons for the second quarter, on the back of strong U.S. flows in April and May. June imports were relatively flat, driving TTF prices near pre-crisis levels before ticking up again on news of an extended outage of Hammerfest LNG and other gas processing facilities. Reduced gas consumption coupled with elevated storage levels at the top of the five-year range continued to weigh on the European market with data from the IEA suggesting the total European gas demand fell by more than 30 BCM in the first half of 23. Total electricity generation has declined considerably, falling 9% in the first half of 23 relative to historic averages, largely as a result of the Russian-Ukraine war and slower economic growth throughout the region. This decline, coupled with notable gains in renewable power generation, resulted in lower demand for thermal generation, further contributing to the decline in total gas consumption. However, we started to see a deceleration of these trends in the second quarter as gas burn economics improved. Once overall energy demand levels are gradually restored in Europe, we expect natural gas to regain its share in the supply stack and maintain its critical role in Europe's power mix. Furthermore, the coal, lignite, and nuclear baseload capacity retirements currently underway in Germany and other European countries should increase demand for gas capacity to maintain grid reliability and flexibility in the power supply stack amid increasing renewable capacity. Let's now turn to slide 10 to discuss Asia. While LNG demand across Asia has remained largely subdued year to date, increased imports in China, South and Southeast Asia during the quarter were offset by further demand decline in Japan, with only 14 million tons of LNG imported by the country in the second quarter, representing an 18% decline year on year. In fact, May registered the lowest import levels in Japan in 15 years as consumers were incentivized to conserve energy amid electricity rate hikes. Additionally, nuclear availability impacted gas demand in the power sector. We expect this trend to continue as two additional nuclear reactors in Japan are scheduled to restart in the third quarter. Similarly, we expect to see nuclear pressures on LNG spot buying in Korea, too, where LNG imports were flat in Q2 with the startup of the 1.4 gigawatt Shin Hanul-1 nuclear plant last year and the expected startup of the similarly sized Shin Hanul-2 in the third quarter of this year. In India, imports during the quarter trended slightly higher compared to last year, increasing by about 4% year on year. Despite the further decline in JKM, prices remained too elevated during the quarter to elicit a meaningful response from price-sensitive South Asian buyers. Southeast Asian demand showed significant growth during the quarter as imports increased 31% year-on-year. Thailand, the main driver of the region's demand, grew imports 43%, or 1 million tons, in Q2 amid a heat wave that sent temperatures soaring. Southeast Asia is expected to be an important growth market in the future as it expands its import infrastructure. The region added a new market in the second quarter as the Philippines imported its first cargo in April. And just last month, Vietnam started commissioning its first regas terminal to service a new 1.5 gigawatt gas-fired power plant. In China, LNG imports picked up in the second quarter, increasing 20% year-on-year. A warm and dry summer triggered a rebound in spot buying activity as a persistent heat wave and low hydropower generation output increased demand for natural gas. China's hydropower dropped 28% year-on-year in the first half of 2023, helping boost electricity demand from other sources, including gas. In fact, during the quarter, overall gas demand grew 10% year-on-year, despite some macroeconomic headwinds in China. Let's now turn to slide 11 for some thoughts on the market for long-term contracting. Despite some of the near-term market dynamics discussed earlier pointing to potentially softened demand for LNG in the front of the curve, which, as Jack noted, we are largely insulated from, Over the last 12 to 18 months, we have witnessed record levels of long-term contracting, particularly for U.S. volumes, as the long-term trade outlook continues to call for further growth in LNG supply. In aggregate, the level of long-term Henry Hublink contracts signed in 22 alone far exceeded the total signed over the six preceding years combined, and the market looks to be on track to potentially repeat this level of contracting activity this year. As we previously discussed, we expect demand from China and other fast-growing Asian economies to underpin the next LNG supply wave, representing over 70% of the LNG demand growth through 2040. Asian demand, coupled with Europe's desire to replace Russian supply, has driven recent commercial activity. Although Asian customers and portfolio players have been the largest and most active buyers of long-term volumes globally over the past 18 months, European counterparts have certainly stepped up, signing contracts representing over 20 MTPA, of which 18 MTPA is tied to U.S. projects, or about a quarter of the total U.S. volumes signed since 2022. At Chenier, we have signed over 15 million tons of long-term contracts in just the last 18 months, 30% of which are expected to underpin our future growth at both Corpus and Sabine Pass. While mid-scale trains 8 and 9 are fully commercialized, The origination team is hard at work constructing the portfolio for the SPL expansion project. As Jack mentioned, our success to date has been a direct result of our resolute commitment to operational excellence and financial discipline across everything that we do. Our contract portfolio today is comprised of a diverse mix of contract structures with varying terms and tenors, all of which were signed with high-quality, credit-worthy, and geographically diverse counterparties, who value the flexibility and reliability of our product. In fact, several of our recently signed contracts were signed with repeat customers, PNN and Equinor most recently, but also EOG, Engie, and PetroChina last year, signaling the mutual commitment to quality we share with our long-term customers. As we continue to commercialize our growth projects, this commitment will remain steadfast. With that, I will turn the call over to Zach to review our financial results and guidance.