Cheniere Energy, Inc.

Stand by, we're about to begin. Good day and welcome to the Chenier Energy Third Quarter 2023 Earnings Call and Webcast. Today's conference is being recorded. At this time, I'd like to turn the conference over to Randy Batia. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Chenier's Third 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 the Chenier Senior Management Team. 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 in 2023 guidance. After prepared remarks, we will open the call for Q&A. We'll now turn the call over to Jack Fusco, Chenier's president and CEO.

Thank you, Randy. And good morning, everyone. Thanks for joining us today as we review our third quarter results in approved full year 2023 outlook. Before we get started, I would like to acknowledge the tragedies of war taking place around the world. Our thoughts and prayers are with those whose lives have been and continue to be impacted by these devastating and heartbreaking events. These events are contributing to disruption, risk, uncertainty, and volatility in the energy markets around the world. International gas supply sources and the critical infrastructure enabling cross-border trade have become focal points with risk to this supply and its access increasingly reflected in price and volatility across international gas benchmarks in recent weeks. As the operator of the second largest LNG platform in the world, stable and reliable operations at our facilities have arguably never been more critical than it is today. As you all know, ensuring stable and reliable operations at our facilities with safety as a foundation has been my central focus since becoming CEO in 2016. When I joined Cheniere, I'd just begun LNG operations, producing its first LNG cargo that February. Today, we produce about two cargoes every single day. And during the third quarter, we produced our 3,000th cargo of LNG. becoming the fastest LNG producer in history to achieve that milestone. I'm extremely proud of the work we do at Chenier. As a result of that work, we're providing tangible benefits in the lives of millions of people around the world. Our customers can take comfort knowing that my focus and the focus of my approximately 1,600 Chenier colleagues remains on maintaining best-in-class operations to help ensure energy security for our 30 plus customers throughout five continents. Turn now to slide five, where I'll review key operational and financial highlights from the third quarter of 2023, as well as cover another long term SBA we announced this morning. We achieved successes across the Chenier platform during the third quarter, generating consolidated adjusted EBITDA of approximately $1.7 billion, Distributable cash flow of approximately $1.2 billion and net income of approximately $1.7 billion. We exported a total of 152 cargoes, an increase relative to the second quarter as we had lower maintenance in the third quarter. As I just mentioned, we also produced our 3,000th cargo during the quarter and maintained our perfect track record of foundation customer cargo deliveries. These operational milestones are a tremendous source of pride for Chenier and serve to further distance our reputation from the competition. Looking ahead to the balance of 2023, our forecast has improved slightly. And while we aren't raising our full year guidance today, we're currently tracking to the high end of the $8.3 to $8.8 billion of consolidated adjusted EBITDA and $5.8 to $6.3 billion of DCF ranges. The improvement to our outlook is mainly driven by portfolio optimization activities, the timing of some expenses to a lesser extent from higher marketing margins than previously forecasted. Zach will provide more color on the guidance, but we have excellent visibility into the balance of the year and are confident in our ability to finish the year at the high end of the ranges. On the commercial front, Anatol and his team continue to build momentum for the SPL expansion project. As we signed a long-term contract with BASF in August, early volumes under the offtake agreement will begin in 2026, ramping to the full 0.8 million tons with commercial start of the first train seven of the SPL expansion project and extending until 2043. This contract illustrates the rapid evolution of LNG into Europe. as it's a long-term contract executed directly with an industrial consumer in Germany, which only a year ago didn't have a single LNG import terminal. And I hope you saw earlier this morning, we announced our second 20-year agreement with Forint, building upon the SBA we executed with it in late 2021 that commenced earlier this year. Of the almost 6 million tons of long-term offtake executed year-to-date, over 75% of that annual total is contracted with repeat customers who clearly value their long-term partnership with Chenier, testament to the reputation and trust we have earned with our long-term customers. This foreign contract is for approximately 0.9 million tons, will extend until 2050, and notably marks the first SBA tied to the second train of the SPL expansion, Train 8, as commercialization on the first train has effectively been completed. We are extremely excited about the market's response to the SPL expansion project and demand for additional capacity from Chenier. Since announcing the project in February, we have signed nearly 6 million tons per annum of long-term contracts in support of the project. and our best-in-class long-term contracted portfolio, all with investment-grade counterparties. And I'm confident we have more to do this year. As always, we remain laser-focused on developing that project to meet or exceed our disciplined capital investment parameters in order to deliver the world-class contracted infrastructure returns our shareholders are accustomed to. While on the topic of returns, Zach and his team continue to progress on our comprehensive 2020 vision capital allocation plan. During the third quarter, we paid down another $50 million of long-term debt. We bought back approximately 2.2 million shares for $357 million, and we increased our quarterly dividend by 10% to 43.5 cents for the third quarter. On stage three, we continue to equity fund that project, investing over $300 million during the quarter, with a total of over $2.5 billion invested to date. Speaking of Stage 3, now turn to Slide 6, where I'm pleased to provide an update on the accelerated progress we are seeing. Since activities on the project moved more heavily into the construction phase a few quarters ago, We've indicated that certain of these construction activities were taking place ahead of plan, as we are now over 44% complete overall across engineering, procurement, and construction. While we remain in single digits in terms of percentage completion on construction for the overall project, it's becoming increasingly clear that the project is tracking months ahead of the guaranteed schedule. I'm optimistic we'll be commissioning on train one with first LNG production by the end of 2024. Forecast all seven trains to achieve substantial completion by the end of 2026. We're extremely excited about the progress Bechtel is making on stage three. We look forward to maintaining accelerating progress in order to again deliver LNG to the market well ahead of schedule, increasing our operating capacity, Again, starting in 2025. On the earnings call in August, I mentioned State 3 was beginning to take shape as the first structural steel was erected and our Train 1 coal boxes had arrived on site. One can certainly appreciate the progress that's been made since then from the photos on this slide. All Train 1 coal boxes have been set in place. Structural steel installation is advancing. and piping and electrical installation has commenced. With the excellent progress made to date, headcount of over 1,500 personnel on site each day, and the one team culture firmly established between Chenier and Bechtel, I'm confident in the team's ability to maintain focus, continue on the accelerated schedule to deliver Corpus Christi Stage 3 safely and ahead of schedule. With that, I'll hand it over to Anatole to discuss the LNG market. Thank you again for your continued support of Cheniere.