US liquefied natural gas producer Cheniere posted $1.7 billion in net profits in the third quarter of the year, reversing a multibillion-dollar loss recorded for the same period last year, with chief executive Jack Frusco stressing that “persistent volatility” in LNG market markets has supported performance.
Cheniere’s net profit for the June-September period compares with a loss of $2.4 billion in the third quarter of 2022.
This was despite revenues in the third quarter this year, at $4.2 billion, were less than half what they were at this time last year ($8.9 billion).
Cheniere shipped 152 cargoes of LNG in the quarter, only four less than it did last year, with total volumes also quite flat (-2%) at 545 trillion British thermal units.
“Persistent volatility in commodity markets continues to reinforce the value of our commercial offering and the stability and visibility of our cash flows, and we are confident in achieving full year 2023 results at the high end of our guidance ranges,” said Frusco in a statement following the release of the results.
Bearish prices
The company said it has been hedging extensively to counter the negative effect of bearish spot gas prices affecting LNG realised margins, especially relating to its long term agreements.
This has led to non-cash favourable changes in fair value of $1.2 billion, contributing to the net income performance this quarter.
The company expects full year adjusted Ebitda towards the upper end of the guidance, between $8.3 billion and $8.8 billion, with distributable cashflow between $5.8 billion and $6.3 billion.
Cheniere has been busy allocating future production volumes to a number of international clients over the past months, in a series of long-term contracts.
In August, Cheniere struck a 28-year supply deal with chemical company BASF with about 1 million tonnes per annum of LNG.
Earlier this summer, it entered into a 20-year supply contract with Chinese private energy company ENN, initially for 900,000 tonnes and increasing to 1.8 million tpa.
And last June, Cheniere and Equinor agreed to double the LNG volumes the Norwegian major had contracted with the US producer, signing a new 15-year deal covering 1.75 million tpa.
Expansion plans
Cheniere currently operates six liquefaction trains at the Sabine Pass LNG terminal in Louisiana, with a capacity of some 30 million tpa.
It also operates three trains at Corpus Christi LNG in Texas, totalling 15 million tpa.
The company is running two separate expansion plans, at Corpus Christi and Sabine Pass.
At the Texas site, Cheniere is currently building seven new liquefaction trains, which would add 10 million tpa of liquefaction capacity once complete.
“Construction on Corpus Christi Stage 3 continues to progress ahead of plan, and I am optimistic first LNG production from Train 1 will occur by the end of 2024,” said Frusco.
At Sabine Pass, the company is assessing the viability of a further expansion that could add over 20 million tpa of additional capacity. Partners in the projects started the regulatory process with the Federal Energy Regulatory Commission (FERC) in May this year.
