Business Wire | Aug 6, 2020 07:30AM EDT

Cheniere Partners Reports Second Quarter 2020 Results and Reconfirms Full Year 2020 Distribution Guidance

Aug. 06, 2020

HOUSTON--(BUSINESS WIRE)--Aug. 06, 2020--Cheniere Energy Partners, L.P. (NYSE American: CQP):

Summary of Second Quarter 2020 Results (in millions, except LNG data)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Revenues $ 1,470 $ 1,705 $ 3,188 $ 3,454

Net income $ 406 $ 232 $ 841 $ 617

Adjusted EBITDA^1 $ 846 $ 591 $ 1,638 $ 1,198

LNG exported:

Number of cargoes 58 85 150 162

Volumes (TBtu) 205 301 530 576

LNG volumes loaded (TBtu) 207 305 534 578

Summary Full Year 2020 DistributionGuidance

2020

Distribution per Unit $ 2.55 - $ 2.65

Recent Highlights

Operational

* As of July 31, 2020, more than 1,025 cumulative LNG cargoes totaling over 70 million tonnes of LNG have been produced, loaded, and exported from the SPL Project (defined below).

Financial

* In May 2020, Sabine Pass Liquefaction, LLC ("SPL") issued an aggregate principal amount of $2.0 billion of 4.500% Senior Secured Notes due 2030. Net proceeds of the offering, along with cash on hand, were used to redeem all of SPL's outstanding 5.625% Senior Secured Notes due 2021.

Liquefaction Project Update

SPL Project

Train 6

Project Status Under Construction

Project Completion Percentage ^(1) 63.9% ^(2)

Expected Substantial Completion 2H 2022

Note: Project update excludes Trains in operation

(1) Project completion percentage as of June 30, 2020

(2) Engineering 96.5% complete, procurement 91.1% complete, and construction25.3% complete

Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE American: CQP) reported net income of $406 million and $841 million, respectively, for the three and six months ended June 30, 2020 compared to $232 million and $617 million for the comparable 2019 periods. The increases in net income for the three and six months ended June 30, 2020 were primarily due to increased total margins2 and decreased costs related to certain maintenance and related activities at the SPL Project which occurred in the 2019 periods, partially offset by increased loss on modification or extinguishment of debt and costs incurred in response to the COVID-19 pandemic. The increase in net income for the six months ended June 30, 2020 was further partially offset by increased interest expense and increased operating and maintenance expenses primarily related to additional Trains in operation.

Total margins increased during the three and six months ended June 30, 2020 primarily due to accelerated revenues recognized from LNG cargoes for which customers have notified us that they will not take delivery and an increase in margins per MMBtu of LNG delivered to customers and recognized in income, partially offset by a decrease in volumes of LNG recognized in income primarily due to cargoes for which long-term customers have not elected delivery. During the six months ended June 30, 2020, the increase in total margin was further partially offset by a decrease in net gains from changes in fair value of commodity derivatives. Margins per MMBtu of LNG delivered to customers and recognized in income increased during the three and six months ended June 30, 2020 primarily due to a higher proportion of total volumes sold under higher-margin long-term contracts, partially offset by a decrease in market pricing for short-term cargoes sold.

Adjusted EBITDA1 was $846 million for the three months ended June 30, 2020, compared to $591 million for the comparable 2019 period, and $1.64 billion for the six months ended June 30, 2020, compared to $1.20 billion for the comparable 2019 period. The increases in Adjusted EBITDA during the three and six months ended June 30, 2020 were primarily due to accelerated revenues recognized from LNG cargoes for which customers have notified us that they will not take delivery and an increase in margins per MMBtu of LNG delivered to customers and recognized in income as detailed above, partially offset by a decrease in volumes of LNG recognized in income primarily due to cargoes for which long-term customers have not elected delivery and costs incurred in response to the COVID-19 pandemic.

During the three and six months ended June 30, 2020, we recognized $388 million and $404 million, respectively, in revenues recognized from LNG cargoes for which customers have notified us that they will not take delivery, of which $244 million would have otherwise been recognized subsequent to June 30, 2020, if the cargoes were lifted pursuant to the delivery schedules with the customers. LNG revenues during the three months ended June 30, 2020 excluded $16 million that would have otherwise been recognized during the quarter if the cargoes were lifted pursuant to the delivery schedules with the customers, as these revenues were recognized during the three months ended March 31, 2020. Excluding the $244 million impact of cargo cancellations related to periods subsequent to June 30, 2020 and those received in prior periods for the current periods, our total revenues would have been $1.24 billion and $2.94 billion for the three and six months ended June 30, 2020, respectively.

During the three and six months ended June 30, 2020, 58 and 150 LNG cargoes, respectively, were exported from the SPL Project, none of which were commissioning cargoes.

Cargo Cancellation Revenue Summary

The following table summarizes the timing impacts of revenue recognition related to cargoes for which customers elected to not take delivery on our revenues for the three and six months ended June 30, 2020 (in millions):

Three Six Months Months

Ended Ended

June 30, June 30, 2020 2020

Total revenues $ 1,470 $ 3,188

Impact of cargo cancellations recognized in the prior 16 - period for deliveries scheduled in the current period

Impact of cargo cancellations recognized in the current (244 ) (244 )period for deliveries scheduled in subsequent periods

Total revenues excluding the timing impact of cargo $ 1,242 $ 2,944 cancellations

SPL Project

We operate five natural gas liquefaction Trains and are constructing one additional Train for a total production capacity of approximately 30 million tonnes per annum ("mtpa") of LNG at the Sabine Pass LNG terminal (the "SPL Project").

Distributions to Unitholders

We will pay a cash distribution per common and subordinated unit of $0.645 to unitholders of record as of August 7, 2020 and the related general partner distribution on August 14, 2020. The payment of such distribution will result in the conversion of the subordinated units into common units on a one-for-one basis on August 17, 2020.

Investor Conference Call and Webcast

Cheniere Energy, Inc. will host a conference call to discuss its financial and operating results for the second quarter 2020 on Thursday, August 6, 2020, at 11 a.m. Eastern time / 10 a.m. Central time. A listen-only webcast of the call and an accompanying slide presentation may be accessed through our website at www.cheniere.com. Following the call, an archived recording will be made available on our website. The call and accompanying slide presentation may include financial and operating results or other information regarding Cheniere Partners.



^1 Non-GAAP financial measure. See "Reconciliation of Non-GAAP Measures" for further details

^2 Total margins as used herein refers to total revenues less cost of sales.

About Cheniere Partners

Cheniere Partners is developing, constructing and operating natural gas liquefaction facilities at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast. Cheniere Partners is currently operating five natural gas liquefaction Trains and is constructing one additional Train for a total production capacity of approximately 30 mtpa of LNG at the Sabine Pass terminal. The Sabine Pass LNG terminal has operational regasification facilities that include five LNG storage tanks, two marine berths and vaporizers and an additional marine berth that is under construction. Cheniere Partners also owns the Creole Trail Pipeline, a 94-mile pipeline that interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines.

For additional information, please refer to the Cheniere Partners website at www.cheniere.com and Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the Securities and Exchange Commission.

Forward-Looking Statements

This press release contains certain statements that may include "forward-looking statements." All statements, other than statements of historical or present facts or conditions, included herein are "forward-looking statements." Included among "forward-looking statements" are, among other things, (i) statements regarding Cheniere Partners' financial and operational guidance, business strategy, plans and objectives, including the development, construction and operation of liquefaction facilities, (ii) statements regarding expectations regarding regulatory authorizations and approvals, (iii) statements expressing beliefs and expectations regarding the development of Cheniere Partners' LNG terminal and liquefaction business, (iv) statements regarding the business operations and prospects of third parties, (v) statements regarding potential financing arrangements, (vi) statements regarding future discussions and entry into contracts, and (vii) statements regarding the COVID-19 pandemic and its impact on our business and operating results. Although Cheniere Partners believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Cheniere Partners' actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Cheniere Partners' periodic reports that are filed with and available from the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Cheniere Partners does not assume a duty to update these forward-looking statements.

(Financial Tables Follow)

Cheniere Energy Partners, L.P.

Consolidated Statements of Income

(in millions, except per unit data)^(1)

(unaudited)

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

Revenues

LNG revenues $ 1,332 $ 1,171 $ 2,781 $ 2,538

LNG revenues-affiliate 61 455 249 760

Regasification revenues 68 67 135 133

Other revenues 9 12 23 23

Total revenues 1,470 1,705 3,188 3,454



Operating costs and expenses

Cost of sales (excluding items 398 880 1,097 1,759 shown separately below)

Cost of sales-affiliate 5 - 5 -

Operating and maintenance 165 162 317 300 expense

Operating and maintenance 48 37 81 66 expense-affiliate

General and administrative 8 3 10 6 expense

General and administrative 24 27 49 48 expense-affiliate

Depreciation and amortization 138 138 276 252 expense

Impairment expense and loss on - 3 5 5 disposal of assets

Total operating costs and 786 1,250 1,840 2,436 expenses



Income from operations 684 455 1,348 1,018



Other income (expense)

Interest expense, net of (236 ) (230 ) (470 ) (417 )capitalized interest

Loss on modification or (42 ) - (43 ) - extinguishment of debt

Other income, net - 7 6 16

Total other expense (278 ) (223 ) (507 ) (401 )



Net income $ 406 $ 232 $ 841 $ 617



Basic and diluted net income per $ 0.78 $ 0.44 $ 1.62 $ 1.19 common unit



Weighted average number ofcommon units outstanding used 348.6 348.6 348.6 348.6 for basic and diluted net incomeper common unit calculation



Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on(1) Form 10-Q for the quarter ended June 30, 2020, filed with the Securities and Exchange Commission.

Cheniere Energy Partners, L.P.

Consolidated Balance Sheets

(in millions, except unit data) ^(1)

June 30, December 31,

2020 2019

ASSETS (unaudited)

Current assets

Cash and cash equivalents $ 1,341 $ 1,781

Restricted cash 167 181

Accounts and other receivables, net 291 297

Accounts receivable-affiliate 2 105

Advances to affiliate 140 158

Inventory 101 116

Derivative assets 20 17

Other current assets 100 51

Other current assets-affiliate 1 1

Total current assets 2,163 2,707



Property, plant and equipment, net 16,584 16,368

Operating lease assets, net 97 94

Debt issuance costs, net 19 15

Non-current derivative assets 37 32

Other non-current assets, net 157 168

Total assets $ 19,057 $ 19,384



LIABILITIES AND PARTNERS' EQUITY

Current liabilities

Accounts payable $ 12 $ 40

Accrued liabilities 410 709

Due to affiliates 36 46

Deferred revenue 22 155

Deferred revenue-affiliate - 1

Current operating lease liabilities 7 6

Derivative liabilities 6 9

Total current liabilities 493 966



Long-term debt, net 17,566 17,579

Non-current operating lease liabilities 90 87

Non-current derivative liabilities 1 16

Other non-current liabilities 1 1

Other non-current liabilities-affiliate 18 20



Partners' equity

Common unitholders' interest (348.6 million unitsissued and outstanding at June 30, 2020 and December 1,943 1,792 31, 2019)

Subordinated unitholders' interest (135.4 millionunits issued and outstanding at June 30, 2020 and (937 ) (996 )December 31, 2019)

General partner's interest (2% interest with 9.9million units issued and outstanding at June 30, 2020 (118 ) (81 )and December 31, 2019)

Total partners' equity 888 715

Total liabilities and partners' equity $ 19,057 $ 19,384



Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on(1) Form 10-Q for the quarter ended June 30, 2020, filed with the Securities and Exchange Commission.

Reconciliation of Non-GAAP Measures

Regulation G Reconciliation

In addition to disclosing financial results in accordance with U.S. GAAP, the accompanying news release contains a non-GAAP financial measure. Adjusted EBITDA is a non-GAAP financial measure that is used to facilitate comparisons of operating performance across periods. This non-GAAP measure should be viewed as a supplement to and not a substitute for our U.S. GAAP measures of performance and the financial results calculated in accordance with U.S. GAAP, and the reconciliation from these results should be carefully evaluated.

Adjusted EBITDA is calculated by taking net income before interest expense, net of capitalized interest, changes in the fair value and settlement of our interest rate derivatives, taxes, depreciation and amortization, and adjusting for the effects of certain non-cash items, other non-operating income or expense items and other items not otherwise predictive or indicative of ongoing operating performance, including the effects of modification or extinguishment of debt, changes in the fair value of our commodity derivatives, impairment expense and loss on disposal of assets, and non-recurring costs related to our response to the COVID-19 outbreak which are incremental to and separable from normal operations. Adjusted EBITDA is not intended to represent cash flows from operations or net income as defined by U.S. GAAP and is not necessarily comparable to similarly titled measures reported by other companies.

We believe Adjusted EBITDA provides relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operating performance in a manner that is consistent with management's evaluation of business performance. Management believes Adjusted EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, depreciation and amortization which vary substantially from company to company depending on capital structure, the method by which assets were acquired and depreciation policies. Further, the exclusion of certain non-cash items, other non-operating income or expense items and other items not otherwise predictive or indicative of ongoing operating performance enables comparability to prior period performance and trend analysis.

Adjusted EBITDA

The following table reconciles our Adjusted EBITDA to U.S. GAAP results for the three and six months ended June 30, 2020 and 2019 (in millions):

Three Months Six Months Ended Ended

June 30, June 30,

2020 2019 2020 2019

Net income $ 406 $ 232 $ 841 $ 617

Interest expense, net of capitalized 236 230 470 417 interest

Loss on modification or 42 - 43 - extinguishment of debt

Other income, net - (7 ) (6 ) (16 )

Income from operations $ 684 $ 455 $ 1,348 $ 1,018

Adjustments to reconcile income from operations to Adjusted EBITDA:

Depreciation and amortization 138 138 276 252 expense

Gain from changes in fair value of (9 ) (5 ) (26 ) (77 )commodity derivatives, net

Impairment expense and loss on - 3 5 5 disposal of assets

Incremental costs associated with 33 - 35 - COVID-19 response

Adjusted EBITDA $ 846 $ 591 $ 1,638 $ 1,198

View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005162/en/

CONTACT: Cheniere Energy Partners, L.P. Investors Randy Bhatia, 713-375-5479 Megan Light, 713-375-5492 or Media Relations Eben Burnham-Snyder, 713-375-5764 Jenna Palfrey, 713-375-5491