Cheniere Energy Inc 2026 Q2 Earnings Call

Good morning, everyone, welcome to Cheniere's second quarter 2026 earnings conference call. The slide presentation and access to the webcast for today's call are available at cheniere.com. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements, 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, a reconciliation of non-GAAP measures to the most comparable GAAP measure can be found in the presentation appendix. The call agenda is shown on slide three. After prepared remarks from Jack, Anatol, Zach, we will open the call for Q&A. I'll now turn the call over to Jack Fusco, Cheniere's Chairman, President, and CEO.

Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review our results from the second quarter of 2026 our further improved outlook for the full year. The LNG market in the second quarter continued to be defined by elevated volatility driven by the war in Iran and the resulting significant constraint on global LNG supply with the effective closure of the Strait of Hormuz. This market disruption is significant, not just for LNG, for many other commodities and products that benefit the world which transit the Strait en route to their respective end markets. We are hopeful for a timely and peaceful resolution continue to pray for the safety of those in harm's way. Without a doubt, this supply disruption has brought to sharp focus the necessity of energy security and diversity of supply amongst LNG buyers.

While in the immediate terms, buyers have been active in sourcing replacement LNG volumes, procuring alternative fuel sources, and implementing demand-side management initiatives, long-term security of supply and building a durable, reliable portfolio have been reinforced as a critical strategic priority our reputation as a customer-focused, safe, and reliable operator only further distinguish us from competitors. On my recent trips to Washington, I've met with Energy Secretary Wright, National Energy Dominance Council Chair Burgum, FERC Chairman Swett, among others. Our dialogue with Washington is extremely constructive, which is especially important amidst this volatile commodity market backdrop. We appreciate this administration's broad support for the U.S. LNG industry its growth. Our regulators and policy makers seek and value input from industry leaders like Cheniere, they are focused on supporting energy infrastructure projects like ours with a robust yet transparent regulatory and oversight regime so that the U.S. can continue to meaningfully contribute to the energy security priorities of customers and countries around the world.

I encourage you all to read the recently published LNG Impact Study led by Dan Yergin at S&P Global, which highlights the vast benefits and advantages of U.S. LNG, both at home and for our allies abroad.

To think that the first LNG cargo from the Lower 48 was exported just 10 years ago from our Sabine Pass facility, now U.S. LNG is on track to be the second highest value export product from our country, a $1 trillion contribution to our economy is an incredible story, we at Cheniere are proud to be at the forefront of this industry. Please turn to slide five, where I'll highlight our key results and accomplishments for the second quarter of 2026 and introduce our second upwardly revised guidance ranges for the full year. I'm pleased to report that our excellent performance in the first quarter across all facets of our business continued through the second quarter. We generated consolidated adjusted EBITDA of approximately $1.8 billion, distributable cash flow of approximately $1.2 billion, and net income of over $3 billion.

On the production side, we produced and exported 184 cargoes for 672 TBtu, a 20% increase over the same period last year. Our production and operations continued to outperform our forecast in the second quarter, thanks to the completion and accelerated start-up of additional trains at stage 3 and enhanced operational reliability during the quarter. Today, we're further increasing our full-year 2026 financial guidance to $7.9 billion-$8.4 billion of consolidated adjusted EBITDA and $5.3 billion-$5.8 billion of DCF. This is the second quarter in a row we are upwardly revising guidance, this quarter, the new low end of the guidance is above the previous high end for both EBITDA and DCF.

The primary drivers of the increase are a further improvement in our production forecast of approximately a half a million tons at the midpoint, thanks to improved reliability, realized outperformance, and acceleration of new stage 3 trains. Sustained higher marketing margins, both achieved and forecasted for the remainder of the year. Contributions from the optimization activities achieved year to date, both upstream and downstream of our facilities. Zach will cover guidance in more detail in a few minutes, we look forward to delivering financial results within these further upwardly revised ranges for the year. During the second quarter, we continued to execute on our comprehensive capital allocation plan. We were able to repurchase another approximately 2.2 million shares for $550 million. Sustained elevated volatility in our shares presented opportunities for our repurchase plan to be active over the quarter.

We funded approximately $1.1 billion of growth CapEx with equity and debt, declared a dividend of $0.555. We continued to make excellent and safe progress on our growth and expansions during the second quarter. Our CCL Stage 3 project is now over 98% complete. Substantial completion of Train 6 was achieved in June, and commissioning on Train 7 has commenced, with first LNG expected imminently. We continue to expect Train 7 substantial completion in the coming months, well ahead of the guaranteed date in 2027, which will officially complete Corpus Christi Stage 3 and further reinforces Cheniere's execution track record for bringing LNG capacity online ahead of schedule and on budget. On our mid-scale Trains 8 and 9 and debottlenecking project, we have now safely progressed over 48% complete and continue to track ahead of the schedule across critical work streams.

Piling has recently been completed, underground piping and installation is progressing well. Key materials and equipment packages, including the Train 8 cold box, are arriving at site on or ahead of schedule as we move further into the construction phase of execution. Turn now to Slide 6, where I'll provide some detail on our next growth project, Phase 1 of the Sabine Pass expansion project. During the second quarter, we took another critical step towards our final investment decision on this expansion when we signed a lump-sum turnkey engineering procurement construction contract with Bechtel Energy. We look forward to continuing our multi-decade relationship with Bechtel as we execute this project. Bechtel has commenced early engineering and critical equipment procurement under a limited notice to proceed, further locking in the project's cost and de-risking the timeline.

The EPC contract with Bechtel is approximately $4.7 billion. Its scope covers one large-scale train at Sabine Pass, Train 7, a boil off gas reliquefaction unit, and related infrastructure and tie-ins to the existing facility. Baker Hughes will once again supply the gas turbines and compressors. As we have described, Phase 1 is a very brownfield project, efficiently leveraging the site, in-place infrastructure, and equipment at Sabine Pass to significantly reduce costs and enhance returns. The project does not require support infrastructure such as additional marine berths, LNG storage tanks, or a significant investment in additional natural gas pipelines. Train 7 is a replica of the first six trains at Sabine Pass with a design capacity of approximately 5 million tons per annum.

The contract also includes the addition of a boil off gas, or BOG, reliquefaction unit to debottleneck the large trains and will add approximately 1 million tons per annum of capacity across Sabine Pass. In addition to the EPC contract with Bechtel, as part of Phase 1, we also awarded Baker Hughes a multi-year services contract covering fleet-wide gas turbine upgrades across all of Sabine Pass in order to enhance power output and further increase LNG production across the facility. In total, Phase 1 is expected to add over 6 million tons per annum of production capacity to our platform, or a total growth of approximately 10%. We've been working hard developing the SPL expansion project. It's both exciting and rewarding to see the pieces come together and our disciplined, highly contracted, brownfield, and returns-focused approach to project development pay off.

With the regulatory approvals expected later this year and the financing process already underway, we now have excellent line of sight in an FID on a significant accretive brownfield growth project that meets or exceeds our capital investment parameters, enabling us to continue to deliver the through-cycle risk-adjusted returns our stakeholders have become accustomed to. With over 40 million tons per annum in the permitting process to potentially grow our platform to over 100 million tons per annum, we have an exceptional opportunity today to support not just tomorrow's global energy balances, but the long-term growth and prosperity of economies around the world, including ours at home here in the U.S. I'm proud of the critical role we play in the global energy market, and I'm excited for our future as a leading global infrastructure platform. With that, I'll now hand it over to Anatol to discuss the LNG market.

Thank you all again for your continued support of Cheniere.