Cheniere Energy Inc 2026 Q3 Earnings Call

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Good morning, everyone, and welcome to Cheniere's third 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, and actual results could differ materially from what is described in these statements. Slide 2 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 3. After prepared remarks from Jack, Anatol, and 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 third quarter of 2026 and the third consecutive increase in our annual financial guidance. Volatility in the global LNG market persisted throughout the third quarter, and the market remains supply constrained without a lasting resolution to the conflict in the Middle East, even as we approach the peak winter months in key LNG demand centers. Cheniere's stable and reliable operations, coupled with our new capacity from Corpus Christi Stage 3, all benefit the market's overall balances. The prices we're seeing today, especially in the spot market, are a clear signal that the market needs additional LNG supply.

Against that backdrop, we have seen significant commercial momentum across short, medium, and especially long-term contract structures, which not only reinforce the themes around energy security, diversity, and durability of supply portfolios that we discussed last quarter, but also helps provide the commercial support necessary for Cheniere to answer the market's calls for new supply while holding to our financial standard. As you have seen, last Thursday at the QatarEnergy headquarters in Doha, His Excellency Minister Al-Kaabi and I executed 4 million tons of long-term SPAs. We reminisced about our last meeting in February. We're thinking about QE as a long-term buyer would have sounded outlandish. The discussion highlighted how closely our views align, both anchored in a long-term perspective and shared values of honesty and respect.

Very few have been impacted by the Gulf War in Iran and the new regional order as much as Qatar and QE in particular. They had built a business and strong reputation as the most reliable LNG producer. As the world got upended, it is truly impressive they did not just wait for the return to normal. Instead, they embarked on a bold new vision to redefine themselves. His Excellency Al-Kaabi made it clear that he wanted the first step of their new strategy to be a long-term SPA with Cheniere. For that, I am truly grateful and humbled to add QE as a long-term customer. Please turn to slide 5, where I will highlight our key results and accomplishments for the third quarter of 2026 and introduce our upwardly revised guidance ranges for the full year.

We achieved two major milestones during the third quarter, the production and export of our 5,000th LNG cargo and the substantial completion of the seventh and final train of Corpus Christi Stage 3. Cheniere achieved the 5,000 cargo milestone faster than any other LNG producer in the world, reaching the mark just 10 years after our first cargo. Those 5,000 Cheniere cargoes represent over 340 million tons of LNG that we have supplied, powering economies and improving lives in markets around the world. On our August earnings call, I told you that first LNG from Train 7 at Stage 3 was imminent, and it happened that weekend. Barely three weeks later, in late August, substantial completion of Train 7 was achieved, completing the Stage 3 project in familiar Cheniere Bechtel fashion, safely, ahead of schedule, and on budget.

I would like to congratulate all of our employees around the world on these remarkable achievements, as they are enabled by the hard work and dedication of our entire workforce and their commitment to operational excellence and safety every single day. Cheniere's stable and reliable LNG operations, coupled with sustained elevated market pricing, continued throughout the third quarter. We generated consolidated adjusted EBITDA of approximately $1.9 billion, distributable cash flow of approximately $1.2 billion and net income of approximately $1.2 billion. During the third quarter, we produced and exported a quarterly record 188 cargoes for 684 TBtu, an approximately 17% increase over the same period last year. Our production and operations continued to outperform in the third quarter, thanks to the accelerated substantial completion and start-up of the seventh train at Stage 3, as well as higher reliability rates compared to the third quarter of 2025.

Earlier this week, we achieved an all-time daily production record of over 8.33 TBtu produced across Sabine and Corpus as we continue to outperform at both sites. For the third consecutive quarter, we are increasing our full year 2026 financial guidance, this time to $8.75 billion-$9.25 billion of consolidated adjusted EBITDA and $6.05 billion-$6.55 billion of DCF. Zach will cover the details of this guidance increase later on the call. We look forward to delivering financial results within these further upwardly revised ranges for the year. Anatol and the commercial team have been extremely busy, and since our last call, have signed long-term SPAs with two new customers aggregating approximately 5 million tons, extending into the 2050s, in which we expect to support our brownfield growth plans at both Sabine Pass and Corpus Christi.

First, in late September, we announced a new SPA with Petrobras for 0.8 million tons per annum for 22 years. The signing of this contract in the year of our 10th anniversary of our first LNG cargo is particularly special to us, since that first LNG cargo we exported back in 2016 was actually sold to Petrobras. As I mentioned, we announced new SPAs with QatarEnergy for up to 4 million tons extending through 2054. During the quarter, we deployed approximately $1.5 billion under our capital allocation plan. We repurchased approximately 2.8 million shares for approximately $730 million. As persistent volatility in our shares continue to present opportunities for our repurchase plan to be active. We funded nearly $740 million of growth CapEx with equity and debt.

This morning, we announced an increase in our quarterly dividend of over 12% to $0.625 or $2.50 annualized, following through on our commitment to raise the dividend by at least 10% per year through the rest of the decade. Turn now to Slide 6. We will provide an update on the status of our brownfield growth projects. First, on the Midscale Trains 8 & 9 and debottlenecking project. We have now safely progressed to over 58% complete as of the end of September and continue to track ahead of schedule across critical engineering, procurement, and construction work streams. We crossed over 1 million man-hour threshold on the project in August, and construction activities today are focused on piping and steel installation across both trains.

Critical equipment such as fabricated steel and cold boxes have arrived at site, which we expect will enable continued progress ahead of schedule as we move further into the construction phase of execution. While we are optimistic the schedule for Midscale Trains 8 & 9 can accelerate, we do not currently forecast any volume contribution in 2027 from this project. Next, on phase one of the SPL Expansion Project. I covered this project in depth last quarter. We are approaching FID on this brownfield expansion, which is expected to add well over 6 million tons per annum of production capacity to our platform at Sabine Pass. In September, FERC issued the final Environmental Impact Statement, or EIS, on the SPL Expansion Project. This important regulatory step increases our visibility to the final approval expected around the end of the year, and we intend to FID very quickly thereafter.

Also, during the quarter, we obtained commitments from our bank syndicate for a term loan sized to finance approximately 50% of the total estimated project cost of phase one, adding to our confidence in the FID timeline around the end of the year. Since the beginning of the year, we have spent almost $500 million on early engineering and procurement work with Bechtel and Baker Hughes, giving the project a bit of a head start while de-risking cost and schedule with key high value and long lead time equipment orders. Moving on to phase one of the CCL Expansion Project. We have advanced this project considerably since our last call with a major regulatory step, as well as the commercial progress with our recent long-term contract announcements.

On the regulatory side, in September, we received our draft EIS from FERC, solidifying our expectation of a FERC permit around the middle of next year. There are some additional regulatory approvals that will be required in order to FID, but the expected timeline of the necessary regulatory approvals around year-end 2027 is intact. I am extremely excited and optimistic about these growth projects. The first phases of SPL and CCL Expansion Projects represent opportunities to accretively grow our platform by over 20%, leveraging our brownfield infrastructure position while maintaining our capital investment discipline and upholding the Cheniere standard. We believe these projects will enable us to deliver our shareholders more of the through-cycle risk-adjusted returns they have become accustomed to.