Cheniere Energy Partners L.P. Reports Q1 2024 Results

TL;DR

<b>Cheniere Energy Partners L.P. saw a decrease in revenue and net income in Q1 2024 compared to the prior year, despite an increase in total assets.</b>

AI Summary

Cheniere Energy Partners, L.P. (CQP) filed a Quarterly Report (10-Q) with the SEC on May 3, 2024. Total revenues for Q1 2024 were $1,720 million, a decrease from $2,106 million in Q1 2023. Net income attributable to Cheniere Energy Partners, L.P. was $524 million in Q1 2024, down from $761 million in Q1 2023. Earnings per common unit (diluted) were $3.00 in Q1 2024, compared to $4.00 in Q1 2023. Total assets as of March 31, 2024, were $25,256 million, an increase from $24,255 million as of December 31, 2023. Total debt as of March 31, 2024, was $10,700 million, a slight increase from $10,698 million as of December 31, 2023.

Why It Matters

For investors and stakeholders tracking Cheniere Energy Partners, L.P., this filing contains several important signals. The decline in revenue and net income suggests potential headwinds in the energy market or operational shifts impacting profitability. The slight increase in debt while revenue decreased warrants attention for future financial health and leverage management.

Risk Assessment

Risk Level: medium — Cheniere Energy Partners, L.P. shows moderate risk based on this filing. The company reported a decrease in revenue and net income for Q1 2024 compared to Q1 2023, indicating a potential downturn in performance.

Analyst Insight

Monitor the company's ability to reverse the trend of declining revenue and net income in subsequent quarters.

Revenue Breakdown

Key Numbers

• 1,720 — Total Revenues (Q1 2024)
• 2,106 — Total Revenues (Q1 2023)
• 524 — Net Income (Q1 2024)
• 761 — Net Income (Q1 2023)
• 3.00 — Earnings Per Common Unit (Diluted) (Q1 2024)
• 4.00 — Earnings Per Common Unit (Diluted) (Q1 2023)
• 25,256 — Total Assets (March 31, 2024)
• 10,700 — Total Debt (March 31, 2024)

Key Players & Entities

• Cheniere Energy Partners, L.P. (company) — Filer name
• 845 TEXAS AVENUE (address) — Business and mailing address
• HOUSTON (location) — City for business and mailing address
• TX (location) — State for business and mailing address
• 77002 (postal_code) — ZIP code for business and mailing address
• 20240331 (date) — Conformed period of report
• 20240503 (date) — Filed as of date
• 20240502 (date) — Date as of change

FAQ

Filing Documents

• cqp-20240331.htm (10-Q) — 1134KB
• exhibit101cqp2024q1form10q.htm (EX-10.1) — 34KB
• exhibit311cqp2024q1form10q.htm (EX-31.1) — 9KB
• exhibit312cqp2024q1form10q.htm (EX-31.2) — 9KB
• exhibit321cqp2024q1form10q.htm (EX-32.1) — 5KB
• exhibit322cqp2024q1form10q.htm (EX-32.2) — 5KB
• cqp-20240331_g1.jpg (GRAPHIC) — 164KB
• 0001383650-24-000027.txt (&nbsp;) — 6808KB
• cqp-20240331.xsd (EX-101.SCH) — 52KB
• cqp-20240331_cal.xml (EX-101.CAL) — 46KB
• cqp-20240331_def.xml (EX-101.DEF) — 289KB
• cqp-20240331_lab.xml (EX-101.LAB) — 495KB
• cqp-20240331_pre.xml (EX-101.PRE) — 387KB
• cqp-20240331_htm.xml (XML) — 1076KB

Financial Information

Part I. Financial Information Item 1. Consolidated Financial Statements 3 Consolidated Statements of Operations 3 Consolidated Balance Sheets 4 Consolidated Statements of Partners' Deficit 5 Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Note 1—Nature of Operations and Basis of Presentation 7 Note 2—Unitholders' Equity 7 Note 3—Restricted Cash and Cash Equivalents 8 Note 4—Trade and Other Receivables, Net of Current Expected Credit Losses 8 Note 5—Inventory 8 Note 6—Property, Plant and Equipment, Net of Accumulated Depreciation 9 Note 7—Derivative Instruments 9 Note 8—Accrued Liabilities 12 Note 9—Debt 13 Note 10—Revenues 14 Note 11—Related Party Transactions 16 Note 12—Net Income per Common Unit 16 Note 13—Customer Concentration 18 Note 14—Supplemental Cash Flow Information 18 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 28 Item 4.

Controls and Procedures

Controls and Procedures 28

Other Information

Part II. Other Information Item 1.

Legal Proceedings

Legal Proceedings 29 Item 1A.

Risk Factors

Risk Factors 29 Item 5. Other Information 29 Item 6. Exhibits 29

Signatures

Signatures 30 i Table of Contents DEFINITIONS As used in this quarterly report, the terms listed below have the following meanings: Common Industry and Other Terms ASU Accounting Standards Update Bcf/d billion cubic feet per day Bcfe billion cubic feet equivalent DOE U.S. Department of Energy EPC engineering, procurement and construction ESG environmental, social and governance FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission FID final investment decision FTA countries countries with which the United States has a free trade agreement providing for national treatment for trade in natural gas GAAP generally accepted accounting principles in the United States Henry Hub the final settlement price (in U.S. dollars per MMBtu) for the New York Mercantile Exchange's Henry Hub natural gas futures contract for the month in which a relevant cargo's delivery window is scheduled to begin IPM agreements integrated production marketing agreements in which the gas producer sells to us gas on a global LNG or natural gas index price, less a fixed liquefaction fee, shipping and other costs LNG liquefied natural gas, a product of natural gas that, through a refrigeration process, has been cooled to a liquid state, which occupies a volume that is approximately 1/600th of its gaseous state MMBtu million British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of one pound of water by one degree Fahrenheit mtpa million tonnes per annum non-FTA countries countries with which the United States does not have a free trade agreement providing for national treatment for trade in natural gas and with which trade is permitted SEC U.S. Securities and Exchange Commission SOFR Secured Overnight Financing Rate SPA LNG sale and purchase agreement TBtu trillion British thermal units; one British thermal unit measures the amount of energy required to raise the temperature of on

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION ITEM I. CONSOLIDATED FINANCIAL STATEMENTS CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per unit data) (unaudited) Three Months Ended March 31, 2024 2023 Revenues LNG revenues $ 1,720 $ 2,106 LNG revenues—affiliate 524 761 Regasification revenues 34 34 Other revenues 17 16 Total revenues 2,295 2,917 Operating costs and expenses Cost of sales (excluding items shown separately below) 964 313 Cost of sales—affiliate 4 17 Operating and maintenance expense 200 206 Operating and maintenance expense—affiliate 43 44 Operating and maintenance expense—related party 13 16 General and administrative expense 3 3 General and administrative expense—affiliate 22 22 Depreciation and amortization expense 168 167 Other 3 — Total operating costs and expenses 1,420 788 Income from operations 875 2,129 Other income (expense) Interest expense, net of capitalized interest ( 202 ) ( 208 ) Interest and dividend income 9 14 Total other expense ( 193 ) ( 194 ) Net income $ 682 $ 1,935 Basic and diluted net income per common unit (1) $ 1.18 $ 3.50 Weighted average basic and diluted number of common units outstanding 484.0 484.0 (1) In computing basic and diluted net income per common unit, net income is reduced by the amount of undistributed net income allocated to participating securities other than common units, as required under the two-class method. See Note 12—Net Income per Common Unit . The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents CHENIERE ENERGY PARTNERS, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except unit data) March 31, December 31, 2024 2023 ASSETS (unaudited) Current assets Cash and cash equivalents $ 333 $ 575 Restricted cash and cash equivalents 59 56 Trade and other receivables, net of current expected credit losses 237 373 Trade rece

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1— NATURE OF OPERATIONS AND BASIS OF PRESENTATION We own a natural gas liquefaction and export facility located in Cameron Parish, Louisiana at Sabine Pass (the "Sabine Pass LNG Terminal" ) which has six operational Trains, for a total production capacity of approximately 30 mtpa of LNG (the "Liquefaction Project" ). The Sabine Pass LNG Terminal also has operational regasification facilities that include five LNG storage tanks, vaporizers and three marine berths. Additionally, the Sabine Pass LNG Terminal includes a 94 -mile natural gas supply pipeline that interconnects the Sabine Pass LNG Terminal with several large interstate and intrastate pipelines (the "Creole Trail Pipeline" ). We are pursuing an expansion project to provide additional liquefaction capacity, and we have commenced commercialization to support the additional liquefaction capacity associated with this potential expansion project. The development of this site or other projects, including infrastructure projects in support of natural gas supply and LNG demand, will require, among other things, acceptable commercial and financing arrangements before we make a positive FID. We do not have employees and thus we and our subsidiaries have various services agreements with affiliates of Cheniere in the ordinary course of business, including services required to construct, operate and maintain the Liquefaction Project, and administrative services. See Note 11—Related Party Transactions for additional details of the activity under these services agreements during the three months ended March 31, 2024 and 2023. As of March 31, 2024, Cheniere owned 48.6 % of our limited partner interest in the form of 239.9 million of our common units. Cheniere also owns 100 % of our general partner interest and our incentive distribution rights ( "IDRs" ). Basis of Presentation The accompanying unaudited Consolidated Financial Statements of CQP have

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (unaudited) The general partner interest is entitled to at least 2 % of all distributions made by us. In addition, the general partner holds IDRs, which allow the general partner to receive a higher percentage of quarterly distributions of available cash from operating surplus as additional target levels are met, but may transfer these rights separately from its general partner interest. The higher percentages range from 15 % to 50 %, inclusive of the general partner interest. Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash, which, as defined in our partnership agreement, is generally our cash on hand at the end of a quarter less the amount of any reserves established by our general partner. All distributions we have paid to date have been made from accumulated operating surplus as defined in the partnership agreement. As of March 31, 2024, our total securities beneficially owned in the form of common units were held 48.6 % by Cheniere, 41.5 % by CQP Target Holdco L.L.C. ( "CQP Target Holdco" ) and other affiliates of Blackstone Inc. ( "Blackstone" ) and Brookfield Asset Management Inc. ( "Brookfield" ) and 7.9 % by the public. All of our 2 % general partner interest was held by Cheniere. CQP Target Holdco's equity interests are 50.0 % owned by BIP Chinook Holdco L.L.C., an affiliate of Blackstone, and 50.0 % owned by BIF IV Cypress Aggregator (Delaware) LLC, an affiliate of Brookfield. The ownership of CQP Target Holdco, Blackstone and Brookfield are based on their most recent filings with the SEC. NOTE 3— RESTRICTED CASH AND CASH EQUIVALENTS As of March 31, 2024 and December 31, 2023, we had $ 59 million and $ 56 million of restricted cash and cash equivalents, respectively, for which the usage or withdrawal of such cash is contractually or legally restricted to the payment of liabilities related to the Liquefaction Project a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (unaudited) NOTE 6— PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION Property, plant and equipment, net of accumulated depreciation consisted of the following (in millions): March 31, December 31, 2024 2023 LNG terminal Terminal and interconnecting pipeline facilities $ 20,194 $ 20,176 Construction-in-process 196 189 Accumulated depreciation ( 4,339 ) ( 4,173 ) Total LNG terminal, net of accumulated depreciation 16,051 16,192 Fixed assets Fixed assets 30 29 Accumulated depreciation ( 26 ) ( 26 ) Total fixed assets, net of accumulated depreciation 4 3 Assets under finance leases Tug vessels 23 23 Accumulated depreciation ( 7 ) ( 6 ) Total assets under finance leases, net of accumulated depreciation 16 17 Property, plant and equipment, net of accumulated depreciation $ 16,071 $ 16,212 Depreciation expense was $ 167 million and $ 165 million during the three months ended March 31, 2024 and 2023, respectively. NOTE 7— DERIVATIVE INSTRUMENTS We have commodity derivatives consisting of natural gas supply contracts, including those under our IPM agreements, for the operation of the Liquefaction Project and expansion project, as well as the associated economic hedges (collectively, the "Liquefaction Supply Derivatives" ). We recognize our derivative instruments as either assets or liabilities and measure those instruments at fair value. None of our derivative instruments are designated as cash flow, fair value or net investment hedging instruments, and changes in fair value are recorded within our Consolidated Statements of Operations to the extent not utilized for the commissioning process, in which case such changes are capitalized. The following table shows the fair value of the derivative instruments that are required to be measured at fair value on a recurring basis, distinguished by the fair value hierarchy levels prescribed by GAAP (in millions): Fair Value Measurem

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (unaudited) results may differ from these estimates and judgments. We derive our volatility assumptions based on observed historical settled global LNG market pricing or accepted proxies for global LNG market pricing as well as settled domestic natural gas pricing. Such volatility assumptions also contemplate, as of the balance sheet date, observable forward curve data of such indices, as well as evolving available industry data and independent studies. In developing our volatility assumptions, we acknowledge that the global LNG industry is inherently influenced by events such as unplanned supply constraints, geopolitical incidents, unusual climate events including drought and uncommonly mild, by historical standards, winters and summers, and real or threatened disruptive operational impacts to global energy infrastructure. Our current estimate of volatility includes the impact of otherwise rare events unless we believe market participants would exclude such events on account of their assertion that those events were specific to our company and deemed within our control. Our fair value estimates incorporate market participant-based assumptions pertaining to certain contractual uncertainties, including those related to the availability of market information for delivery points, as well as the timing of satisfaction of certain events or development of infrastructure to support natural gas gathering and transport. We may recognize changes in fair value through earnings that could be significant to our results of operations if and when such uncertainties are resolved. The Level 3 fair value measurements of the natural gas positions within the Liquefaction Supply Derivatives could be materially impacted by a significant change in certain natural gas and international LNG prices. The following table includes quantitative information for the unobservable inputs for the Level 3 Liquefaction Supply Derivatives as of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—CONTINUED (unaudited) (4) Includes any day one gain (loss) recognized during the reporting period on deals that were entered into during the reporting period which continue to exist at the end of the period. (5) Roll-off in the current period of amounts recognized in our Consolidated Balance Sheets at the end of the previous period due to settlement of the underlying instruments in the current period. (6) Transferred out of Level 3 as a result of observable market for the underlying natural gas purchase agreements. All existing counterparty derivative contracts provide for the unconditional right of set-off in the event of default. We have elected to report derivative assets and liabilities arising from those derivative contracts with the same counterparty and the unconditional contractual right of set-off on a net basis. The use of derivative instruments exposes us to counterparty credit risk, or the risk that a counterparty will be unable to meet its commitments, in instances when the derivative instruments are in an asset position. Additionally, counterparties are at risk that we will be unable to meet our commitments in instances where the derivative instruments are in a liability position. We incorporate both our nonperformance risk and the respective counterparty's nonperformance risk in fair value measurements depending on the position of the derivative. In adjusting the fair value of the derivative contracts for the effect of nonperformance risk, we have considered the impact of any applicable credit enhancements, such as collateral postings, set-off rights and guarantees. Liquefaction Supply Derivatives We hold Liquefaction Supply Derivatives which are primarily indexed to the natural gas market and international LNG indices. As of March 31, 2024, the remaining fixed terms of the Liquefaction Supply Derivatives ranged up to approximately 15 years, some of which commence or accelerate upon the satisfactio

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