Cheniere Energy Partners, LP · NYSE:CQP
Cheniere Energy Partners, LP — Investor Day (April 2017)
126 slides from Cheniere Energy Partners, LP's investor day presentation, Apr 19, 2017
Slide 1: Cheniere Energy, Inc. Analyst Day, April 19, 2017
CHENIERE ENERGY, INC. April 19, 2017 ANALYST DAY
Slide 2: Agenda
Agenda Strategic Overview Financial Strategy & Guidance Welcome & Logistics Q&A Commercial Strategy & Initiatives Construction, Pipeline and Operations Panel Closing Remarks Commercial Panel Special Guest Speaker Randy Bhatia, Vice President, Investor Relations Jack Fusco, President and Chief Execut
Slide 3: Safe Harbor Statements
Safe Harbor Statements Forward-Looking Statements This presentation contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amend
Slide 4: Strategic Overview
STRATEGIC OVERVIEW Jack Fusco, President and CEO
Slide 5: Organizational Chart - Analyst Day Participants
Key Jack Fusco President & Chief Executive Officer Michael Wortley EVP & Chief Financial Officer Anatol Feygin EVP & Chief Commercial Officer Doug Shanda SVP, Operations Ed Lehotsky SVP, Engineering & Construction Chad Zamarin SVP, Pipeline Tom Bullis EVP & Chief Administrative Officer Robert Fee Ch
Slide 6: Cheniere Investment Thesis
Cheniere Investment Thesis Positioned as low-cost LNG provider through brownfield site expansions 7 train platform offers excellent visibility for long-term cash flows • 20-year “take-or-pay” style commercial agreements with investment grade off-takers for approximately 87% of the expected aggre
Slide 7: LNG Share Price and Commodity Prices
- 10.00 20.00 30.00 40.00 50.00 60.00 - 2.00 4.00 6.00 8.00 10.00 Henry Hub Oil Parity (Brent) Cheniere Share Price (LNG) LNG Share Price and Commodity Prices Henry Hub prompt month natural gas price is range-bound Henry Hub indexed LNG contracts are inherently less volatile Fixed fees insulat
Slide 8: Organizational Evolution from Development to Operations
Organizational Evolution from Development to Operations 2016 Vision, Mission & Values Leadership Team Organizational Realignment Zero-based Budget Hire Chief HR Officer Compensation and Long-Term Incentive Program Establish Safety Committee 2017 and Beyond Operational Excellence Fo
Slide 9: Engineering & Construction and Operations
Engineering & Construction and Operations Execute on construction of LNG platform safely, on time, and on budget Transition the trains from construction management to operations management safely, efficiently, and effectively Identify and incorporate lessons learned • Cross-functional team wor
Slide 10: Financial and Commercial
Financial and Commercial Disciplined long-term financial strategy enables expansion opportunities for future cash flow growth at attractive return hurdles Contracted cash flows, strong balance sheet and liquidity, and SPL’s investment grade ratings provide optionality and lower costs for future
Slide 11: Cheniere Ideally Positioned to Capitalize on Tightening LNG Market
Existing Capacity Newly Operational Under Construction 0 50 100 150 200 250 300 350 400 450 500 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Market tightening Cheniere Ideally Positioned to Capitalize on Tightening LNG Market The global LNG market is ex
Slide 12: Leveraging Infrastructure and Expertise: A Key Competitive Advantage
Leveraging Infrastructure and Expertise: A Key Competitive Advantage Leverage Existing Infrastructure to Enable Competitive, Incremental Liquefaction Capacity Able to leverage existing network to supply incremental gas to feed additional trains • Significant investment in infrastructure – one of l
Slide 13: Sabine Pass Expansion
Sabine Pass Expansion Sabine Pass Property Allows for Major Expansion of Cheniere’s Existing Footprint Artist’s rendition Train 6 Fully permitted Attractive expansion economics Potential Expansion Rights to additional 524 acres of land east of Sabine Pass site Existing footprint allows third
Slide 14: Corpus Christi Expansion
Additional Land for Potential Expansion Stage 3 In Development Stage 2: Train 3 Fully Permitted Stage 1: Trains 1 & 2 Under Construction Corpus Christi Expansion Corpus Christi Property Allows for Major Expansion of Cheniere’s Existing Footprint Stage 2 Train 3 fully permitted, partially commercia
Slide 15: Midscale Project Overview – FEED Initiated
15 Midscale Project Overview – FEED Initiated Began Midscale project evaluation in early 2016 Reviewed 18 proposals from potential contractors KBR/Siemens/Chart Consortium approved to continue with full FEED and EPC proposal to be completed September 2017 Initial capital cost estimates are c
Slide 16: Key Takeaways
Key Takeaways 16 Ability to leverage sites, infrastructure, and expertise to double LNG capacity 1 One of largest pipeline capacity holders and largest gas buyer in U.S. Early mover advantage Scale and purchasing power Incremental opportunity to capture margin Facilitates FOB/DES deliveries
Slide 17: Financial Strategy and Guidance
FINANCIAL STRATEGY AND GUIDANCE Michael Wortley, EVP and CFO
Slide 18: Table of Contents
Table of Contents 18 Where We’ve Been I Long-Term Balance Sheet Strategy II Liquidity Summary III Financial Projections and Capital Allocation Strategy IV Strategic and Competitive Considerations V Appendix VI
Slide 19: Current Cheniere Corporate Structure
Current Cheniere Corporate Structure 19 Cheniere Energy, Inc. (“CEI”) (NYSE MKT: LNG) Cheniere Energy Partners, L.P. (“CQP”) (NYSE MKT: CQP) Sabine Pass LNG, L.P. (“SPLNG”) Sabine Pass Liquefaction, LLC (“SPL”) Creole Trail Pipeline, L.P. (“CTPL”) Cheniere Energy Partners LP Holdings, LLC (“CQH”) (N
Slide 20: Where We've Been
CHENIERE ENERGY, INC. WHERE WE’VE BEEN I
Slide 21: Financial Priorities: Past and Present
Financial Priorities: Past and Present 21 Prior Goals (Last 2 Years) Evolve Capital Structure and Execute Achieve Investment Grade (“IG”) Ratings at Sabine Pass Liquefaction, LLC • S&P upgraded SPL to investment grade at BBB- in September 2016 • Fitch rated SPL investment grade at BBB- (initial rati
Slide 22: Where We've Been: Sabine Pass Ratings Momentum
Ba3 BB++1Notch BBB- (Stab le) +1 Notch +1 Notch Ba1 (Positive) BBB- (Stab le) Ba3 / BB- Ba2 / BB Ba1 / BB+ Baa3 / BBB- Investment Grade Baa2 / BBB Baa1 / BBB+ Where We’ve Been: Sabine Pass Ratings Momentum 22 December 21, 2016 Moody's upgrades SPL to Ba1 (Positive) from Ba2 September 12, 2016 S&P
Slide 23: Where We've Been: Spread Compression
5.875% 5.0% 5.0% 4.2% 7.0% 5.875% 418 bps 331 bps 235 bps 185 bps 529 bps 349 bps 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% SPL 2026s SPL 2027s SPL 2037s SPL 2028s – CCH 2024s CCH 2025s Jun-16 Sep-16 Feb-17 Mar-17 – May-16 Dec-16 Coupon G-Spread at Issue Where We’ve Been: Spread Compression
Slide 24: Where We've Been: Maturity Profile Progression
$8 .4 – $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 CCH - Credit Facilities $1 .2 5 $1 .5 $6 .0 – $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 CCH - Credit Facilities CCH - Senior Notes $1 .7 $0.4 $0.4 $4 .6 $5 .0 $2 .0 $1 .0 $1 .5 $2 .0 $2 .0 – $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 SPLNG - Senior Notes CT
Slide 25: Where We've Been: Construction Spend Progress
$0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12 $13 $14 $15 $16 $17 $18 $19 $20 $21 $22 $23 $24 $25 S ep -1 2 N ov -1 2 Ja n- 13 M ar -1 3 M ay -1 3 Ju l-1 3 S ep -1 3 N ov -1 3 Ja n- 14 M ar -1 4 M ay -1 4 Ju l-1 4 S ep -1 4 N ov -1 4 Ja n- 15 M ar -1 5 M ay -1 5 Ju l-1 5 S ep -1 5 N ov -1 5 Ja n- 16 M a
Slide 26: Long-Term Balance Sheet Strategy
CHENIERE ENERGY, INC. LONG-TERM BALANCE SHEET STRATEGY II
Slide 27: Balance Sheet Underpinned by Strong Counterparty Credits
AA- to AA+ Rated 20.2% A- to A+ Rated 20.3% BBB- to BBB+ Rated 59.5% Balance Sheet Underpinned by Strong Counterparty Credits 27 Cheniere Counterparty Exposure SPA Customers Sabine Pass Liquefaction Corpus Christi Liquefaction Cheniere 11 External SPA Customers(1) (BBB / Baa2 / BBB+) (NR / Baa3 / BB
Slide 28: Liquefaction Plants Operate for Longer Than 20-year SPA Period
Liquefaction Plants Operate for Longer Than 20-year SPA Period Location: Abu Dhabi Capacity: 5.6 mtpa Start Year: 1977 Asset Age: 40 years ADGAS LNG Location: Algeria Capacity: 21 mtpa Start Year: 1972 & 1978 Asset Age: 45 & 39 years Algeria LNG Location: Brunei Capacity: 7.4 mtpa Start Year: 1972 A
Slide 29: Abundant Shale Gas Reserves Make Sustainable Price Increases Unlikely
Abundant Shale Gas Reserves Make Sustainable Price Increases Unlikely - 10 20 30 40 50 60 70 ($12) ($11) ($10) ($9) ($8) ($7) ($6) ($5) ($4) ($3) ($2) ($1) $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 - 500 1,000 1,500 Years Supply2 $/MMBtu Tcf 29 800 Tcf producible below $3.00 Henry Hub (30 years)(1) 1,400 Tcf pr
Slide 30: Long-term Capital Structure Plan
Long-term Capital Structure Plan 30 Utilize leverage capacity at CQP and CEI (the corporate levels) to delever SPL and CCH (the project levels) over the next 5-10 years Debt incurrence test will force the deleveraging of SPL and CCH over time at 1.5x/1.4x DSCR By migrating project debt up to C
Slide 31: Target Leverage for Projects and Corporates
Target Leverage for Projects and Corporates 31 Cheniere Energy Inc. (NYSE MKT: LNG) “BB” Ratings Profile 5.0x Target Debt / EBITDA Cheniere Energy Partners, L.P. (NYSE MKT: CQP) “BB” Ratings Profile 5.0x Target Debt / EBITDA Sabine Pass Liquefaction, LLC “BBB” Ratings Profile 1.5x avg. Target DSCR C
Slide 32: Credit Ratings Policy
Credit Ratings Policy 32 Project ratings capped by agencies to be no higher than three notches above sponsor/owner ratings Demonstrated access to HY market for SPL, CCH and other BB midstream issuers No significant commodity purchasing activities outside of project entities requiring credit su
Slide 33: Summary Amortization Requirements at Project Levels
($bn) 7 Trains without utilizing Corporate Debt Capacity 7 Trains utilizing Corporate Debt Capacity SPL Debt Amortization Start at SPL (1.5x DSCR) Early 2020s Mid-Late 2020s Migrated Debt to CQP (5.0x debt / EBITDA) – ~$3.0 - $4.0 Debt at SPL (project) $13.7 ~$9.7 - $10.7 Debt at CQP (corporate) $2.
Slide 34: Liquidity Summary
CHENIERE ENERGY, INC. LIQUIDITY SUMMARY III
Slide 35: CEI and CQP Available Liquidity
$0.2 $0.9 $0.3 $0.3 $0.1 $0.8 $0.1 $0.1 $0.0 $0.3 $0.5 $0.8 $1.0 $1.3 $1.5 $1.8 $2.0 CQP CEI $bn CEI and CQP Available Liquidity 35 Cash on Hand(1) CEI Revolver Capacity Remaining SPL Contingency(3) Remaining CCH Contingency(3) Cash on Hand(1) Total: $0.8 billion Total: $2.0 billion CQP General WC F
Slide 36: CEI Deconsolidated Five Year Sources and Uses
Note: Assumes approximately 4.5 mtpa/train production case (1) Assumes current implied gross margin by CMI through 2019 and $2.50 gross margin thereafter, before 80/20 profit-sharing tariff with SPL/CCH $2.3 $0.6 $1.1 $1.2 $0.8 $1.3 $0.9 $0.8 $4.0 – $2.0 $4.0 $6.0 $8.0 Sources Uses $bn CEI Deconsoli
Slide 37: Capital Allocation
Capital Allocation 37 CEI Free Cash Flow Achieve Target Leverage 1.5x / 1.4x DSCR at Projects 5.0x Deconsolidated Debt / EBITDA at Corporates Grow Invest in the LNG value chain, anchored by expansions of brownfield sites Buy Back Stock Return on own stock will guide viability of other potential inve
Slide 38: Financial Projections and Capital Allocation Strategy
CHENIERE ENERGY, INC. FINANCIAL PROJECTIONS AND CAPITAL ALLOCATION STRATEGY IV
Slide 39: Consolidated vs. Deconsolidated
Consolidated vs. Deconsolidated 39 CEI CCH Consolidated Deconsolidated SPL CQP and CQH SPLNG CTPL CMI CCPL CCL Minority Interest
Slide 40: 2017 Guidance
2017 Guidance 40 Note: Range is driven by CMI margin assumptions, train timing and production. Adjusted EBITDA, Distributable Cash Flow and Distributable Cash Flow per Share are non-GAAP measures. A reconciliation to net income (loss) attributable to common stockholders, the most comparable U.S. GAA
Slide 41: Run Rate Guidance: 7 Train Case
7 Trains ($bn, except per share amounts or unless otherwise noted) SPL T1-5, CCH T1-2 CEI Consolidated Adjusted EBITDA $3.8 - $4.1 Less: CQP/CQH Minority Interest ($0.9) - ($0.9) Less: CQP/SPL Interest Expense ($0.9) Less: CEI Interest Expense/Other ($0.0) Less: CCH Interest Expense ($0.5) CEI Distr
Slide 42: Run Rate Guidance: Impact of Additional Train
7 Trains utilizing Corporate Debt Capacity CCH T3 Utilizing Corporate Debt Capacity CCH Debt Amortization Start at CCH Mid 2020s Late 2020s Migrated Debt to CEI ($bn) ~$2.0 - $2.5 ~$2.3 - $3.3 Debt at CCH(2) ~$6.5 - $7.5 ~$7.5 - $9.0 Debt at CEI(3) ~$2.6 - $3.1 ~$2.9 - $3.9 7 Trains 8 Trains ($bn, e
Slide 43: CQP Distribution Philosophy
CQP Distribution Philosophy 43 CQP Class B units expected to convert and receive the Q3 distribution since Train 3 Substantial Completion has occurred SPL and CQP to retain cash to ensure adequate SPL project funding and debt service during construction (~$2.5bn of cash required to complete 5 tr
Slide 44: Strategic and Competitive Considerations
CHENIERE ENERGY, INC. STRATEGIC AND COMPETITIVE CONSIDERATIONS V
Slide 45: Current Cheniere Corporate Structure
Current Cheniere Corporate Structure 45 Cheniere Energy, Inc. (CEI) (NYSE MKT: LNG) Cheniere Energy Partners, L.P. (NYSE MKT: CQP) Sabine Pass LNG, L.P. (SPLNG) Total TUA (1 Bcf/d) Chevron TUA (1 Bcf/d) SPL TUA (2 Bcf/d) Sabine Pass Liquefaction, LLC (SPL) Creole Trail Pipeline, L.P. (CTPL) Cheniere
Slide 46: New LNG Investment Considerations
New LNG Investment Considerations 46 Fundamentals that have evolved for Cheniere Strong cash flows from first trains and corporate debt capacity enable flexibility • Portfolio management with contract ladder versus long-term only • Attractive foundation contracts with investment grade counterparti
Slide 47: Key Takeaways
Key Takeaways 47 Cheniere’s first mover advantage and successful financial and operational execution have Cheniere well placed for the next wave of new LNG build No debt maturities until 2020 First three trains online ahead of schedule; remaining trains on time and on budget Two world-class LN
Slide 48: Financial Appendix
CHENIERE ENERGY, INC. FINANCIAL APPENDIX VI
Slide 49: Forecasting Points
Forecasting Points 49 EIG Notes Conversion CCH Holdco II Notes (EIG Notes) convert into ~20mm LNG shares in 2020 at estimated $94 / share (ultimate principal balance of ~$1.7bn) • Conversion at a 10% discount to LNG’s share price • Only 50% of the EIG Notes can be converted at initial conversion a
Slide 50: Insurance Summary
Insurance Summary 50 Property and Business Interruption – SPLNG, SPL and CTPL • Assets Under Construction • Trains 4 and 5 are insured by Bechtel until transfer of care, custody and control to Sabine • Assets in Operation • SPLNG, CTPL and SPL Trains 1-3 are insured under a Cheniere program • $3.5
Slide 51: Cheniere Energy, Inc. Analyst Day, April 19, 2017
CHENIERE ENERGY, INC. April 19, 2017 ANALYST DAY
Slide 52: Commercial Strategy and Initiatives
COMMERCIAL STRATEGY AND INITIATIVES Anatol Feygin, EVP and CCO
Slide 53: Table of Contents
Table of Contents 53 Commercial Strategy and Initiatives I LNG Strategy and Communications – Andrew Walker, Vice President II Gas Supply – Corey Grindal, Senior Vice President III Commercial Operations and Asset Optimization – Eric Bensaude, Managing Director IV Origination – Ramzi Mroueh, Managing
Slide 54: Commercial Strategy and Initiatives
CHENIERE ENERGY, INC. COMMERCIAL STRATEGY AND INITIATIVES I
Slide 55: Commercial Group Organization
Commercial Group Organization – World Class and Performing Seven Groups United By Clear Objectives Serve our customers Maximize the value of our assets Underwrite new liquefaction capacity Gas Supply Commercial Structuring & Corporate Development Commercial Support & Integration Commercial Operation
Slide 56: Cheniere Commercial Platform Overview
At current 3-train run rate, Cheniere is the largest physical natural gas consumer in the U.S. 7-train platform forecast to make Cheniere 2 to 3 times the next largest consumer Cheniere holds capacity on most Gulf Coast interstate pipelines • Largest shipper on CTPL, Transco, KMLP Projected
Slide 57: Projected Company Ranking by LNG Sales in 2020
Projected Company Ranking by LNG Sales in 2020 0 10 20 30 40 50 60 m tp a Projected Top LNG Suppliers by Company - 2020 Source: Cheniere Research, Wood Mackenzie Note: volumes include ‘equity’ LNG, third-party offtake and own project offtake. Tolling facility production reflected in offtaker volumes
Slide 58: U.S. LNG Expected to be Key in Satisfying Robust Global Gas Growth
U.S. LNG Expected to be Key in Satisfying Robust Global Gas Growth 58 Source: Cheniere Research, Global Data, World Bank, Wood Mackenzie Note: Conversion from GW to Bcf/d assumes thermal efficiency of 61% (1) China plans to grow share of gas to 15% by 2030; India in the next few years 0% 1% 2% 3% 4%
Slide 59: Cheniere Full Service a Structural Competitive Advantage
Cheniere Full Service a Structural Competitive Advantage Liquefaction Shipping/DES Sales LNG to Power U.S. Pipeline, Storage and Gas Supply One of largest pipeline capacity holders in U.S.: more than 5 Bcf/d More than $400 million in annual capacity payments Manage intra-month volume variance
Slide 60: Cheniere Marketing: Robust Strategy for Excess Volumes
Cheniere Marketing’s LNG portfolio is currently being marketed on a short, medium and long term basis Excess volumes have seasonality with incremental volume available during the premium Northern Hemisphere winter – potential for marketing seasonal strips of cargoes Firm volumes are used to st
Slide 61: Global LNG SPAs Signed in 2016: A Buyer's Market
Global LNG SPAs Signed in 2016: A Buyer’s Market 61 0 1 2 3 4 5 6 m tp a New projects Existing/UC/Portfolio 10 7 5 1 0 3 0 2 4 6 8 10 12 < = 0.5 >0.5 to 1.0 >1.0 to 1.5 >1.5 to 2.0 >2.0 to 2.5 > 2.5 D ea ls mtpa 0 2 4 6 8 10 12 5 yrs >5 to 10 yrs >10 to 15 yrs>15 to 20 yrs m tp a LNG Deals by Volume
Slide 62: Key Takeaways
Key Takeaways 62 Affordable, reliable U.S. and Canadian gas supply will supply growing global gas demand Deep and liquid resource base ensures affordability and scalability of gas supplies Cost curve continues to fall while resource base increases - 800 Tcf below $3.00/MMBtu Approximately 30%
Slide 63: Commercial Panel
COMMERCIAL PANEL
Slide 64: LNG Strategy and Communications
CHENIERE ENERGY, INC. LNG STRATEGY AND COMMUNICATIONS II Andrew Walker, Vice President
Slide 65: LNG Fundamentals are Supportive of Long-Term Growth
Pacific Basin SPAs Atlantic Basin SPAs 0 50 100 150 200 250 300 350 400 450 500 2016 2018 2020 2022 2024 2026 2028 2030 Global LNG Demand vs. SPAs (mtpa) Global LNG Demand Estimate Existing Capacity Newly Operational Under Construction 0 50 100 150 200 250 300 350 400 450 500 2013 2014 2015 2016 201
Slide 66: Cheniere Has Speed To Market Advantage as Balance Tightens
-10 0 10 20 30 40 50 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 mtpa LNG Capacity FID Incremental supply Forecast Source: Cheniere interpretation of Wood Mackenzie data (Q4 2016) LNG projects have long lead times from san
Slide 67: Estimated Breakeven LNG Pricing by Region
$7.5 $8.6 $11.4 $12.2 $10.4 $8.5 $9.6 $12.2 $13.2 $13.2 $5 $10 $15 $20 Cheniere Gulf Coast Southeast Asia Western Canada Northwest Australia East Africa LN G P ri ce s ($ /M M B tu ) 67 U.S. natural gas is abundant and cost competitive with other sources of global supply U.S. Gulf Coast liquefac
Slide 68: Emerging & New Markets Forecast to Underpin LNG Demand Growth
Emerging & New Markets Forecast to Underpin LNG Demand Growth 68 Source: Cheniere Research, Cheniere interpretation of Wood Mackenzie data (Q4 2016) 0 50 100 150 200 250 300 350 400 2005 2010 2015 2020 2025 2030 Bunkers Atlantic Africa Europe N. America S. America 0 50 100 150 200 250 300 350 400 20
Slide 69: Floating Regasification Continues to Unlock New Markets
Floating Regasification Continues to Unlock New Markets 69 Existing = 25, ~95 MTPA capacity Ordered/Available* = 9, ~38 MTPA capacity 2017 Proposed = ~40, ~100 MTPA capacity Price environment, technological solutions and LNG availability encouraging access • New importing markets and emerging new
Slide 70: Key Takeaways
Key Takeaways 70 Despite robust supply growth in the near term, the global LNG market is expected to rebalance and start tightening from 2020 1 Market Remains Cyclical but Cheniere Positioned as Most Responsive New competitive supply capacity needs to be sanctioned soon to replace maturing supply an
Slide 71: Gas Supply
CHENIERE ENERGY, INC. GAS SUPPLY III Corey Grindal, Senior Vice President
Slide 72: Gas Supply Guiding Principles
Establish counterparty / market liquidity Transacted with 68 counterparties in 2016 Pipeline capacity contracted at terminal level Pipeline capacity contracted upstream of terminal Term gas purchases into pipeline capacity Delivered 230,000,000 MMBtu to the terminal in 2016; still over 50% u
Slide 73: Sabine Pass Liquefaction Gas Supply
Sabine Pass Liquefaction Gas Supply 73 Delivered over 300 TBtu to the terminal with 99.9% scheduling efficiency Outperformed delivered supply cost target of 105% of Henry Hub Assets in place enable effective management of changing day-to-day plant consumption related to commercial operations a
Slide 74: Managing Changing Feed Gas Needs
Managing Changing Feed Gas Needs 74 1.6 1.8 2.0 2.2 2.4 Weds Jan 11 Thurs Jan 12 Fri Jan 13 Sat Jan 14 Sun Jan 15 TB tu Expected Sabine Pass Feed Gas Requirements for January 15, 2017 Production forecast and daily flows can be highly variable Adjustments to Production Forecast During Train 3 Commiss
Slide 75: Sabine Pass Gas Supply Infrastructure Advantage
75 Sabine Pass Gas Supply Infrastructure Advantage Transportation into SPL (TBtu/day) Pipeline Contracted Capacity Total Capacity CTPL 1.530 1.530 NGPL 0.550 0.750 Transco 1.200 1.500 KMLP 0.600 1.200 Total 3.880 4.980 Diverse and redundant pipeline network has allowed SPL to adapt to changing mar
Slide 76: Corpus Christi Liquefaction Gas Supply Following the Sabine Pass Model
Establish counterparty / market liquidity Currently enabled with 80 market participants Pipeline capacity contracted at terminal level Contracted for Train 1 and Train 2 load Pipeline capacity contracted upstream of terminal Continue to evaluate options for Train 3 Term gas purchases into pipe
Slide 77: Corpus Christi Liquefaction Pipeline Infrastructure Secured
Corpus Christi Liquefaction Pipeline Infrastructure Secured Sufficient firm pipeline capacity for Train 1 and Train 2 operations secured Once CCPL is completed by end of 2017, Gas Supply ready to commission pipeline and compression needed for CCL commissioning in 2018 CCL has built out a geogr
Slide 78: Key Takeaways
Key Takeaways 78 People, systems, and processes are in place to manage supply and logistics Scalable, difficult to replicate Management of intra-month price and gas supply volatility requires fully staffed trade floor in- tune with plant operations Competitive pipeline capacity and term supply
Slide 79: Commercial Operations and Asset Optimization
CHENIERE ENERGY, INC. COMMERCIAL OPERATIONS AND ASSET OPTIMIZATION IV Eric Bensaude, Managing Director
Slide 80: Commercial Operations & Asset Optimization Organization
Commercial Operations & Asset Optimization Organization 80 Liquefaction Asset Optimization Long-Term Short/Medium-Term Monetize Excess Volumes Short-Term Customers Long-Term Customers Commercial Operations Deliver into SPA Scheduling Customer Relationships Manage Risk Maximize Margin Capture Optim
Slide 81: Foundation Customer Deliveries
Foundation Customer Deliveries 81 More than 100 Cargoes Loaded from Sabine Pass, with Over 50 to Foundation Customers 0 5 10 15 20 25 Projected Foundation Customer Deliveries KEY MILESTONES Achieved Contracted September 16, 2016 • GNF Pre-commercial November 15, 2016 • BG DFCD June – November
Slide 82: Seasonality Can Impact Short-Term Margins
0 1 2 3 4 $/ M M B tu Historical Margins Asia Margin Europe Margin Seasonality Can Impact Short-Term Margins 82 Lower margins in forward curve: • Weaker oil and coal prices • Warm weather sensitivity • Additional LNG production ramping up Drivers that moved margins last winter: • Low Korean stocks a
Slide 83: Cheniere is One of the Top LNG Shippers
Cheniere is One of the Top 5 LNG Shippers 83 Oak Spirit transiting new locks at Panama Canal Jan’17 Over 25 vessels chartered • Ranging from 138,000 m3 to 174,000 m3 • 1,500 days in 2016 • 11 ship owners and 5 portfolio players 8 vessels on a multi-month basis 16 vessels for spot voyages Pea
Slide 84: Sabine Pass Cargoes Delivered to Countries to Date
Sabine Pass Cargoes Delivered to 19 Countries to Date 84 Sabine Pass LNG Facility Portugal Kuwait India Brazil Argentina Cargo Delivery Destination China Spain Sabine Pass Chile Mexico Jordan Dominican Republic Turkey Egypt Japan South Korea Italy UAE Source: DOE, Kpler Malta Pakistan
Slide 85: Optimization Example – Trade
Optimization Example – Trade 1 Sabine LNG cost $3.25 / MMBtu Asia $7.00 / MMBtu Freight $2.50 / MMBtu Illustrative Cheniere Profit Calculation ($/MMBtu) Asia LNG price 7.00 Shipping cost to Asia (2.50) Cost of LNG from Sabine (3.25) Cheniere profit 1.25 85
Slide 86: Optimization Example – Trade
Optimization Example – Trade 2 Freight $1.00 / MMBtu Americas $10.00 / MMBtu Asia cancellation fee $2.00 / MMBtu Sabine LNG cost $3.25 / MMBtu Illustrative Cheniere Profit Calculation ($/MMBtu) Americas LNG price 10.00 Asia cancellation cost (2.00) LNG price realized, net of cancellation 8.00 Shippi
Slide 87: Key Takeaways
Key Takeaways 87 The right people in the right places with the right systems and processes to market excess volumes across the globe Scalable to market additional growth capacity 1 Committed to deliver on commercial obligations to foundation and spot customers 2 Capturing global optimization oppor
Slide 88: Origination
CHENIERE ENERGY, INC. ORIGINATION V Ramzi Mroueh, Managing Director
Slide 89: Origination Group: A Strong Team in Place for Global Coverage
Origination Group: A Strong Team in Place for Global Coverage 89 Singapore Houston, TX Santiago, Chile London, U.K. Origination Office Americas EMEA Asia Pacific Tokyo, Japan Nationalities Spanish, 7 French, 5 Chinese, 4 Russian, 3 German, 2 Arabic, 1 Dutch, 1 Hungarian, 1 Italian, 1 Japanese, 1 Mal
Slide 90: Demand Forecast to Grow More than 200 mtpa by 2030
- 50 100 150 200 250 300 350 400 450 500 2000 2005 2010 2015 2020 2025 2030 mtpa Demand Forecast to Grow More than 200 mtpa by 2030 Driven by Supplemental & Growth Markets 90 LNG Market Segmentation Traditional Flex Growth Supplemental Type Characteristics Locations Demand Growth (mtpa) Supplemental
Slide 91: Origination Model Designed to Serve Segments of Opportunities
Origination Model Designed to Serve 3 Segments of Opportunities 91 Cheniere Marketing’s Flexible Liquefaction Capacity Enhances Ability to Serve Evolving End User and Market Development Segments Competitively Traditional Supplemental FOB deliveries Competitive / price driven process Able to un
Slide 92: Key Takeaways
Key Takeaways 92 Cheniere professionals are strategically located across the globe to meet customer needs 1 Active ongoing contracting discussions with multiple counterparties in the three core market segments 2 Able to serve traditional portfolio customers as well as new end users in growth and dev
Slide 93: Cheniere Energy, Inc. Analyst Day, April 19, 2017
CHENIERE ENERGY, INC. April 19, 2017 ANALYST DAY
Slide 94: Construction, Pipeline and Operations Panel
CONSTRUCTION, PIPELINE AND OPERATIONS PANEL
Slide 95: Engineering and Construction
ENGINEERING AND CONSTRUCTION Ed Lehotsky, Senior Vice President
Slide 96: Engineering & Construction Team
Engineering & Construction Team 96 Over 1,500 years of experience in construction of oil and gas facilities (~25 years average per person) Over 750 years of total LNG experience (over 12 years average per person) Ed Lehotsky SVP, Engineering & Construction New Project Management Project Controls
Slide 97: Sabine Pass Liquefaction Construction Progress
Sabine Pass Liquefaction Construction Progress Trains 1, 2, and 3 in Operation, Train 4 Expected 2H 2017, Train 5 Expected 2019 Note: Based on Guaranteed Substantial Completion Dates per EPC contract. Construction percentages complete as of March 31. 2017. DFCD Window Current Completion Schedule Pro
Slide 98: Sabine Pass Liquefaction Project Execution – April 2017
Sabine Pass Liquefaction Project Execution – April 2017 Trains 1, 2 & 3 Operational Train 4 Commissioning Train 5 Under Construction Train 6 Fully Permitted
Slide 99: Corpus Christi Liquefaction Construction Progress
Corpus Christi Liquefaction Construction Progress Trains 1 & 2 Expected Completion 2019 Stage 1 (Trains 1 & 2) 59.1% complete overall • Engineering 100% complete, procurement 78.6% complete, construction 30.7% complete • LNG Tank A 59.5% complete, LNG Tank C 51.7% complete • Target substantial com
Slide 100: Corpus Christi Liquefaction Project Execution – April 2017
Corpus Christi Liquefaction Project Execution – April 2017 Stage 1: Trains 1& 2, Tanks A & C, Marine Berths Under Construction Stage 2 Train 3, Tank B Fully Permitted
Slide 101: Equipment Manufacturers Across 26 States
CA CO IA LA MN NV NY OK OH TX PA VA Flowserve Ebara Pumps GE Energy Pax, LLC Delta Environmental Products Pax, Steel Inc. Rosemount Inc. Chart GE Linde Ag Petrochem Southwest Filter Co. Zeeco GE Energy P&W Alfa Laval GE Energy Aquatech Int’nl Chromalox Calgon Carbon Corp. GE Atlas Copco Rotork Inc.
Slide 102: Construction Labor at Liquefaction Facilities
Construction Labor at Liquefaction Facilities 102 On-Site Workforce Peaking in Early 2017 at ~8,200 Approximately 78 million construction man hours and more than $7 billion in wages
Slide 103: Key Takeaways
Key Takeaways 103 First three trains at Sabine Pass facility transferred to Cheniere’s care, custody, and control ahead of schedule and within budget 1 Commitment to completing remaining four trains under construction Safely On time and ahead of contractual dates On budget 2 Incorporate lesson
Slide 104: Pipelines
PIPELINES Chad Zamarin, Senior Vice President
Slide 105: Cheniere Pipeline Overview
Cheniere Pipeline Overview 105 Pipeline Mission Ensure reliable supply and operational flexibility for Cheniere’s LNG terminals Extend Cheniere’s supply reach to ensure basin and producer diversity Develop attractive investments that enhance Cheniere’s integrated value chain Proposed Midship P
Slide 106: Creole Trail Pipeline: Critical Infrastructure Serving Sabine Pass
Creole Trail Pipeline: Critical Infrastructure Serving Sabine Pass Overview: 94 miles of 42” pipeline, 53,000 HP of Compression Interconnections with Trunkline, Transco and TETCO Design Rate: 1,500,000 Dth/d Centralized gas control operations Can provide ‘swing’ capacity to assist in manag
Slide 107: Creole Trail Pipeline Map
Creole Trail Pipeline Map 107 SABINE PASS LNG JOHNSON BAYOU METER STATION 53,000 HP GILLIS COMPRESSOR STATION
Slide 108: Corpus Christi Pipeline: Critical Infrastructure Serving CCL
Corpus Christi Pipeline: Critical Infrastructure Serving CCL Overview 22 miles of 48” pipeline, 1.5 miles of dual 36” header 73,000 HP compressor station – 2 Solar Titan and 2 electric driven Solar compressors 5 receipt meter stations and one delivery meter to CCL Project Status Engineering
Slide 109: Corpus Christi Pipeline Map
Corpus Christi Pipeline Map 109
Slide 110: Proposed Midship Pipeline: Extending and Diversifying Supply Reach
Proposed Midship Pipeline: Extending and Diversifying Cheniere’s Supply Reach 200 miles of mainline and 33 miles of laterals originating in Kingfisher County, OK and terminating in Bryan County, OK Initial capacity of 1 Bcf/d, expandable to 1.4 Bcf/d through addition of horsepower Deliveries t
Slide 111: Proposed Midship Pipeline Map
Proposed Midship Pipeline Map 111
Slide 112: Key Takeaways
Key Takeaways 112 Develop attractive investments to enhance integrated, full-service LNG offering 1 Construct pipeline projects ahead of schedule and within budget 2 Operate critical infrastructure for our LNG facilities 3 Develop, Construct, and Operate Pipelines to Support LNG Value Chain Leverage
Slide 113: Operations
OPERATIONS Doug Shanda, Senior Vice President
Slide 114: Operations Organization
Operations Organization M an ag em en t an d S up po rt S ab in e P as s SVP, Operations – Douglas Shanda, 23 years of experience with 10 in LNG Total Operations liquefaction experienced employees have combined ~1330 years of experience with ~800 years in liquefaction operations from 23 facilities a
Slide 115: Liquefaction Capacity
Liquefaction Capacity 115 How do we define nominal production capacity? Nominal production capacity is the approximate expected capacity before adjustments, which include: • Planned maintenance • Reliability • Over design • Debottlenecking • Process conditions Are the adjustments the same for Sabi
Slide 116: Liquefaction Capacity
Liquefaction Capacity 116 4.5 mtpa Maintenance Adjustments Reliability Adjustments 4.3 mtpa 4.6 mtpa Planned Maintenance Unplanned Maintenance Nominal Capacity Adjusted Capacity What adjusted capacity can be expected from Cheniere’s 7 trains? Adjusted nominal capacity is expected to range between
Slide 117: Performance Versus 115% of HH
Performance Versus 115% of HH How do we measure performance? Performance is measured as a percentage to LNG Produced (%) • Defined as the percentage of feed gas utilized, converted to condensate, or lost plus realized price in the supply and transportation of feed gas and production of LNG versus
Slide 118: Facility Maintenance
Facility Maintenance Maintenance requirements for a liquefaction facility • Refrigerant turbines, compressors and ancillary equipment package represents the majority of maintenance • Covered by a Contractual Services Agreement (CSA) with GE • Pipeline quality gas and no front end liquids removal u
Slide 119: Key Takeaways
Key Takeaways 119 Experienced Operations leadership team and site teams 1 Current guidance for expected adjusted nominal capacity of 4.3 to 4.6 mtpa 2 Debottlenecking opportunities identified 3 Operational Excellence to Maximize Production Performance Facility gas utilization performance exp
Slide 120: Cheniere Energy, Inc. Analyst Day, April 19, 2017
CHENIERE ENERGY, INC. April 19, 2017 ANALYST DAY
Slide 121: Closing Remarks
CLOSING REMARKS Jack Fusco, President and CEO
Slide 122: Cheniere's Existing LNG Platform Creates Advantages for Growth
Cheniere’s Existing LNG Platform Creates Advantages for Growth Construction Operations Significant infrastructure investment at Corpus Christi and Sabine Pass sites • Site preparation • Utilities • Storage • Shipping Additional expansion at very competitive investment: ~$500-600/ton(1) Positio
Slide 123: Cheniere Energy, Inc. Analyst Day, April 19, 2017
CHENIERE ENERGY, INC. April 19, 2017 ANALYST DAY
Slide 124: Appendix
APPENDIX
Slide 125: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 125 Regulation G Reconciliations In addition to disclosing financial measures in accordance with U.S. GAAP, the accompanying presentation contains non-GAAP financial measures. EBITDA, Adjusted EBITDA, Contracted EBITDA, Distributable Cash Flow, Distributable Cas
Slide 126: Reconciliation of Non-GAAP Measures (Continued)
Reconciliation of Non-GAAP Measures (Continued) 126 Note: Totals may not sum due to rounding ($bn, except per share amounts or unless otherwise noted) 2017 Net Income (Loss) Attributable to Common Stockholders ($0.5) - ($0.3) Net Income (Loss) Attributable to Non-Controlling Interest $0.8 - $0.9 Inc