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Cheniere Partners Reports Third Quarter 2017 Results, Revises 2017 Guidance and Provides Full Year 2018 Distribution Guidance

HOUSTON, Nov. 14, 2017 /PRNewswire/ --

Summary of Third Quarter 2017 Results (in millions, except LNG data)


Three Months Ended

Nine Months Ended


September 30,

September 30,


2017


2016


2017


2016

Revenues

$

903


$

331


$

2,786


$

549

Net income (loss)

$

23


$

(82)


$

116


$

(257)

Adjusted EBITDA1

$

298


$

100


$

900


$

164

LNG exported:








Number of cargoes

44


18


135


33

Volumes (TBtu)

160


62


482


114

LNG volumes loaded (TBtu)

162


61


483


114

Revised 2017 Full Year Distribution Guidance


2017

Distribution per Unit

$

1.73

-

$

1.80

2018 Full Year Distribution Guidance


2018

Distribution per Unit

$

2.00

-

$

2.20

Recent Achievements

Strategic

  • As of October 31, 2017, more than 200 cumulative LNG cargoes had been produced, loaded, and exported from the SPL Project (defined below), with deliveries completed to 25 countries worldwide. Sabine Pass Liquefaction, LLC has successfully fulfilled its obligations to the foundation customers of Trains 1-3 and provided LNG to the marketing function of Cheniere Energy, Inc.

Operational

  • Substantial completion of Train 4 of the SPL Project was achieved in October 2017, more than five months ahead of the guaranteed completion date.
  • LNG production operations at the SPL Project continued uninterrupted during Hurricane Harvey.

Financial

  • In August 2017, the Date of First Commercial Delivery ("DFCD") relating to Train 2 of the SPL Project was reached under the respective 20-year Sale and Purchase Agreements ("SPAs") with Gas Natural Fenosa LNG GOM, Limited and BG Gulf Coast LNG, LLC.
  • In September 2017, we issued an aggregate principal amount of $1.5 billion of 5.250% Senior Notes due 2025 ("the 2025 CQP Senior Notes"). Net proceeds of the offering, after deducting commissions, fees and expenses, were used to prepay a portion of the outstanding indebtedness under our credit facilities.
  • In September 2017, Moody's Investors Service, S&P Global Ratings and Fitch Ratings assigned ratings of Ba2 / BB / BB, respectively to the 2025 CQP Senior Notes.

Liquefaction Project Update


SPL Project

Liquefaction Train

Trains 1-3

Train 4

Train 5

Train 6

Project Status

Operational

Operational

Under Construction

Permitted

Expected Substantial Completion

Complete

Complete

2H 2019

Expected DFCD Window

Start

Complete

1H 2018

2H 2019









Construction operations at the SPL Project have returned to productivity levels achieved prior to Hurricane Harvey.

__________________________

Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE American: CQP) reported net income of $23 million and $116 million for the three and nine months ended September 30, 2017, respectively, compared to net losses of $82 million and $257 million for the comparable periods in 2016.  Adjusted EBITDA1 for the three and nine months ended September 30, 2017 was $298 million and $900 million, respectively, compared to $100 million and $164 million for the comparable 2016 periods.

During the three and nine months ended September 30, 2017, 44 and 135 LNG cargoes, respectively, were exported from the SPL Project, of which 5 and 12, respectively, were commissioning cargoes.

Variances in results of operations for the three and nine months ended September 30, 2017, as compared to the three and nine months ended September 30, 2016, were primarily driven by increased income from operations, due primarily to the timing of completion of Trains and the length of each Train's operations within the periods being compared, partially offset by increased interest expense, net of amounts capitalized. Total revenues increased $572 million and $2.2 billion during the three and nine months ended September 30, 2017, respectively, as compared to the three and nine months ended September 30, 2016, respectively, primarily due to the increased volume of LNG sold that was recognized as revenues following the achievement of substantial completion of these Trains.

Total operating costs and expenses increased $423 million and $1.7 billion during the three and nine months ended September 30, 2017, respectively, compared to the three and nine months ended September 30, 2016. The increase in total operating costs and expenses was primarily due to an increase in cost of sales and, to a lesser extent, from increases in operating and maintenance expense and depreciation and amortization expense, partially offset by a decrease in general and administrative expense.

SPL Project Update

Through Cheniere Partners, we are developing up to six Trains at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the "SPL Project"). Each Train is expected to have a nominal production capacity, which is prior to adjusting for planned maintenance, production reliability, and potential overdesign, of approximately 4.5 million tonnes per annum ("mtpa") of LNG. Trains 1 through 4 are operational, Train 5 is under construction, and Train 6 is being commercialized and has all necessary regulatory approvals in place.

Distributions to Unitholders

We will pay a cash distribution per common unit and subordinated unit of $0.44 to unitholders of record as of November 3, 2017 and the related general partner distribution on November 14, 2017.

Investor Conference Call and Webcast

Cheniere Energy, Inc. will host a conference call to discuss its financial and operating results for the third quarter on Tuesday, November 14, 2017, 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.

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

About Cheniere Partners
Through its wholly owned subsidiary, Sabine Pass LNG, L.P., Cheniere Partners owns 100% of the Sabine Pass LNG terminal located in Cameron Parish, Louisiana, on the Sabine-Neches Waterway less than four miles from the Gulf Coast. The Sabine Pass LNG terminal includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 billion cubic feet equivalent (Bcfe), two marine berths that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately 4.0 Bcf/d.  Through its wholly owned subsidiary, Cheniere Creole Trail Pipeline, L.P., Cheniere Partners also owns a 94-mile pipeline that interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines.

Cheniere Partners, through its subsidiary, SPL, is developing, constructing, and operating natural gas liquefaction facilities at the Sabine Pass LNG terminal adjacent to the existing regasification facilities. Cheniere Partners, through SPL, plans to construct over time up to six liquefaction trains, which are in various stages of development, construction, and operations.  Trains 1 through 4 are operational, Train 5 is under construction and Train 6 is being commercialized and has all necessary regulatory approvals in place. Each liquefaction train is expected to have a nominal production capacity, which is prior to adjusting for planned maintenance, production reliability, and potential overdesign, of approximately 4.5 mtpa of LNG. SPL has entered into six third-party LNG SPAs that in the aggregate equate to approximately 19.75 mtpa of LNG and commence with the date of first commercial delivery of Trains 1 through 5 as specified in the respective SPAs.

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 September 30, 2017, 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' 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, and (vi) statements regarding future discussions and entry into contracts. 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 Table Follows)

Cheniere Energy Partners, L.P.

Consolidated Statements of Operations

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

(unaudited)



Three Months Ended


Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016

Revenues








LNG revenues

$

723


$

249


$

1,718


$

334

LNG revenues—affiliate

111


16


864


16

Regasification revenues

65


64


195


194

Other revenues

3


1


7


2

Other revenues—affiliate

1


1


2


3

Total revenues

903


331


2,786


549









Operating costs and expenses








Cost of sales (excluding depreciation and amortization expense shown separately below)

490


159


1,580


212

Cost of sales—affiliate


1



1

Operating and maintenance expense

73


38


205


80

Operating and maintenance expense—affiliate

31


14


70


36

Development expense

1



2


General and administrative expense

5


2


10


9

General and administrative expense—affiliate

18


25


63


68

Depreciation and amortization expense

87


44


239


92

Other

1



1


Total operating costs and expenses

706


283


2,170


498









Income from operations

197


48


616


51









Other income (expense)








Interest expense, net of capitalized interest

(153)


(114)


(437)


(229)

Loss on early extinguishment of debt

(25)


(26)


(67)


(54)

Derivative gain (loss), net

1


10


(2)


(26)

Other income

3



6


1

Total other expense

(174)


(130)


(500)


(308)









Net income (loss)

$

23


$

(82)


$

116


$

(257)









Basic and diluted net loss per common unit

$

(1.10)


$

(0.27)


$

(4.12)


$

(0.56)









Weighted average number of common units outstanding used for basic and diluted net loss per common unit calculation

247.2


57.1


121.2


57.1

___________________

(1)   Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed with the Securities and Exchange Commission.

 

Cheniere Energy Partners, L.P.

Consolidated Balance Sheets

(in millions, except unit data) (1)



September 30,


December 31,


2017


2016

ASSETS

(unaudited)



Current assets




Cash and cash equivalents

$


$

Restricted cash

1,395


605

Accounts and other receivables

172


90

Accounts receivable—affiliate

18


99

Advances to affiliate

57


38

Inventory

77


97

Other current assets

35


29

Total current assets

1,754


958





Non-current restricted cash

48


Property, plant and equipment, net

15,097


14,158

Debt issuance costs, net

42


121

Non-current derivative assets

37


83

Other non-current assets, net

213


222

Total assets

$

17,191


$

15,542





LIABILITIES AND PARTNERS' EQUITY




Current liabilities




Accounts payable

$

24


$

27

Accrued liabilities

419


418

Current debt


224

Due to affiliates

55


99

Deferred revenue

134


73

Deferred revenue—affiliate

1


1

Derivative liabilities

4


14

Total current liabilities

637


856





Long-term debt, net

16,040


14,209

Non-current deferred revenue

2


5

Non-current derivative liabilities

2


2

Other non-current liabilities—affiliate

25


27





Partners' equity




Common unitholders' interest (348.6 million units and 57.1 million units issued and outstanding at September 30, 2017 and December 31, 2016, respectively)

1,559


130

Class B unitholders' interest (zero and 145.3 million units issued and outstanding at September 30, 2017 and December 31, 2016, respectively)


62

Subordinated unitholders' interest (135.4 million units issued and outstanding at September 30, 2017 and December 31, 2016)

(1,086)


240

General partner's interest (2% interest with 9.9 million units and 6.9 million units issued and outstanding at September 30, 2017 and December 31, 2016, respectively)

12


11

Total partners' equity

485


443

Total liabilities and partners' equity

$

17,191


$

15,542

___________________

(1)   Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, 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 (loss) 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 and changes in the fair value of our commodity derivatives. Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) 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 nine months ended September 30, 2017 and 2016 (in millions):


Three Months Ended


Nine Months Ended


September 30,


September 30,


2017


2016


2017


2016

Net income (loss)

$

23


$

(82)


$

116


$

(257)

Interest expense, net of capitalized interest

153


114


437


229

Loss on early extinguishment of debt

25


26


67


54

Derivative loss (gain), net

(1)


(10)


2


26

Other income

(3)



(6)


(1)

Income from operations

$

197


$

48


$

616


$

51

Adjustments to reconcile income from operations to Adjusted EBITDA:








Depreciation and amortization expense

87


44


239


92

Loss from changes in fair value of commodity derivatives, net

14


8


45


21

Adjusted EBITDA

$

298


$

100


$

900


$

164

 

CONTACTS:




Investors


Randy Bhatia:

713-375-5479

Megan Light:

713-375-5492

Media


Eben Burnham-Snyder:

713-375-5764

 

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SOURCE Cheniere Energy Partners, L.P.

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