Cheniere Energy, Inc. Price & Performance (LNG)

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 two of our presentation contains a discussion of those forward looking statements in a [indiscernible] In addition, we may include references to certain non GAAP financial measures such as consolidated adjusted EBITDA and distributable cash flow. A reconciliation of these measures to the most comparable GAAP measure can be found in the appendix of the slide presentation. As part of our discussion of Cheniere's results, today's call may also include selected financial information and results for Cheniere Energy Partners LP LP or CQP. We do not intend to cover CQP's results separately from those of Cheniere Energy Inc. The call agenda is shown on Slide three. Jack will begin with operating and financial highlights. Anasol will then provide an update on the LNG market, and Zach will review our financial results and 2025 guidance. After our prepared remarks, we will open the call for Q and A. I'll now turn the call over to Jack Fusco, Cheniere's President and CEO. Thank you, Randy.

Good morning, everyone. Thanks for joining us today as we review our outstanding results from the fourth quarter and full year 2024. And discuss our vision for what I expect to be an exciting and rewarding year for [indiscernible] in 2025. In 2024, we once again generated excellent results across the key strategic priorities of the company driven by our uncompromising ambition to consistently deliver sustainable long term value to our stakeholders.

These results underpinned by Cheniere's safety first culture Operational excellence, customer focus and financial discipline further distinguished Jeneer in the market. And reinforce our reputation as best in class across our entire platform. We take these successes in 2025 with the wind at our backs as a global market call for new LNG capacity Energy security in general and natural gas in particular have been prioritized over the last several years accelerated by geopolitical conflicts in multiple theaters that have refocused government on the long term importance of natural gas. Throughout these conflicts, the criticality of a long term energy supply portfolio that is diverse secure and perhaps most of all reliable. Has been laid bare and Cheniere's LNG Stands As An Ideal And Powerful Solution. The United States has a significant opportunity to provide that reliable and secure energy supply the world over. And we now have a more constructive backdrop for the development and operation of large scale energy infrastructure. In this country. We are engaged with the new administration in Washington and are optimistic for a more clear transparent and predictable permitting and regulatory regime so we can continue to safely build and operate more LNG capacity the world so clearly needs for decades to come Please turn to Slide five.

Where I'll highlight our key accomplishments and results for the fourth quarter and full year 2024 as well as introduce our financial guidance for 2025. In the fourth quarter, we generated consolidated adjusted EBITDA of approximately 1,600,000,000.0 bringing our total for the full year to $6,155,000,000 We generated distributable cash flow of approximately $1,100,000,000 in the fourth quarter and approximately 3,730,000,000.00 for the full year. Net income in the fourth quarter totaled and approximately $3,300,000,000 for the year. Full year EBITDA landed in the middle of our recently increased guidance range and $155,000,000 above the high end of the original range provided a year ago.

On DCF, we delivered results above the most recent range and $300,000,000 above the high end of the original range. These outstanding financial results are once again enabled by the relentless focus on performance. That I'm proud to share with my 1,700 Cheniere callings around the world. We produced a record amount of LNG in 2024.

Approximately 45,000,000 tons which is over 10% of the global LNG supply [indiscernible] And we did so while successfully completing turnarounds at both Sabine Pass and Corpus Christi and most importantly, we once again delivered a top quintile safety performance. In 2024, SPL achieved 11,000,000 labor hours in Corpus Christi, achieved 7,000,000 labor hours, about a single loss time [indiscernible] All of our stakeholders should take as much pride in these results as I do. As the Cheniere production teams continue to set the safety and reliability standard in our industry. During 2024, Zach and his team continue to make allocation plan, deploying over $1,500,000,000 towards our Stage three project paying down $800,000,000 of long term debt and buying back almost 14,000,000 shares for approximately $2,250,000,000 In addition, we increased the dividend by 15% to $2 per share annualized and announced another $4,000,000,000 share repurchase authorization last summer while ahead of schedule. Looking ahead to the full year 2025, I'm pleased to introduce our 2025 financial guidance of $6,500,000,000 to $7,000,000,000 in consolidated adjusted EBITDA dollars 4,100,000,000.0 to $4,600,000,000 in distributable cash flow, and $3,250,000,000 to $3.35 in per unit distributions at CQP. These ranges reinforce four was a trough year for EBITDA in BCF as we expect year over year growth in 2025 as Corpus Christi Stage three begins to enter operations.

The guidance range contemplates the first three trains of Corpus Stage three startup production this year. Zach will have more to say on guidance in a few minutes. But we are committed to delivering results within these ranges for 2025.

We made significant progress on our growth during 2024 as demonstrated from our progress on our Corpus Christi Stage three project Bechtel continues to execute construction and commissioning on an accelerated schedule. At year end, total completion stood at 77.2%, with the construction across the entire project at over 42% complete. We were proud to achieve first LNG back in December, an important milestone that helps reinforce our forecast timeline for Train one to reach substantial completion by the end of the first quarter. I'll discuss Stage three more on the next slide. With regard to Corpus Christi trains eight and nine, the project is nearing the final regulatory approvals required in order to reach FID and we remain on track to reach FID on this Brownfield expansion in this year, We recently placed orders for the long lead time items to ensure we can continue our efforts without delays upon receipt. Of the remaining necessary [indiscernible] Please turn to Slide six, where I'll provide more in-depth look at our progress on Corpus Christi Stage three. We're working closely together with Bechtel to move Stage [indiscernible] Train one commissioning continues to progress to plan and I'm pleased to share that this week we completed production of our first for cargo of LNG from the Stage three project.

Over 5,000 personnel are working to safely advance the project towards completion we are beginning to turn a significant number of systems over to commissioning and startup teams on Train two.

In addition, all equipment and materials on Trains one through seven have been procured and delivered at this point. Mitigating Stage three risks of import tariffs. We continue to target the first three trains to ramp up production by year end of this year and all seven trains to be substantially complete. By the end of twenty twenty six. Please turn to Slide seven where I highlight our strategic priorities for 2025. First and foremost, we expect to reinforce our track record of best in class operations in 2025. We will continue to operate our business the right way the safe way especially as we construct and commission Corpus Christi Stage three. Our hard earned reputation in the market as a safe and reliable operator is a significant competitive advantage one which will serve all of us well for the long term. And it is vital we maintain that advantage. Second, we are committed to getting Corpus Christi Mid scale trains eight and nine to [indiscernible] As I just mentioned, we look forward to receiving the remaining regulatory permits in the near future. Are taking the steps necessary in preparation. An FID later this year. During 2024, we locked in approximately $500,000,000 of long lead time equipment and other costs under limited notices to proceed with Bechtel related to trains eight and nine.

Helping to ensure the project can maximize efficiencies on both cost and schedule. Finally, we intend to strategically pursue permits to ensure the long term growth optionality of our Sabine Pass and Corpus Christi footprints. As I said at the beginning of my remarks, we are actively engaged with the new administration are very encouraged by the early action and stated policy goals prioritizing a clear, transparent and durable permitting process. Given that improvement in the permitting environment for LNG which is a stark contrast from just a few months ago. We have an opportunity in a strategic imperative to secure permits for significant growth at both Sabine and Corpus, in order to de risk the permitting requirements of future project development. With line of sight to a total capacity of over 90,000,000 tons per annum, We will of course always adhere to our disciplined capital investment parameters so that any incremental capacity is likely to be built under a phased approach while optimizing our brownfield advantages at both facilities. [indiscernible] while we have this window, we intend to aggressively pursue permits at both sites give ourselves a path to potentially more than double our current operating capacity once permits and accretive economics online.

I look forward to updating you all on these efforts in the coming quarters. As they develop. 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. Thanks, Jack, and good morning, everyone.

Before we turn to a discussion of the markets, I'd like to acknowledge the constructive progress made in recent weeks towards restoring peace between Russia and Ukraine.

While it remains a fluid situation and the peaceful solution in the near term is not a given, we're encouraged by the ongoing talks and hope resolution can be achieved soon. The Russia Ukraine conflict over the last three years had a tremendous impact on global energy markets, not only altering supply demand balances, but also serving as a powerful reminder of the criticality of a secure and reliable energy supply portfolio. It has once again highlighted the vital role natural gas plays in the everyday lives [indiscernible] and economies around the world.

A resolution to the years long war would likely result in the restoration of incremental Russian gas volumes into Europe over time. We believe this would aid a rebalancing in the gas market and help support a more affordable and stable pricing environment conducive to long term natural gas and LNG demand growth. Now please turn to Slide nine. We'll start with a look back at '24. The market remained relatively tight throughout last year due to limited growth in supply capacity, coupled with strong demand outside of Europe, and continued geopolitical tensions throughout the year. Global LNG trade grew by less than 4,000,000 tons year on year as project delays Russian sanctions and a lull in new projects coming online limited supply growth. While new projects started up in Russia, The U. S, Mexico and The Congo, these projects contributed very little volume to the market due to starting up late in the year or in the case of Russia sanctions preventing cargoes from reaching markets. As a result, the increased LNG consumption in Asia as well as other markets such as Egypt and Brazil was satisfied at the expense of Europe for most of the year. These conditions continue to support spot prices, which remained elevated albeit thankfully lower than the unprecedented levels of 'twenty two as the post crisis rebalancing gradually continued.

ETF monthly settlement prices averaged over 20% lower than the 'twenty three average Similarly, the settlement price for JKM averaged $11.8 MMBtu in 2024, over 25% lower versus '23 Average Henry Hub settlement price was 17% lower in '24 compared to '20 However, starting in late twenty twenty four, cold weather in Europe coupled with the expiry of the gas transit agreement between Russia and Ukraine at the end of 'twenty four, caused the rebound in European spot prices with a narrowing and later reversal of the JKM TTF spread in order to attract cargoes into Europe. Let's turn to the next page and address this in further detail.

In 2024, Europe's imports declined 19% year over year, down over approximately 22,000,000 tons.

Due to sluggish growth in the industrial sector lower gas fired power generation, and competing demand for volume outside the region.

However, Europe's fundamentals improved in the second half of the year as regional balances reversed course, especially in the fourth quarter, when Europe turned tighter amid winter weather and the expiry date for Russian natural gas flows through Ukraine neared. While gas fired generation fell 10% year on year, a drop in renewables output in the fourth quarter along with persistent cold temperatures resulted in more gas fired generation which rose 15% year on year This accelerated gas withdrawals from underground storage bringing inventory levels below the pre war five year average and roughly 17 Bcm below the comparable period last year. This decline is equivalent to approximately 180 cargoes of LNG. And is likely the reason we saw a swift call on cargoes into Europe towards the end of the year and into the beginning of 'twenty five. We believe this fall is likely to continue through most of this year LNG will be critical in mitigating the loss of Russian gas in Europe and helping replenish inventories for next winter in the absence of other incremental supply alternatives. While Europe has had a tale of two halves in 2024, Asia consistently experienced growth across its markets for most of the year.

Asia added over 20,000,000 tons of LNG imports, up 8% year on year to two eighty three million tons.

China was the most significant contributor to this growth increasing 10% to 78,000,000 tons not quite back to its pre war peak China's growth in LNG imports came as the country's overall gas demand grew roughly 8% across all major sectors. Including transportation, which reached an estimated 15,000,000 to 16,000,000 tons in 2024. Additionally, as is the case across most of the region, China experienced heat waves this past summer, which helped boost power generation from its growing gas fleet which added 19 gigawatts of capacity in 2024. This builds on the 10.3 gigawatts that were added in 2023 for a current total of 145 gigawatts of installed gas power generation capacity.

In addition to CCGT capacity, the country in installed an incremental 24,000,000 tons per annum of regas capacity. An increase of 20% and an additional 141 Bcf or four Bcm of underground storage capacity for an estimated total of nine fifty three Bcf or 27 Bcm as of the end of twenty twenty four. All aligned with the country's goal to reach peak coal consumption this year peak carbon emissions by 02/1930 and grow natural gas to 15% of primary energy. As we've noted on previous calls, we believe that the Asia Pacific region would will continue to support LNG demand growth for decades to come. And 2024 provides an added conviction to that thesis. The region accounted for nearly 45% of gas demand growth in 2024 which represents an all time high globally growing at a rate of 2.8% year on year representing incremental demand of approximately 11 Bcf a day. Let's move to the next slide.

The global gas market has gained significant flexibility with the growth in LNG trade. Which plays a key role in balancing the global gas market evidenced by the avoidance of a severe energy crisis in Europe into 2024 we believe it is likely to remain a key contributor to global energy supply security for decades [indiscernible] Throughout 2024, there were numerous and at times compounding factors impacted the supply and demand of LNG and contributed to sustained elevated pricing in the short end of the curve last year. These include extreme weather events and shortfalls on the supply side. Amid few counterbalancing elements last year, these factors coincided to create major trade deficits in some markets. As I mentioned earlier, the start of new projects in 2024 did little to offset the supply deficits resulting from other project delays system outages and resource maturation just to name a few. Completing gas resources for LNG in legacy supply areas such as Egypt, Algeria, Trinidad and even Australia have far outweighed gains in other areas such as Argentina where domestic gas production growth helped reduce the country's imports of LNG last year. And in fact, Australia has taken Train two at Northwest shelf offline due to We believe examples like these are structurally supportive of demand for LNG supply in the future.

While the energy security provided by Destination Flexible LNG further reinforces the prospects of LNG demand growth in general. The expected growth in the LNG market will require an additional estimated two thirty MTPA of LNG supplies in the coming decade. And new supply from Cheniere both under construction and in development, will not only help meet this demand, but also should help ensure improved availability, deliverability and affordability of gas supply globally. While offsetting some of the legacy resource depletion and ensuring greater energy security to markets worldwide. With that, I'll turn the call over to Zach to review our financial results and guidance.

Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our and key financial accomplishments. And to discuss our financial guidance for 2025.

Turn to Slide 13, please. For the fourth quarter and full year 2024, we generated net income of approximately $977,000,000 and $3,250,000,000 Consolidated adjusted EBITDA of approximately $1,600,000,000 and $6,155,000,000 and distributable cash flow of approximately $1,000,000,000 and $3,730,000,000 respectively.

With these results, we've now reported positive net income for the second full fiscal year. Compared to 2023, our fourth quarter and full year 2024 results reflect the moderation of international gas prices, as well as a higher proportion of our LNG being sold under long term contracts. And lower contributions from optimization activities upstream and downstream of our facilities as the extreme market volatility continues to subside since 2022 and 2023.

These impacts were partially offset by higher volumes of LNG from our two sites during the year. During the fourth quarter and full year, we recognized in income six fifteen and two thousand three hundred and forty nine TBtu of physical LNG. Which included six zero five and two thousand three hundred and twenty five TBtu from our projects.

And ten and twenty four TBtu sourced from third parties respectively.

Approximately ninety two percent and ninety six were sold in relation to term SBA or IPM agreements. While we have many significant achievements to highlight from 2024, I'm particularly proud of the execution on our 2020 vision capital allocation plan throughout the year. In 2024, we deployed approximately $5,400,000,000 towards the key pillars of the plan. Shareholder returns, accretive growth, and balance sheet management. As of year end, we have allocated nearly $14,000,000,000 of our $20,000,000,000 target by 2026.

That we intend to surpass and enhance our capital returns. While retaining financial flexibility to fund accretive growth across our platform. All of which to position us to achieve our target of generating over $20 per share of run rate distributable cash flow for our shareholders. During 2024, we repurchased approximately 13,800,000.0 shares for approximately $2,300,000,000 Having repurchased over 10% of our outstanding shares since announcing our 2020 vision plan in September 2022, we are already over halfway to our stated initial target of 200,000,000 shares outstanding. This progress led us to increase our share repurchase authorization last year by $4,000,000,000 through 2027. Which we are currently working through opportunistically. We also declared $1.87 per common share in dividends for 2024. And paid over $400,000,000 in dividends during the year. As previously announced with our June capital allocation update, we increased our quarterly dividend by approximately 15% to $2 annualized and intend to follow through with our guidance of 10% dividend growth Annually, through the end of this decade. We remain committed to our targeted payout ratio of approximately 20% over time which will enable us to retain the financial flexibility essential to our comprehensive and balanced long term capital allocation plan.

And disciplined self funded growth objectives. During the fourth quarter and full year, we repaid $350,000,000 and $800,000,000 of outstanding long term indebtedness respectively, During the year, we fully repaid the SBL twenty twenty four notes and addressed our 2025 maturities across the complex. Only $300,000,000 of principal remaining, on the SVL 2025 notes. Which we plan to repay with cash on hand at maturity in March. During the year, we also issued the inaugural investment grade bond at Cheniere Energy Inc. Following our blueprint for strategic refinancing, extending our maturity all while de securing and desubordinating Looking ahead, you can expect more of this while in the near term, we will continue to focus our debt pay down within the CQP complex preparation, for financing the SPL expansion project. The rating agencies continue to recognize our progress on balance sheet management through our corporate structure in 2024. Last year, we received our twenty second credit rating upgrade since 2021 and are now investment grade at every Cheniere issuer by all three rating agencies. The continued recognition from the ratings agencies reflects our capital discipline, proven project execution, and operational excellence. And having developed and structured these projects to have robust credit metrics, over the long term.

During the fourth quarter and full year, we funded approximately $220,000,000 and $1,500,000,000 of CapEx on Stage three. Bringing total spend on the project to over $4,500,000,000 We also deployed approximately $400,000,000 2024 towards future growth and debottlenecking. Including procurement for certain equipment for mid scale trains eight and nine and continued development capital to progress the SPL expansion project. To date, we have funded over $300,000,000 of the approximately $500,000,000 of costs that Jack mentioned we locked in for mid scale trains eight and nine related infrastructure. With approximately $3,000,000,000 in consolidated cash and ample undrawn revolver and term loan liquidity throughout the Cheniere Complex, We expect to continue equity funding the Stage three CapEx while remaining active on our opportunistic buyback program. As we continue to manage our cash balances efficiently. Turn now to Slide 14, where I will For the year, Today, we are introducing our full year 2025 guidance ranges of $6,500,000,000 to $7,000,000,000 in consolidated adjusted EBITDA and $4,100,000,000 to $4,600,000,000 in distributable cash flow. And the $3.25 to $3.35 per common unit of distributions from CQP. From 2024 axles to the midpoint of 2025 guidance, 2025 is up 10%, 17% and percent respectively. Solidifying 2024 as a trough year with Stage three startup driving higher financial performance expectations this year.

Consistent with what we discussed on the 3Q call, these changes reflect our production forecast of 47,000,000 to 48,000,000 tons of LNG in 2025. Which contemplates our existing nine train platform plus our outlook for production from the first three trains at Corpus Christi Stage 3 this year. Achieving first LNG in December and first cargo already this month together with the commissioning of Train one tracking on schedule, reinforces our conviction in our forecast of 47,000,000 to 48,000,000 tons of LNG production consistent with the October call, As such, our team has continued to forge sell some of our uncontracted volumes opportunistically And today, we forecast approximately 1,500,000 to 2,000,000 tons of unsold capacity for the remainder of 2025. Of the approximately 3,000,000 to 4,000,000 tons of spot capacity for 2025 guided to on the last call the CI team has now locked in almost 2,000,000 tons at attractive market netbacks up from over 1,000,000 tons as of the last call.

Given that exposure, we forecast that a $1 change in market margin would impact EBITDA by approximately $75,000,000 to $100,000,000 for the full year.

However, most of the remaining open volumes will be contingent on the timing and ramp up of the first three trains of Stage three. Looking at curves today, netbacks, while vaults With the timing of our Stage three trains coming online, and the resulting incremental marketing volumes, could drive significant variability in our expected earnings for 2025. As with the commissioning of our first nine trains, we hope to improve the commissioning process for each subsequent train by employing lessons learned. We continue to expect the remaining mid scale trains at Stage three to reach substantial completion in 2026.

At which point we have several million tons of new long term contracts starting in 2026 and 2027, Keeping our platform over 90% contracted, with creditworthy counterparties and take or pay style cash flows and averaging approximately 95% contracted through the mid-2030s. As always, our result could be impacted by the timing of certain cargoes around year end. And as noted on prior calls, our DCF could be affected by changes in the tax code. Particularly as it relates to any coming tax reform The IRS transition guidance and the final rules of the corporate alternative minimum tax.

These changes can impact the timing and amount of our cash tax payments this year and going forward. But should be immaterial on an NPV basis and not impact our ability to generate over $20,000,000,000 of available cash through 2026. As Jack noted, in 2025, we are focused on bringing Stage three online safely while supporting this year's financial results. Progressing Trains eight and nine to FID while Bechtel remains on-site constructing and commissioning Stage three and to take advantage of a constructive permitting window to provide line of sight to a total of over 90,000,000 tons. Of permitted capacity across both sites which will help solidify optionality for future brand filled growth Long term, 2025 is already off to a great start. We're pleased to see the meaningful progress at Stage three, keeping that project ahead of schedule. Will help us deliver on EBITDA growth in 2025. Encouraged by strong and improving fundamentals across our industry. But we also take comfort in the strength and resiliency of our highly contracted platform that has been demonstrated through multiple cycles making us a trusted long term partner to all of our stakeholders.

As we remain focused on maintaining our track record of reliability, safety and operational excellence, we will continue to serve as responsible, transparent stewards of capital in order to grow our leading infrastructure platform. And enhance the long term compounding value delivered to our stakeholders. While delivering on our commitments by supplying our customers with reliable, affordable and cleaner burning LNG. That concludes our prepared remarks. Thank you for your time and your interest in Cheniere. Operator, we're ready to open the line for questions. We'll now take our first question from Theresa Chen with Barclays.

Good morning. Thank you for taking my questions. First, it's great to see the seamless execution and the tailwinds behind your business.

Going back to the comments on the recent geopolitical developments related to Russia and Ukraine, Has this altered your view on the path forward for U. S. LNG in particular? Have you seen any effects on your commercial discussions for a long term contract European customers, and understanding that there's quite a bit going on over there between geopolitical developments the weather, the depleting inventories and so on. So I would love to hear your thoughts here.

Teresa, thank you very much. This is Jack. I'll start and I'll turn it over to Anatol and he can talk more specifically about his interactions with our customers. But first, we pray for world peace. I mean that we've has been very concerning these last three years of what's going on just more broadly around the world, not only in the Ukraine So we pray that we can settle things down and get back the basics and let people live and enjoy their lives. So as you know, we have a very highly contracted business model So we have anticipated a very volatile commodity market going forward. And it's no different than what we've seen in the past. So whether it was COVID in 2020, or the Ukraine Russian war in 2023 and beyond, we expect there to be a lot of volatility in a commodity driven market. But more specifically on our engagements with our customers, I think what's been extremely highlighted by this war is that energy security, energy diversity is necessary for any [indiscernible] So with that, Anitol, do you have any more to Thanks, Jack. Thanks, Theresa.

It is a backdrop of volatility and uncertainty. It is [indiscernible] was heard loud and clear by the market. U. S. Sent a record amount of volume to Europe, 86% of our cargoes in January.

Went to Europe and is helping resolve the current situation but inventories, as you know, are still order magnitude 25% lower than they were last year.

You have multiple conflicting events playing out as we commented and Jack further commented. Hopefully, there's good progress on on peace and the hot wars starts to ebb, On top of that, we have a very favorable geopolitical environment, both on The U. S. Side, where we have good support from the administration to continue our growth ambitions as well as from Europe, on the one hand aims to end the conflict, but on the other hand as soon as Nick week, we'll likely announce cessation of all energy, Russian energy imports into Europe. All this results in a backdrop where the reliable and certain product that we offer with full destination flexibility it's just hard to see how there's a better solution to navigate the uncertainties that are on the comp. So we have a number of good tailwinds and hope that that will be true for Europe at large.

Got it.

And turning to the other side of the world, as the Trump administration targets The U. S. Trade deficits with international trading partners including top LNG importers in Asia, There seems to be more willingness to shore up gas supplies with U. S. LNG volumes. What do you make of this? Do you think this is largely political rhetoric? Or would you expect, an acceleration in commercial development from here complementing the structural demand growth from that area of the world. [indiscernible] very similar to what happened during President Trump's first term when in November of twenty seventeen, I was invited to join the President and [indiscernible] on a trip through Asia and that resulted in our first that first long term energy contract with between China and Cheniere.

And I would expect that he's very focused on making The U. S. Energy dominant and I feel pretty confident he will follow through and help us all get get more products sold and grow our business here domestically.

Yes, Theresa, just to add to Jack's comments we have this tremendous pull from Asia for gas in general and LNG. Unlike other LNG suppliers, The U. S. Does not do government to government transactions. That said, governments are very important in these discussions and ultimately they are commercial deals, Jack mentioned the one we executed with Petro China in 2018, we've clearly shown the world the benefit of this destination flexibility, reliability and it's no accident that we've had a number of repeat engagements with China and other customers in Asia and we expect that to continue to be the case having proved this concept and having executed and further built our relationships through these various cycles. So Hard to say that these are not tailwinds for us.

Thank you very much. [indiscernible] take our next question from Justin Jenkins with Raymond James.

Hey, thanks. Good morning, everyone. I guess maybe I tack on to Theresa's question and Jack, you may mentioned this in your remarks, but maybe some more details on how the early days of the Trump administration have been versus your expectations on the regulatory and firm [indiscernible] maybe also how that potential for new capacity has played into contracting discussion as well. Justin, it's been refreshing quite honestly.

When we produced First LNG at Stage three in December. The first email that came across my desk was [indiscernible] the then nominated Secretary of Energy [indiscernible] [indiscernible] But and then the second email came from the former Secretary of Energy Dan Ballet who was with during President Trump's first administration. So it just it helps. These are very complicated, very capital intensive projects. There's a lot of different moving parts at any given time. Put together having regulatory certainty is very important It's not not everything that makes the project go, but it's very, very important in our timeline. So the focus and communications have been very strong and very clear.

Great.

Thanks, Jack. I guess if I follow-up on guidance here, it looks like 1,000,000 to 2,000,000 tons of Stage three volumes incorporated in the EBITDA guidance. Is that mostly just Train one and maybe some of Train two getting into EBITDA for the year? Or how are you framing that volume sensitivity in 2025? Sure. Just to summarize for everybody, we've guided to 47,000,000 to 48,000,000 tons of LNG this year, which would be the most by a few million tons that we've ever done.

That's based on the the foundation of the first nine trains at 45,000,000 tons and then Stage three coming online.

Getting us to 47% to 48 I'd say a little less than 1,000,000 tons is expected to be commissioning and that gets you to like over 46,000,000 to 47,000,000 tons. To get to the high end of that range, basically, we're going to need three trains up and running and pretty much fully there by early in the fourth quarter of the year. And then to get to the low end of the range, basically that would mean only two trains hit substantial completion this year. Right now, we feel very good that we're in the middle of that range. And things are progressing well.

But that's really the toggle between that 1,000,000 to 2,000,000 tons of P and L operational production.

Perfect.

We'll take our next question from Bert Sanzibaro with Wolfe Research.

Hi, good morning.

Can you please talk to optimization you've already seen year to date, whether it's shipping optimization, with Asia Europe spreads looking tight in certain periods or procurement from gas basis volatility? Sure. We won't get into all the details of optimization. And as you know, as we think about guidance, and this is the initial guidance we've given for 2025, We don't lag into most of the optimization in the early guidance. So that'll come with time as we continue to lock it in. And the optimization comes from upstream of the plant through our lifting margin and then downstream of the plant as we optimize with some third party sourcing and moving cargoes around and taking advantage of at times the arbitrage between JKM and TTF. And then obviously sub chartering. As one would expect with sub chartering, our shipping rates much lower year over year.

Addition to that, with Stage three coming online, our length in our sub chartering like portfolio or our chartering book is less.

So I'd imagine that will be less of a driver of the optimization this year. But it's fair to say we've already locked in $100,000,000 of optimization To get to the upside of our guidance range, we're keen to try to lock in a couple hundred more.

Thanks for that. And what are you seeing as far as pricing for long term SDAs recently? And has there been any notable upward pressure as costs for newbuilds are rising?

Yes. So it is a competitive market as you can imagine. We have a number of projects that of course have FID ed over the twenty two twenty twenty three period. But as we've said on previous calls that the Cost side of the equation is obvious to everyone and we are at or above the top end of our historical range of two to two fifty For Cheniere's projects, we are confident that we can leverage our reliability and operational performance having never missed a foundation customer cargo and extract a premium from that market. So that's why we're comfortable saying we're at or above the top end of that range. That is up meaningfully from where we were, let's say, three or four years ago, but I would say it's fair to say that it is not commensurate with the cost pressures in the market and as Zach will remind you, in order to move forward for us, we need to meet all of our investment parameters and we have to use every ground field advantage in our book to get to that hurdle.

And just to add to that Brownfield advantage, I mean, we already have Bechtel on-site at Corpus and we're keen to FI FID midscale eight to nine this year. Which will just be two added trains and and we have some plans to unlock more debottlenecking there to get closer to 60,000,000 tons as a total portfolio.

And then we did speak to the idea that we're going to take advantage of this constructive permitting window to get over 90,000,000 tons.

But there's definitely flexibility there to do it in phases And there's pretty good line of sight of first phases at both sites to get at least a large scale train or so that is very brownfield, meaning no tanks, no pipelines, no births, And that's going to allow us to be cost competitive and allows even these these SBA levels that are better than they had been but maybe haven't inflated as much as things like labor have. Worked themselves out and put us in a really good position to continue to grow well beyond 60,000,000 tons in the coming years.

Thank you.

We'll now take our next question from CERN on Russian gas coming back into the marketplace and LNG supply in general coming in. You've touched on this a number of times in the call, but just wondering if you might be able to expand a bit more, I guess, with regards to how you see this transpiring over time. In our minds, lower or even stable LNG prices have been helpful to incentivizing demand, particularly in Asia. Seems to be the long term growth avenue here. I'm just wondering if you could could share some more thoughts along these lines.

Thanks, Jeremy. And again, as we've commented, we yearn for peace and we yearn for more moderate and stable economics of our product. We can control to a large extent safety and reliability but market will dictate the economics. And as you know, the market has the gas market, for example, globally grew by almost 3% last year, but of course, LNG market didn't grow or grew 4,000,000 tons off a over 400,000,000 ton base. So the market needs more LNG, it needs that dispatched and it needs to refill a number of markets that have been in essence starved of this product and we hope that that starts to play out over the coming years. We've tried it out the number in the past of over 600,000,000 tons and this is a historical number of non coincident demand by markets And the one thing that has of course played out over the last few years is the tremendous investment I mentioned specifically China, but you've seen this investment in gas generation, regas infrastructure, pipeline storage, globally, over 400,000,000 tons of regas capacity will be added to the current, over 1,000 tons by 02/1930. Those are just things under construction.

So how does Europe play out Who knows, right? You have this policy directive that's going to come out that says no more Russian gas into Europe. On the other hand, again, we hope that peace is restored and flows are restored. I will lean on our friends at Equinor who are the largest suppliers of of gas to the continent these days in an estimate that once flows are resumed, they'll be well below the prewar levels, but could get up to the range of 30 to 35 Bcm including a little bit on Nord Stream two, through Europe sorry, through Ukraine, but highly, highly unlikely and we agree with this through Poland. So we think it's another relief valve. We think it's great for the market. The prices you've seen over the last few months into Europe are the highest that we've seen since the start of 2023. So once you take out the the extreme highs of 'twenty two right after the war, very elevated and they had the desired response. They drew a record amount of LNG into Europe but inventories are still 25 percentage points below a year ago and every percentage point is about 10 cargoes.

So you don't have any flow through Ukraine now. You're at a huge deficit Europe will continue to need LNG and if I can quote Equinor one more time, its estimate is an additional three fifty cargoes of LNG. So again, what's the answer? Diverse, flexible portfolio that that reliably shows up and and serves the load that desperately needs gas. Got it. That's very helpful there. And then I could just turn to Zach, quick here on capital allocation. Just wondering, we've seen others in Midstream maybe deemphasize the buyback side, but it seems like Schneers continued to kind of plow forward on that side and the share count reduction [indiscernible] future growth, when we look at Corpus, the two point five years from FID to first LNG, no one has exceeded that speed to market. We see material contracts as signed as you've discussed in the past. The permitting window as you've described and just very attractive brownfield economics here. And so just wondering how think about balancing these sides? It seems like some more growth could be coming into the plan sooner given these factors. Just wondering if you could share your thoughts on this? Sure.

Thanks for all that. And And I'd say we're also targeting substantial completion of the first train inside of three years.

Not just first LNG in 02/2005 which we're pretty excited about. I think it comes back to the fact that I'm not sure we have Many peers in our business that have the cash flow or operation maturity level that we have. So we're in a position now where we're going to have a relatively big CapEx year right? We're We're not yet on the homestretch of Stage three, but we're going to have like $1,500,000,000 of unlevered CapEx and we plan to FID [indiscernible] around $800,000,000 of CapEx this year. So we're talking about well over $2,000,000,000 At the same time, we have over $3,000,000,000 of cash on the balance sheet, and we have an over $3,000,000,000 term loan still available to us to draw as we see fit in the coming years. So what you can expect is more of the same. Basically, this past year, we we deployed $5,400,000,000 on capital allocation and DCF was $3,700,000,000 and we brought our cash balances down from mid-four billion going into last year to low-3s. We're going to continue to work that down. By $1,000,000,000 or $2,000,000,000 in the next year or so. And eventually draw on that term loan.

So you can expect us to fund all this CapEx and still have more than enough capital to do more of the same as it relates to the buyback. We'll grow the dividend by 10% as we guided to and we'll pay down a healthy amount of debt again as we get ready for SDL expansion in the coming years. But the $2,250,000,000 of buybacks in one year, that shouldn't be an anomaly It'll just come down to how opportunistic we can be. Got it. That's helpful. I'll leave it there. Thanks.

Your next question will come from Craig Sheer with Tuohy Brothers.

Good morning. Thanks for Zach, maybe I can pick up on Jeremy's question, some others. So we have some stubbornly high C Corp cash balances on the balance sheet.

Even after buybacks, growth CapEx, funding, reducing debt, So what do you see as the catalyst for ultimately [indiscernible] the C Corp cash balance down to a more sustainable perhaps $1,000,000,000 Is it maybe bringing the CQP distribution down to the base after you finally FID stage five or what should we be looking for here?

I think it's just going to be methodical as it was from 4.5 down to three and you'll see it come down even more so this year as we have over $2,000,000,000 of planned CapEx that we'd like to do without slowing down whatsoever the rest of capital allocation. I think folks can take comfort that I'd like to say that To say that the buyback program could be opportunistic is an understatement. Basically in Q1 last year when we actually had a lot of pressure on the stock, we bought back over 50% of that number for the year. If you just look at this coming the quarter that we're in today, we probably bought back more in the February than we did all of January. So you can see that that will continue to plug away.

But and we'll continue to develop Sabine expansion and be in a position next year to start doing meaningful LMTPs. We're well placed to almost have very similar capital allocation year over year where it will be demonstrably higher than even the $4,100,000,000 to $4,600,000,000 of DCF we just guided to.

Great. That's Cheniere growth kind of into my second question. And that's the prospective 90 plus MTPA enterprise platform Jack alluded to in the opening comments, Presumably that assumes at least another 10 Mt. P. A. Permitted at Corpus Christi after the nine major trains [indiscernible] doing that math right? And what ultimately could that location hold? [indiscernible] as you know, Craig, we recently acquired 500 acres of property contiguous to our Corpus Christi site There was a birth included in that purchase.

The birth isn't LNG ready, but it gives us access, water access. So on that site, we could probably if on a clean sheet of paper, have somewhere around 20,000,000 tons of additional LNG production.

In addition to the nine Stage three trains and the three big trains.

That's why we just say over 90,000,000 tons, but the idea that we're not well placed with brownfield growth at Sabine and in Corpus is It's just not not even close to true. We're going to give ourselves this window to get that optionality And then we might just hit a bunch of singles and doubles and and grow by a few trains in phases as economics align. Always come back to those economics and the fact that we can FID projects thanks to this brownfield advantage at six to seven times CapEx to EBITDA.

Great. Thank you.

We'll now move to Jason Gabelman with TD Cowen.

Yes. Thanks for taking my question.

I may have missed it earlier, but do you have a equity to debt funding [indiscernible] maybe not for Stage three in isolation as you continue to fund with equity, but Stage three in combination with the mid scale expansions. Sure. Basically, as we think about FID of a project, it comes back to these economics that we want to earn a 10% unlevered return, which we back into being around seven times CapEx to EBITDA. Before leverage. And then adding leverage, bringing trains on early, taking advantage that are over two fifty are all upside to our shareholders. That we don't bake in to justify FID of a project. So that's how we plan to FID future projects. But as it relates to Stage three in midscale A to nine and obviously the cash balance that we have and the undrawn term loan we plan to just use that term loan to fund a portion of the remainder of Stage three and mid scale eight to nine without having to raise incremental debt. It's the same as following through with debt pay down. We just don't do debt pay down and we're equity funding a bit here and being very efficient with our cash and interest costs overall.

In the interim. As we think about the Sabine expansion one day that will be inside an MLP, that's even at the lower distribution distributing out over $2,000,000,000 this year, We plan to continue to distribute that out. We plan to stay investment grade and still have billions of dollars of debt raised to fund that project in the interim. Fifty-fifty is the plan. We don't have to do more than that It aligns with all the other parameters of STNG.

Around under four times [indiscernible] even during construction going forward. Okay, great. That was the only question for me. The rest of my questions have been answered.

We'll take a question from Jean Amsellemari with Bank of America. Hi. As you are ramping Corpus Stage three, your first foray into modular, can you speak to any learnings that you've had positive or negative around ramp up time, ability to run over nameplate or anything else that you think important On the question, you threw me for a curve, Jean Ann. Did you say our first foray into modular?

I did, yes.

No, we stick build So as you know, the only difference between the way we do it with Bechtel and the way somebody does it modularly is if you're betting against American workers' productivity.

And we tend to bet on America and not on Italian workers. But That's fair. I shouldn't I guess maybe I'll revise instead of using the phrase modular to the smaller size.

The smaller size. Okay. So [indiscernible] it's gone very well. I was very pleased with Bechtel and my staff on first LNG before the end of last year.

We're down now on Train one to a very small construction work group basically doing control tuning and some cleanup work I would expect us next month to go operational.

With that train.

Well ahead of schedule.

And then Train two is going extremely well. We're fully staffed from a construction perspective. On an accelerated schedule we're we've turned over 20% of the systems to commissioning. A lot of the systems that we had to bring online for Train one are already active like the feed gas pipelines, the AGRU, the acid gas removal units, the FLARE the LNG rundown line. So I would my expectation is that Train two, three, four just come on faster than what we experienced here with Train one.

That's great. Thank you. And then as a follow-up, as your contracting Sabine Pass expansion, can you just give us your latest thinking about the minimum contract percentage of the portfolio that you would want to pursue?

Yes. Thanks, Jean Ann. It's Anatol. So as you know, we've we've had very good success on the SPL expansion where you've essentially contracted Train seven and have done now our second offtake agreement for Train eight. We're We're very comfortable with those agreements and our partner And make the math work in terms of generating the types of returns that we require of ourselves. So very healthy position and as we've covered throughout this call, there are some very robust tailwinds to the Cheniere Platform And To U. S. LNG as we work to be the key provider of these destination flexible solutions to the LNG consumers. And don't get us wrong, we take advantage of the torque by debottlenecking the facility, having open capacity, bringing trains on early before the contracts contractually begin. But we are a contracted infrastructure company. And we build at six to seven times CapEx to EBITDA, and we make it through years just fine like 2020 and do a hell of a lot better in years like 2022 and basically every year since. So we're kind of building this to last and we know we're getting the right risk adjusted returns by staying around 90% on a portfolio basis.

Don't do this for the benefit of the banks.

We do this for the standard that we've held the company to and how we compare everything to just buying back more stock and letting shareholders just own more of Sabine and Corpus that way. Great.

Thanks. I'll leave it there.

We'll now take our last question from John McKay with Goldman Sachs.

Hey, guys. Thanks for the time. Just a quick one from me. I think previously you talked about Sabine potentially being a 2026 FID. I understand we've kind of moving towards maybe less of 20 all at once and maybe a kind of one train at first with the brownfield economics. Can you maybe walk us through what your process on timing could look like there?

I would say it's at the earliest late twenty six, maybe even or more likely '27. Because what's most important Right now, is this permitting window. And understanding the art of the possible at both of our sites to get to 90 plus million tons over time. So we're going to work on that permitting process and make sure that we tee ourselves up not just for a super brownfield Phase one, but for the ability to get to 15,000,000 to 20,000,000 tons over time. And if that forces us to FID in 'twenty seven, so be it. Because it's most important that we have that optionality long term. With that said, we're already spending money on the development of Sabine expansion and I could see us starting LMTPs next year. On Sabine expansion. So money is going to go out the door and we're going to start locking in costs and timeline. In a positive way to allow that project to be as successful as every other project we've done to date. Makes sense. Thank you.

That concludes today's question answer session. I'd like to turn the conference back to our presenters for any additional or closing comments.

This is Jack. I just want to thank everybody for all of your support. And we look forward to seeing you in the very near future.

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.