01—Abstract
Summary
Summary of the 10-K filed February 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Cheniere Energy Partners, L.P.
(CQP) reported net income of $1.27 billiona, or $2.51 per common unit, for 2018, compared with net income of $490 million ($1.32 loss per common unit) in 2017. Total revenues rose to $6.43 billion from $4.30 billion, driven by additional Trains of the Liquefaction Project entering operation at the Sabine Pass LNG terminal. Train 5 was 99.7% complete at year-end, with substantial completion expected in 1Q 2019, and Train 6 has a December 2018 SPA with PETRONAS and limited notices to proceed to Bechtel; its final investment decision remains contingent on commercial arrangements and financing.
The partnership's balance sheet carries $16.3 billionb of total debt before unamortized premium, discount and debt issuance costs, against zero cash and cash equivalents and $1.5 billion of current restricted cash at December 31, 2018. Partners' equity was $800 million. Operating cash flow was $1.87 billion in 2018, versus $977 million in 2017, while investing outflows were $804 million and financing outflows were $1.12 billion, including $1.1 billion of distributions to unitholders.
The company issued $1.1 billionc of 5.625% Senior Notes due 2026 in September 2018 and used the proceeds to prepay its CQP Credit Facilities. Investors should weigh the concentration of revenue in a single facility and a small number of customers: BG, Naturgy, KOGAS and GAIL each accounted for more than 10% of 2018 revenues, at 28%, 21%, 23% and 19%. The filing also notes that the partnership had not been profitable historically before 2018, that Train 6 requires significant additional funding, and that the risk factors cover dependence on Cheniere, which controls the general partner.
02—Key points
Key Highlights
- Net income of $1.27 billion ($2.51 per common unit) in 2018, versus $490 million in 2017 and a net loss of $171 million in 2016.
- Total revenues of $6.43 billion in 2018, up from $4.30 billion in 2017, with LNG revenues of $4.83 billion and LNG revenues from affiliates of $1.30 billion.
- Train 5 was 99.7% overall complete at December 31, 2018, with expected substantial completion in 1Q 2019; Trains 1 through 4 are operational.
- Train 6 has a 20-year SPA with PETRONAS for about 1.1 mtpa and an EPC contract with Bechtel of roughly $2.5 billion; FID is contingent on commercial arrangements and financing.
- Total debt of $16.3 billion (before unamortized premium, discount and debt issuance costs) and zero cash and cash equivalents at December 31, 2018, with $1.5 billion of current restricted cash.
- Operating cash flow of $1.87 billion in 2018, versus $977 million in 2017, while $1.1 billion was distributed to unitholders during the year.
- Revenue concentration: BG (28%), Naturgy (21%), KOGAS (23%) and GAIL (19%) each exceeded 10% of 2018 total revenues from external customers.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Cheniere Energy Partners kept $0.20.
- Revenue$6.43B100.0%
- Cost of revenue−$3.40B53.0%
- Gross profit$3.02B47.0%
- Operating costs−$1.04B16.2%
- Operating income$1.98B30.8%
- Interest, other & tax−$705.0M11.0%
- Net income$1.27B19.8%
Where FY2018 revenue went
$6.43B- Cost of revenue: $3.40B, 53% of revenue
- Net income: $1.27B, 20% of revenue
- Other operating costs: $1.04B, 16% of revenue
- R&D: $2.0M, 0.0% of revenue
- Interest, other & tax: $705.0M, 11% of revenue
Kept 20% as net incomeR&D $2.0M · 0.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 26, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $6.43B$4.30B | +49.3% |
| Cost of Revenue | $3.40B$2.32B | +46.7% |
| Gross Profit | $3.02B$1.98B | +52.4% |
| R&D Expenses | $2.00M$3.00M | −33.3% |
| Operating Expenses | $4.45B$3.15B | +41.3% |
| Operating Income | $1.98B$1.16B | +71.2% |
| Interest Expense | $733.00M$614.00M | +19.4% |
| Net Income | $1.27B$490.00M | +160.0% |
| EPS (Basic) | $2.51$-1.32 | +290.2% |
| Shares Outstanding (Basic) | 348.60M178.50M | +95.3% |
05—Questions
Frequently Asked Questions
How did Cheniere Energy Partners perform financially in 2018?
Net income was $1.27 billion, or $2.51 per common unit, compared with $490 million, or a $1.32 loss per common unit, in 2017. Total revenues rose to $6.43 billion from $4.30 billion, and income from operations increased to $1.98 billion from $1.16 billion. The filing attributes the increase mainly to additional Trains operating during the year, partly offset by higher interest expense.
What is the status of Train 5 and Train 6 of the Liquefaction Project?
Train 5 was 99.7% complete at December 31, 2018, with commissioning under way and expected substantial completion in 1Q 2019; SPL began commissioning cargoes from Train 5 in November 2018. Train 6 has all necessary regulatory approvals in place and a PETRONAS SPA, but FID and full notice to proceed depend on acceptable commercial arrangements and adequate financing.
How much debt does the partnership carry and when does it mature?
Total consolidated debt was $16.3 billion before unamortized premium, discount and debt issuance costs at December 31, 2018. The filing states that $2.0 billion matures in 2021, $1.0 billion in 2022, $1.5 billion in 2023, $11.0 billion between 2024 and 2028, and $0.8 billion in 2037. The CQP Credit Facilities mature on February 25, 2020, and only a $115 million revolving facility remained, undrawn.
What are the main risks for unitholders?
The filing highlights reliance on a single facility, the Sabine Pass LNG terminal, for substantially all anticipated 2019 revenue, and dependence on a limited number of customers and contractors, particularly Bechtel. It also notes the need for significant additional funding for Train 6, the history of losses before 2018, and conflicts of interest with Cheniere, which owns and controls the general partner. Unitholders have limited voting rights, and the subordination period and distribution policy may affect cash available to unitholders.
What distributions have been paid and declared to unitholders?
During 2018, the partnership paid aggregate distributions of $1.1 billion on common, subordinated and general partner units, including incentive distribution rights. On January 25, 2019, it declared a $0.59 distribution per common and subordinated unit, payable February 14, 2019 to unitholders of record as of February 6, 2019, covering October 1 through December 31, 2018.
06—Continue