01—Abstract
Summary
Summary of the 10-K filed February 24, 2021. Cited figures are marked; the original filing is the authoritative source.
Cheniere Energy Partners, L.P.
(CQP), a Delaware limited partnership formed by Cheniere Energy, Inc., provides LNG services and operates the Sabine Pass LNG terminal in Cameron Parish, Louisiana. As of December 31, 2020, SPL was operating five liquefaction Trains with a sixth under construction, expected to be substantially completed in the second half of 2022, for a total production capacity of approximately 30 mtpa. Train 6 was 77.6%a complete overall.
SPL has fixed-price long-term SPAs with eight third parties covering approximately 75% of capacity from Trains 1 through 6, with an annual fixed fee of approximately $2.9 billionb from third-party customers for Trains 1 through 5, rising to at least $3.3 billion once Train 6 begins commercial delivery. Revenues were $6.167 billion in 2020 versus $6.838 billion in 2019, and net income was $1.183 billion, or $2.32 per common unit, versus $1.175 billion, or $2.25 per unit, in 2019. The filing cites $553 million of LNG revenue recognized on cargoes customers elected not to take, and it notes that customers remain obligated to pay fixed fees for those cargoes.
Liquidity at year-end 2020 included $1.2 billionc of cash and cash equivalents and total debt of $17.8 billion on a consolidated basis before unamortized premium, discount and debt issuance costs. The company refinanced $2.0 billion of SPL's 5.625% notes due 2021 with 4.500% notes due 2030 issued in May 2020, and it entered a $1.2 billion SPL working capital facility maturing in March 2025. Distributions paid during 2020 totaled $1.4 billion across common, subordinated and general partner units, including IDRs.
Subordinated units converted to common units on a one-for-one basis in August 2020. The company reported that it had no employees and relied on Cheniere subsidiaries for personnel, and that substantially all of its anticipated 2021 revenue depends on the Sabine Pass LNG terminal.
Key risks highlighted include the Train 6 construction timeline and cost (EPC contract price of approximately $2.5 billiond, with $1.9 billion incurred as of year-end 2020), customer performance and termination rights under long-term contracts, COVID-19 effects on operations and construction, the concentration of revenue in one facility, and the conflicts of interest arising from Cheniere's control of the general partner. Debt maturities total $1.0 billion in 2022, $1.5 billion in 2023, $2.0 billion in 2024 and $3.5 billion in 2025.
02—Key points
Key Highlights
- Revenues of $6.167 billion for 2020, down from $6.838 billion in 2019, with LNG revenues—affiliate falling to $662 million from $1.312 billion.
- Net income of $1.183 billion, or $2.32 per common unit, for 2020, compared with $1.175 billion, or $2.25 per unit, for 2019.
- Train 6 of the Liquefaction Project was 77.6% complete overall as of December 31, 2020, with expected substantial completion in the second half of 2022.
- Long-term SPAs cover approximately 75% of Trains 1 through 6 capacity, with a weighted average remaining contract length of approximately 17 years; annual third-party fixed fees are approximately $2.9 billion, rising to at least $3.3 billion after Train 6.
- Cash and cash equivalents of $1.2 billion and total consolidated debt of $17.8 billion as of December 31, 2020.
- Distributions paid during 2020 totaled $1.4 billion, and the last quarterly distribution declared was $0.655 per common unit for the fourth quarter of 2020.
- Cheniere owns 48.6% of the common units, and the company has no employees and depends on Cheniere subsidiaries for personnel and services.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 24, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $6.17B$6.84B | −9.8% |
| R&D Expenses | $0$0 | — |
| Operating Expenses | $4.04B$4.80B | −15.8% |
| Operating Income | $2.13B$2.04B | +4.2% |
| Interest Expense | $909.00M$885.00M | +2.7% |
| Net Income | $1.18B$1.18B | +0.7% |
| EPS (Basic) | $2.32$2.25 | +3.1% |
| Shares Outstanding (Basic) | 399.30M348.60M | +14.5% |
05—Questions
Frequently Asked Questions
How did the company's revenue and net income change in 2020?
Total revenues fell to $6.167 billion in 2020 from $6.838 billion in 2019, primarily due to lower volumes recognized as revenue and lower LNG revenue from affiliate sales to Cheniere Marketing. Net income was $1.183 billion, or $2.32 per common unit, versus $1.175 billion, or $2.25 per unit, in 2019. The filing attributes the stable net income to higher margins from lower natural gas feedstock prices and additional LNG volume from a newly substantially complete Train, partly offset by higher debt-related costs and depreciation.
When is the sixth Train expected to be operational, and what is its status?
Train 6 was 77.6% complete overall as of December 31, 2020, with engineering at 99.0%, procurement at 99.9%, subcontract work at 54.9% and construction at 49.2%. Substantial completion is expected in the second half of 2022. The EPC contract price is approximately $2.5 billion, of which $1.9 billion had been incurred as of December 31, 2020.
How is the company's revenue secured?
SPL has fixed-price long-term SPAs with eight third-party customers, generally with 20-year terms and a weighted average remaining length of approximately 17 years, covering approximately 75% of total production capacity from Trains 1 through 6. Customers pay a fixed fee per MMBtu, which is payable even if they cancel or suspend cargoes, plus a variable fee generally equal to approximately 115% of Henry Hub. Fixed fees from third-party SPA customers total approximately $2.9 billion annually for Trains 1 through 5.
What are the company's main debt obligations and maturities?
As of December 31, 2020, total consolidated debt was $17.8 billion before unamortized premium, discount and debt issuance costs. Scheduled maturities are $1.0 billion in 2022, $1.5 billion in 2023, $2.0 billion in 2024, $3.5 billion in 2025 and approximately $9.0 billion between 2026 and 2030, with approximately $0.8 billion maturing in 2037. The company had $1.2 billion of cash and cash equivalents and $750 million of available commitments under its 2019 CQP revolving facility at year-end.
What are the key risks to unitholders identified in the filing?
Key risks include construction cost overruns and delays for Train 6, customer performance and termination rights under SPAs and TUAs, COVID-19 impacts on operations and customers, and the company's dependence on a single facility, the Sabine Pass LNG terminal, for substantially all anticipated 2021 revenue. The filing also highlights conflicts of interest with Cheniere, limited unitholder voting rights, and the possibility of dilution from future equity issuances.
06—Continue