01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
Cheniere Energy Partners, L.P.
(NYSE American: CQP) reported strong 2021 results driven by its Sabine Pass LNG terminal. Net income rose to $1,630 milliona from $1,183 million in 2020, and total revenues increased to $9,434 million from $6,167 million, primarily from higher revenues per MMBtu as customers took delivery of cargoes and from higher Henry Hub prices. Train 6 of the Liquefaction Project achieved substantial completion on February 4, 2022, bringing total production capacity to approximately 30 mtpa.
The partnership has contracted approximately 75% of the Liquefaction Project's production capacity under long-term SPAs, with approximately 16 years of weighted average remaining life as of December 31, 2021. The balance sheet carried $17.3 billionb of total debt outstanding (before unamortized premium, discount and debt issuance costs) against $0.9 billion of cash and cash equivalents and $1.6 billion of available credit facility commitments. Net cash provided by operating activities was $2,291 million in 2021, up from $1,751 million, and the partnership issued $2.7 billion of senior notes while redeeming $3.6 billion.
In February 2022, management announced the initiation of quarterly distributions comprised of a base amount of $0.775c per unit plus a variable amount, and S&P upgraded the issuer credit rating from BB to BB+. The filing also discloses contingent matters, including a Louisiana Department of Environmental Quality compliance matter and a PHMSA matter in which SPL agreed to pay a reduced civil penalty of $1,458,200. Management does not expect either to have a material adverse impact on financial results.
Partnership ownership is concentrated, with Cheniere owning 48.6%d of the common units. Key risks include dependence on customers under long-term contracts, reliance on Cheniere for personnel, and conflicts of interest with the general partner.
02—Key points
Key Highlights
- Net income of $1,630 million for 2021, up $447 million from $1,183 million in 2020, with basic and diluted net income per common unit of $3.00 versus $2.32
- Total revenues of $9,434 million, up from $6,167 million, driven mainly by variable fees on delivered cargoes and higher Henry Hub prices
- Train 6 reached substantial completion on February 4, 2022, bringing the Liquefaction Project to six trains with approximately 30 mtpa of production capacity
- Approximately 75% of total Liquefaction Project production capacity is contracted under long-term SPAs, with about 16 years of weighted average remaining life as of December 31, 2021
- Total debt of $17.3 billion at December 31, 2021, with $0.9 billion of cash and cash equivalents and $1.6 billion of available credit facility commitments
- In February 2022, the partnership announced quarterly distributions comprised of a base amount of $0.775 per unit ($3.10 annualized) plus a variable amount, beginning with the first quarter of 2022
- Net cash provided by operating activities of $2,291 million in 2021, compared with $1,751 million in 2020
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $9.43B$6.17B | +53.0% |
| R&D Expenses | $1.00M$0 | — |
| Operating Expenses | $6.88B$4.04B | +70.1% |
| Operating Income | $2.56B$2.13B | +20.3% |
| Interest Expense | $831.00M$909.00M | −8.6% |
| Net Income | $1.63B$1.18B | +37.8% |
| EPS (Basic) | $3.00$2.32 | +29.3% |
| Shares Outstanding (Basic) | 484.00M399.30M | +21.2% |
05—Questions
Frequently Asked Questions
How did CQP's profitability change in 2021?
Net income rose to $1,630 million in 2021 from $1,183 million in 2020, an increase of $447 million. The filing attributes this mainly to increased margin on LNG delivered from higher volumes and higher gross margin per MMBtu, partially offset by the non-recurrence of $553 million in revenues recognized in 2020 on cargoes customers did not take delivery of.
How much of the Liquefaction Project's capacity is contracted, and for how long?
Approximately 75% of the total production capacity from the Liquefaction Project is contracted through long-term SPAs, with approximately 16 years of weighted average remaining life as of December 31, 2021. Customers generally must pay a fixed fee on contracted volumes even if they cancel or suspend cargo deliveries.
What is the partnership's debt and liquidity position?
As of December 31, 2021, CQP had $17.3 billion of total debt outstanding on a consolidated basis before unamortized premium, discount and debt issuance costs, $0.9 billion of cash and cash equivalents, $0.1 billion of restricted cash, and $1.6 billion of available credit facility commitments. Senior notes had a weighted average interest rate of 4.86%.
What distributions are unitholders expected to receive going forward?
On January 28, 2022, the partnership declared a $0.700 per common unit distribution for the fourth quarter of 2021. In February 2022, management announced that quarterly distributions will move to a base amount plus a variable amount, starting with the first quarter of 2022, with the base amount set at $0.775 per unit ($3.10 annualized). The variable amount will reflect remaining available cash after items such as debt repayment reserves and capital allocation goals.
What regulatory or legal matters could affect the partnership?
Subsidiaries are in discussions with the Louisiana Department of Environmental Quality over self-reported Title V Permit deviations from 2012 to 2016. Separately, PHMSA proposed civil penalties related to a 2018 tank incident, and SPL agreed to pay a reduced penalty of $1,458,200, with the case closed in November 2021. Management does not expect either matter to have a material adverse impact on financial results.
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