01—Abstract
Summary
Summary of the 10-K filed February 24, 2017. Cited figures are marked; the original filing is the authoritative source.
Cheniere Energy, Inc. (LNG) filed its 2016 10-K on February 23, 2017, reporting on its financial condition and operations for the year ending December 31, 2016.
The company is heavily involved in developing and operating Liquefied Natural Gas (LNG) terminals and related businesses. During 2016, Cheniere achieved significant operational milestones, notably commencing operations at Trains 1 and 2 of its Sabine Pass LNG Project in Louisiana. The company's financial performance in 2016 showed a substantial increase in revenue compared to prior years, primarily driven by the commencement of LNG exports from Sabine Pass.
Despite the revenue growth, Cheniere continued to incur net losses, though these losses narrowed compared to 2015. This was largely due to significant capital expenditures and ongoing construction costs for its projects, including the Corpus Christi LNG Project in Texas. Cheniere's strategy focuses on expanding its integrated U.S. LNG infrastructure to serve global markets, with a significant portion of its liquefaction capacity already contracted under long-term agreements.
02—Key points
Key Highlights
- Commencement of Operations: Trains 1 and 2 of the Sabine Pass LNG Project (SPL Project) in Louisiana achieved substantial completion and began operating activities in May and September 2016, respectively, marking a significant step in Cheniere's transition from a development-stage company to an operational one.
- Increased Revenues: Total revenues for 2016 surged to $1.28 billion from $271 million in 2015, primarily due to the recognition of LNG revenues following the commencement of operations at Sabine Pass.
- Narrowed Net Loss: The net loss attributable to common stockholders decreased from $975.1 million in 2015 to $610.0 million in 2016, indicating improved financial performance as operational revenues began to offset substantial project development costs.
- Active Construction and Development: The company continued robust construction activity on its LNG facilities, with Sabine Pass Trains 3 and 4, and Train 5, as well as Corpus Christi Stage 1 (Trains 1 and 2), progressing significantly. Further development of Corpus Christi Stage 2 and Sabine Pass Train 6 were contingent on financing and commercial arrangements.
- Strong Contracted Capacity: Cheniere had secured long-term Sale and Purchase Agreements (SPAs) for a substantial portion of the expected LNG production capacity from its operational and under-construction trains at both Sabine Pass and Corpus Christi, providing significant revenue visibility.
- Debt Financing: The company actively managed its capital structure, issuing substantial amounts of debt in 2016 to fund ongoing construction and development activities for its major LNG projects.
- Credit Rating Upgrades: Cheniere saw positive movement in its credit ratings, with upgrades from Standard & Poor's, Moody's, and Fitch, reflecting progress in project development and operational commencement.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2016, Cheniere Energy, Inc. lost $0.48.
- Revenue$1.28B100.0%
- Cost of revenue−$582.0M45.4%
- Gross profit$701.0M54.6%
- Operating costs−$731.0M57.0%
- Operating income−$30.0M2.3%
- Interest, other & tax−$580.0M45.2%
- Net income−$610.0M47.5%
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 24, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $1.28B$271.00M | +373.4% |
| Cost of Revenue | $582.00M-$15.00M | +3980.0% |
| Gross Profit | $701.00M$286.00M | +145.1% |
| R&D Expenses | $7.00M$42.00M | −83.3% |
| SG&A Expenses | $260.00M$363.00M | −28.4% |
| Operating Expenses | $1.31B$720.00M | +82.4% |
| Operating Income | -$30.00M-$449.00M | +93.3% |
| Interest Expense | $488.00M$322.00M | +51.6% |
| Net Income | -$610.00M-$975.00M | +37.4% |
| EPS (Basic) | $-2.67$-4.30 | +37.9% |
| EPS (Diluted) | $-2.67— | — |
| Shares Outstanding (Basic) | 228.80M226.90M | +0.8% |
| Shares Outstanding (Diluted) | 228.80M226.90M | +0.8% |
05—Questions
Frequently Asked Questions
What were Cheniere's key operational achievements in 2016?
In 2016, Cheniere's most significant operational achievement was the commencement of commercial operations at Trains 1 and 2 of its Sabine Pass LNG Project in Louisiana. This marked a critical transition for the company, moving from a development-focused entity to a producer and exporter of LNG.
How did Cheniere's financial performance change in 2016 compared to 2015?
Cheniere experienced a substantial increase in revenues in 2016, reaching $1.28 billion compared to $271 million in 2015, driven by the start of LNG exports. While the company continued to report a net loss, the loss narrowed significantly to $610 million in 2016 from $975.1 million in 2015, reflecting the positive impact of operational revenues offsetting high construction and interest expenses.
What is Cheniere's strategy for future growth and development?
Cheniere's strategy is to develop, construct, and operate integrated LNG infrastructure in the U.S., connecting abundant domestic natural gas supplies with international markets. Key to this strategy is the continued development and expansion of its Sabine Pass and Corpus Christi LNG terminals, underpinned by long-term customer contracts.
What is the status of Cheniere's major LNG projects?
As of December 31, 2016, Trains 1 and 2 at Sabine Pass were operational, Train 3 was undergoing commissioning, and Trains 4 and 5 were under construction. At Corpus Christi, Stage 1 (Trains 1 and 2) was under construction, with expected substantial completion in 2019. The company was also evaluating final investment decisions for additional trains at both locations.
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