01—Abstract
Summary
Summary of the 10-K filed February 21, 2018. Cited figures are marked; the original filing is the authoritative source.
Cheniere Energy, Inc. (LNG) reported its 2017 annual results, highlighting significant progress in its liquefaction and export facilities.
The company's Sabine Pass LNG terminal in Louisiana is operational with Trains 1-4, and Train 5 is substantially under construction with an expected completion in the first half of 2019. Development is also advancing on the Corpus Christi LNG terminal in Texas, with Stage 1 (Trains 1 and 2) projected for substantial completion in 2019, and Train 3 being commercialized. Financially, Cheniere continues to operate at a net loss but has seen revenue growth driven by its operational LNG trains.
The company secured significant long-term Sale and Purchase Agreements (SPAs) for its facilities, providing a substantial portion of contracted revenues through fixed fees, which are collectible even if cargo deliveries are suspended by customers. This contracting strategy aims to secure predictable cash flows to support its extensive capital expenditure program.
Looking ahead, Cheniere is focused on completing its ongoing construction projects, securing financing for future trains (Train 6 at Sabine Pass and Train 3 at Corpus Christi), and optimizing its asset base. The company's strategy revolves around leveraging U.S. natural gas supply to meet international demand.
02—Key points
Key Highlights
- Significant progress in construction and operation of liquefaction facilities at Sabine Pass (Trains 1-5 operational/under construction) and Corpus Christi (Stage 1 under construction).
- Entered into multiple long-term, fixed-fee Sale and Purchase Agreements (SPAs) for LNG volumes, securing significant future revenue streams.
- Total debt stands at $26.1 billion as of December 31, 2017, indicating substantial financing for capital-intensive projects.
- Achieved substantial completion and commenced operating activities for Trains 2, 3, and 4 at Sabine Pass during 2016-2017.
- Total revenues increased significantly to $5.6 billion in 2017, up from $1.3 billion in 2016, driven by increased LNG volumes sold.
- The company reported a net loss attributable to common stockholders of $393 million for 2017, an improvement from $610 million in 2016, reflecting ongoing investment in growth.
- Focus remains on securing financing and commercial arrangements for future trains (Train 6 at Sabine Pass, Train 3 at Corpus Christi) and expansion projects.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2017, Cheniere Energy, Inc. lost $0.07.
- Revenue$5.60B100.0%
- Cost of revenue−$3.12B55.7%
- Gross profit$2.48B44.3%
- Operating costs−$1.09B19.5%
- Operating income$1.39B24.8%
- Interest, other & tax−$1.78B31.8%
- Net income−$393.0M7.0%
Where FY2017 revenue went
$5.60B- Cost of revenue: $3.12B, 56% of revenue
- Operating income: $1.39B, 25% of revenue
- Other operating costs: $827.0M, 15% of revenue
- R&D: $10.0M, 0.2% of revenue
- SG&A: $256.0M, 4.6% of revenue
Kept 25% as operating incomeR&D $10.0M · 0.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 21, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $5.60B$1.28B | +336.6% |
| Cost of Revenue | $3.12B$582.00M | +436.1% |
| Gross Profit | $2.48B$701.00M | +253.9% |
| R&D Expenses | $10.00M$7.00M | +42.9% |
| SG&A Expenses | $256.00M$260.00M | −1.5% |
| Operating Expenses | $4.21B$1.31B | +220.9% |
| Operating Income | $1.39B-$30.00M | +4726.7% |
| Interest Expense | $747.00M$488.00M | +53.1% |
| Net Income | -$393.00M-$610.00M | +35.6% |
| EPS (Basic) | $-1.68$-2.67 | +37.1% |
| EPS (Diluted) | $-1.68$-2.67 | +37.1% |
| Shares Outstanding (Basic) | 233.10M228.80M | +1.9% |
| Shares Outstanding (Diluted) | 233.10M228.80M | +1.9% |
05—Questions
Frequently Asked Questions
What is the current operational status of Cheniere's LNG facilities?
As of December 31, 2017, Cheniere's Sabine Pass LNG terminal has Trains 1 through 4 operational, with Train 5 under construction and expected to be substantially completed in the first half of 2019. The Corpus Christi LNG terminal has Stage 1 (Trains 1 and 2) under construction with expected substantial completion dates in 2019.
How is Cheniere financing its extensive construction projects?
Cheniere finances its capital-intensive projects primarily through a combination of project-specific debt, senior secured notes, credit facilities, and equity contributions. As of December 31, 2017, the company had approximately $26.1 billion in total debt outstanding. They are also exploring additional financing options for future project development.
What is Cheniere's revenue model, and how are its contracts structured?
Cheniere's primary revenue comes from LNG liquefaction and export services. The company has secured long-term Sale and Purchase Agreements (SPAs) with customers that include a fixed fee component, payable regardless of whether LNG cargo deliveries are made, and a variable fee component tied to the Henry Hub natural gas price. This fixed fee structure provides a predictable revenue stream.
Is Cheniere profitable?
The company has historically incurred net losses attributable to common stockholders. For the year ended December 31, 2017, Cheniere reported a net loss of $393 million. While revenues have grown significantly due to increased operational capacity, the company is still in a significant growth and investment phase.
06—Continue