Cheniere's Third-Quarter Profit Beats Forecast Despite Weak LNG Prices

According to Reuters news on November 2, U.S. liquefied natural gas company Cheniere Energy reported third-quarter profit on Thursday that exceeded analyst expectations, even though the company is facing lower natural gas prices and declining export volumes.

The company's shares were up about 2.3% in early trading, at $172.50, after the company said its quarterly results included a $1.4 billion gain from its derivatives portfolio.

Cheniere's LNG production fell to 548 TBtu (British Thermal Units), compared with 559 TBtu a year ago.

The company reported a profit of $7.03 per share, with the expectations of $2.53, according to London Stock Exchange Group (LSEG) data. Cheniere's full-year profit forecast was reiterated to $8.8 billion from the original $8.3 billion. CEO Jack Fusco said the company is confident its full-year 2023 results will be within the guidance range.

Cheniere reported third-quarter revenue of $4.2 billion, compared with $8.9 billion in the same period last year. The company said the revenue decline was due to lower benchmark natural gas pricing at the U.S. Henry Hub. U.S. natural gas prices fell about 60% in the third quarter compared with the same period last year as U.S. natural gas production continued to grow and concerns about European energy security eased.

In addition, Cheniere said it has signed an agreement to supply approximately 900,000 tons of liquefied natural gas per year to Chinese natural gas company Foran Energy within 20 years. Deliveries will begin following the start of commercial operations of Liquefaction Train 8 in Sabine Pass, Louisiana.

New liquefaction train coming soon

Cheniere's investment in "whether to add trains 7-9 to Sabine" is pending. Once the investment decision is made, the company will agree to start annual sales of about 800,000 tons of LNG to European chemical company BASF in mid-2026 after train 7 is basically completed.

Cheniere is the largest U.S. natural gas buyer and the largest U.S. exporter of LNG, producing approximately 45 million tons of LNG per year in Corpus Christi and Sabine

The company is also building a new liquefaction train in Corpus Christi that will add more than 10 million tons per year of capacity between 2025 and 2027. The company is also developing expansion projects that could increase production capacity by approximately 20 million tons per year in Sabine and approximately 3 million tons per year in Corpus Christi.

Chenier said that the third phase of the Corpus Christi expansion project is completed ahead of schedule, and it is possible to produce the first batch of LNG before the end of 2024.

Cheniere said in its earnings report that Europe's global LNG imports fell below 2022 highs in August and September.

In Asia, third-quarter LNG imports rose year-on-year in China, India and Thailand, but fell in Japan, South Korea and Taiwan Province of China.

Looking ahead, Chenier expects global LNG demand to grow by more than 3% a year through 2040, driven by growing demand from developing economies in Asia.

Cheniere said this increase in demand will increase LNG supply after 2027, with the supply-demand gap expected to reach about 135 million tons per year in 2040.