Cheniere's Q2 profits double, inks first long-term LNG deal to supply Japan
Despite higher year-over-year profit, its adjusted core profit of $1.42 billion missed analysts' forecasts for profits of $1.56 billion, according to data compiled by financial firm LSEG. Shares were down less than 1% on Thursday afternoon.
Cheniere also announced it signed a 21-year LNG supply deal with Japan's biggest power generator JERA for 1 million metric tons per annum (MTPA) of LNG starting in 2029 through to 2050. This is its first long-term deal with a Japanese company, Chief Commercial Officer, Anatol Feygin, said on an earnings call.
The U.S. is the world's largest exporter of LNG and commercial activity in the sector has gained momentum after President Donald Trump lifted a moratorium on new LNG export permits in January.
In July, the European Union pledged $750 billion worth in strategic LNG purchases from the U.S. over three years as part of a sweeping trade pact, opening up opportunities for major producers like Cheniere.
While the EU has committed to buying more U.S. LNG, it is up to commercial parties to reach agreements, said Feygin, adding that in the case of Cheniere, those deals must meet its returns.
Cheniere's revenue stood at $4.52 billion in the second quarter, about 43% higher than the same period last year, while the number of LNG cargoes exported totaled 154 during the quarter, down by one cargo due to maintenance activities, the company said.
Cheniere's largest plant, Sabine Pass, had two of its LNG plants - also called trains - down for three weeks in the second quarter, impacting production, CEO Jack Fusco said during the call.
Cheniere could see a lift to its revenue after its effective tax rate fell below 10% through to 2030 following the passage of Trump's so-called Big Beautiful Bill, Chief Financial Officer Zach Davis said.
This year alone the company expects a reduction in its tax burden of $200 million, he added.
The company raised the lower-end of its current-year adjusted core profit forecast by $100 million to between $6.6 billion and $7.0 billion.
The company reported net income of $1.63 billion, or $7.30 per share, for the quarter, up nearly 85% from a year ago.
Cheniere has also added 1 MTPA of LNG capacity by increasing efficiencies at its plants, and plans a 24 MTPA expansion project at Corpus Christi, Fusco said.
Cheniere plans to move away from smaller plants built in a factory and assembled on site, like those used in its expansion projects at Corpus Christi, and return to utilizing ConocoPhillips' (COP.N), opens new tab technology in large, stick-built plants, those constructed onsite from the ground up, Fusco said.
It is more cost effective to maintain larger LNG plants, and current demand levels support those projects, he said.
The company is aiming to bring its total production capacity to over 100 MTPA, but will only do so if it has the commercial support, said Fusco.
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