Cheniere Energy, Inc. · NYSE:LNG
Cheniere Energy — Investor Day (April 2017)
126 slides from Cheniere Energy's investor day presentation, Apr 19, 2017
Slide 1: Cheniere Energy, Inc. Analyst Day April 19, 2017
CHENIERE ENERGY, INC. ANALYST DAY April 19, 2017
Slide 2: Agenda
Agenda Welcome & Logistics Randy Bhatia, Vice President, Investor Relations Strategic Overview Jack Fusco, President and Chief Executive Officer Financial Strategy & Guidance Michael Wortley, Executive Vice President and Chief Financial Officer Q&A Jack Fusco & Michael Wortley Break Commercial Strat
Slide 3: Safe Harbor Statements
Safe Harbor Statements Forward-Looking Statements This presentation contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amend
Slide 4: Strategic Overview
STRATEGIC OVERVIEW Jack Fusco, President and CEO
Slide 5: Organizational Chart - Analyst Day Participants
Organizational Chart - Analyst Day Participants Jack Fusco President & Chief Executive Officer Michael Anatol Doug Ed Chad Sean Tom Bullis Robert Fee Wortley Feygin Shanda Lehotsky Zamarin Markowitz EVP & Chief EVP & Chief SVP, SVP, SVP, Pipeline General EVP & Chief Chief of Staff & Financial Commer
Slide 6: Cheniere Investment Thesis
Cheniere Investment Thesis Positioned as low-cost LNG provider through brownfield site expansions 7 train platform offers excellent visibility for long-term cash flows • 20-year “take-or-pay” style commercial agreements with investment grade off-takers for approximately 87% of the expected aggre
Slide 7: LNG Share Price and Commodity Prices
LNG Share Price and Commodity Prices $/MMBtu $/Share 10.00 60.00 50.00 8.00 40.00 6.00 30.00 4.00 20.00 2.00 10.00 - - Henry Hub Oil Parity (Brent) Cheniere Share Price (LNG) Henry Hub prompt month natural gas price is range-bound Henry Hub indexed LNG contracts are inherently less volatile Fi
Slide 8: Organizational Evolution from Development to Operations
Organizational Evolution from Development to Operations Organizational changes ensure Cheniere will continue to be nimble and able to quickly capitalize on commercial opportunities in various global commodity price environments 2016 2017 and Beyond Vision, Mission & Values Operational Excellen
Slide 9: Engineering & Construction and Operations
Engineering & Construction and Operations Execute on construction of LNG platform safely, on time, and on budget Transition the trains from construction management to operations management safely, efficiently, and effectively Identify and incorporate lessons learned • Cross-functional team wor
Slide 10: Financial and Commercial
Financial and Commercial Disciplined long-term financial strategy enables expansion opportunities for future cash flow growth at attractive return hurdles Contracted cash flows, strong balance sheet and liquidity, and SPL’s investment grade ratings provide optionality and lower costs for future
Slide 11: Cheniere Ideally Positioned to Capitalize on Tightening LNG Market
Cheniere Ideally Positioned to Capitalize on Tightening LNG Market The global LNG market is expected to need new competitive supplies to fill the approaching supply/demand gap LNG projects under construction are not expected to be sufficient to satisfy demand and ensure stability of prices; insu
Slide 12: Leveraging Infrastructure and Expertise: A Key Competitive Advantage
Leveraging Infrastructure and Expertise: A Key Competitive Advantage Leverage Existing Infrastructure to Enable Competitive, Incremental Liquefaction Capacity Premier LNG provider with proven track record and Able to leverage existing network to supply economies of scale incremental gas to feed
Slide 13: Sabine Pass Expansion
Sabine Pass Expansion Sabine Pass Property Allows for Major Expansion of Cheniere’s Existing Footprint Train 6 Fully permitted Train 5 Attractive expansion Train 4 Under Construction Commissioning economics Potential Expansion Train 6 Additional Land for Potential Expansion Rights to additiona
Slide 14: Corpus Christi Expansion
Corpus Christi Expansion Corpus Christi Property Allows for Major Expansion of Cheniere’s Existing Footprint Stage 2 Stage 3 In Development Train 3 fully permitted, partially commercialized Brownfield economics with significant infrastructure already installed Stage 3 Stage 2: Train 3 Fully Perm
Slide 15: Midscale Project Overview – FEED Initiated
Midscale Project Overview – FEED Initiated Began Midscale project evaluation in early 2016 Reviewed 18 proposals from potential contractors KBR/Siemens/Chart Consortium approved to continue with full FEED and EPC proposal to be completed September 2017 Initial capital cost estimates are comp
Slide 16: Key Takeaways
Key Takeaways Cheniere’s LNG Platform Creates Competitive Advantages on Multiple Fronts 1 Ability to leverage sites, infrastructure, and expertise to double LNG capacity 2 One of largest pipeline capacity holders and largest gas buyer in U.S. Early mover advantage Scale and purchasing power In
Slide 17: Financial Strategy and Guidance
FINANCIAL STRATEGY AND GUIDANCE Michael Wortley, EVP and CFO
Slide 18: Table of Contents
Table of Contents I Where We’ve Been II Long-Term Balance Sheet Strategy III Liquidity Summary IV Financial Projections and Capital Allocation Strategy V Strategic and Competitive Considerations VI Appendix 18
Slide 19: Current Cheniere Corporate Structure
Current Cheniere Corporate Structure Cheniere Energy, Inc. SEC Filers (“CEI”) (NYSE MKT: LNG) Cheniere Energy Partners LP Cheniere Marketing, Cheniere Corpus CQP GP Holdings, LLC LLC Christi Holdings, LLC & IDRs (“CQH”) (“CMI”) (“CCH”) (NYSE MKT: CQH) Cheniere Energy Partners, L.P. (“CQP”) (NYSE MKT
Slide 20: I. Where We've Been
I CHENIERE ENERGY, INC. WHERE WE’VE BEEN
Slide 21: Financial Priorities: Past and Present
Financial Priorities: Past and Present Achieve Investment Grade (“IG”) Ratings at Sabine Pass Liquefaction, LLC • S&P upgraded SPL to investment grade at BBB- in September 2016 • Fitch rated SPL investment grade at BBB- (initial rating) in January 2017 • Moody’s upgraded SPL to Ba1 (Positive Outlo
Slide 22: Where We've Been: Sabine Pass Ratings Momentum
Where We’ve Been: Sabine Pass Ratings Momentum Historical SPL Ratings Movement Baa1 / BBB+ January 9, 2017 September 12, 2016 S&P upgrades SPL to BBB- Fitch issues initial SPL rating (Stable) from BB+ of BBB- (Stable) December 21, 2016 Moody's upgrades SPL to Baa2 / BBB Ba1 (Positive) from Ba2
Slide 23: Where We've Been: Spread Compression
Where We’ve Been: Spread Compression Historical G-Spread(1) at Initial Issuance (Last 12 Months) 9.0% Coupon G-Spread at Issue 8.0% 7.0% 7.0% 5.875% 5.875% 6.0% 5.0% 5.0% 5.0% 529 bps 4.2% 4.0% 418 bps 3.0% 349 bps 331 bps 2.0% 235 bps 185 bps 1.0% 0.0% SPL 2026s SPL 2027s SPL 2037s SPL 2028s – CCH
Slide 24: Where We've Been: Maturity Profile Progression
Where We’ve Been: Maturity Profile Progression CQP / SPL Debt Maturity Profile Progression: H1 2016 to Today $6.0 SPLNG - Senior Notes $6.0 CQP - Credit Facilities $5.0 H1 2016 CTPL - Term Loan Today SPL - Senior Notes $5.0 SPL - Credit Facilities $5.0 SPL - Senior Notes $4.0 $4.0 $3.0 $3.0 Projecte
Slide 25: Where We've Been: Construction Spend Progress
Where We’ve Been: Construction Spend Progress Unlevered Budget Spend Curve SPL & CCL remaining spend as of March 2017: SPL & CCL spend as of March 2017: ~$19bn ~$4bn(1) SPL & CCL % spent to date: ~83% SPL & CCL % remaining to spend: ~17% SPL & CCL % contingency spent to date: ~29% $25 SPL & CCL % re
Slide 26: II. Long-Term Balance Sheet Strategy
II CHENIERE ENERGY, INC. LONG-TERM BALANCE SHEET STRATEGY
Slide 27: Balance Sheet Underpinned by Strong Counterparty Credits
Balance Sheet Underpinned by Strong Counterparty Credits Cheniere Counterparty Exposure Cheniere 11 External SPA Customers(1) All 20-year “take or pay” style SPAs with investment grade (“IG”) counterparties AA- to AA+ Rated 20.2% Average portfolio rating of A / A3 / A and BBB / Baa2 / BBB+ for S
Slide 28: Liquefaction Plants Operate for Longer Than 20-year SPA Period
Liquefaction Plants Operate for Longer Than 20-year SPA Period ~100 mtpa of operational LNG export capacity is 20+ years old Six (~66 mtpa) of these operational plants have run for >30 years MLNG Location: Malaysia Capacity: 18 mtpa Start Year: 1983 & 1995 Asset Age: 34 & 22 years Kenai LNG Alge
Slide 29: Abundant Shale Gas Reserves Make Sustainable Price Increases Unlikely
Abundant Shale Gas Reserves Make Sustainable Price Increases Unlikely 800 Tcf producible below $3.00 Henry Hub (30 years)(1) (1) 1,400 Tcf producible below $4.00 Henry Hub (51 years) ; 500 Tcf added in less than 6 years $/MMBtu Years Supply2 - 10 20 30 40 50 60 70 $9 $8 $7 $6 ~800 Tcf ~1400 Tcf $5 <
Slide 30: Long-term Capital Structure Plan
Long-term Capital Structure Plan Utilize leverage capacity at CQP and CEI (the corporate levels) to delever SPL and CCH (the project levels) over the next 5-10 years Debt incurrence test will force the deleveraging of SPL and CCH over time at 1.5x/1.4x DSCR By migrating project debt up to CQP
Slide 31: Target Leverage for Projects and Corporates
Target Leverage for Projects and Corporates Cheniere Energy Inc. (NYSE MKT: LNG) “BB” Ratings Profile Corporates 5.0x Target Debt / EBITDA Debt / EBITDA: Deconsolidated Debt Outstanding Annual Deconsolidated Contracted EBITDA Cheniere Energy Partners, L.P. (NYSE MKT: CQP) “BB” Ratings Profile 5.0x T
Slide 32: Credit Ratings Policy
Credit Ratings Policy Reasons to maintain IG ratings Reasons to maintain BB ratings at the project levels at the corporate levels Project indentures already require Project ratings capped by agencies to be no amortization over time at IG credit metrics higher than three notches above Reduce wo
Slide 33: Summary Amortization Requirements at Project Levels
Summary Amortization Requirements at Project Levels 7 Trains without utilizing 7 Trains utilizing ($bn) Corporate Debt Capacity Corporate Debt Capacity SPL Debt Amortization Start at SPL (1.5x DSCR) Early 2020s Mid-Late 2020s Migrated Debt to CQP (5.0x debt / EBITDA) – ~$3.0 - $4.0 Debt at SPL (proj
Slide 34: III. Liquidity Summary
III CHENIERE ENERGY, INC. LIQUIDITY SUMMARY
Slide 35: CEI and CQP Available Liquidity
CEI and CQP Available Liquidity $b n Total: $2.0 billion $2.0 CCH General WC $0.1 Facility Capacity $1.8 CEI Revolver Capacity $0.8 $1.5 $1.3 Remaining CCH $1.0 $0.3 Total: $0.8 billion Contingency(3) $0.8 $0.1 CQP General WC Facility Capacity $0.1 SPL General WC Facility Capacity(2) $0.5 Remaining
Slide 36: CEI Deconsolidated Five Year Sources and Uses
CEI Deconsolidated Five Year Sources and Uses Available Cash Generation: 2017 – 2021 $8.0 $bn Sources: ~$6.5 billion Uses: ~$6.5 billion Available Cash $6.0 $0.8 CQP GP / IDR Distributions Grow (CCH T3, etc.) Buy back Stock Pay Dividend $0.9 CEI Cash on Hand $0.8 CMI Cash Flow(1) $4.0 $4.0 $1.
Slide 37: Capital Allocation
Capital Allocation CEI Free Cash Flow Achieve Target Leverage 1.5x / 1.4x DSCR at Projects 5.0x Deconsolidated Debt / EBITDA at Corporates Grow Buy Back Stock Pay Dividend Further Debt Invest in the LNG value Return on own stock Recurring or otherwise Reduction chain, anchored by will guide viabilit
Slide 38: IV. Financial Projections and Capital Allocation Strategy
IV CHENIERE ENERGY, INC. FINANCIAL PROJECTIONS AND CAPITAL ALLOCATION STRATEGY
Slide 39: Consolidated vs. Deconsolidated
Consolidated vs. Deconsolidated Consolidated Deconsolidated CEI Minority Interest CMI CCH CQP and CQH CCL CCPL CTPL SPLNG SPL 39
Slide 40: 2017 Guidance
2017 Guidance ($bn, except per share amounts or unless otherwise noted) 2017 CEI Consolidated Adjusted EBITDA $1.4 - $1.7 Less: CQP/CQH Minority Interest ($0.3) - ($0.4) Less: SPL and CQP Cash Retained / Interest Expense / Other ($0.6) - ($0.6) Less: CQP Interest Expense ($0.1) Less: CEI Interest Ex
Slide 41: Run Rate Guidance: 7 Train Case
Run Rate Guidance: 7 Train Case 7 Trains SPL T1-5, ($bn, except per share amounts or unless otherwise noted) CCH T1-2 CEI Consolidated Adjusted EBITDA $3.8 - $4.1 Less: CQP/CQH Minority Interest ($0.9) - ($0.9) Less: CQP/SPL Interest Expense ($0.9) Less: CEI Interest Expense/Other ($0.0) Less: CCH I
Slide 42: Run Rate Guidance: Impact of Additional Train at CCH
Run Rate Guidance: Impact of Additional Train at CCH Additional Run-Rate Distributable Cash Flow 7 Trains 8 Trains (1) SPL T1-5, CCH T3 SPL T-5, ($bn, except per share amounts or unless otherwise noted) CCH T1-2 CCH T1-3 CEI Consolidated Adjusted EBITDA $3.8 - $4.1 $0.4 - $0.6 $4.2 - $4.7 Less: CQP/
Slide 43: CQP Distribution Philosophy
CQP Distribution Philosophy Pre-Completion of SPL T1-5 CQP Class B units expected to convert and receive the Q3 distribution since Train 3 Substantial Completion has occurred SPL and CQP to retain cash to ensure adequate SPL project funding and debt service during construction (~$2.5bn of cash r
Slide 44: V. Strategic and Competitive Considerations
V CHENIERE ENERGY, INC. STRATEGIC AND COMPETITIVE CONSIDERATIONS
Slide 45: Current Cheniere Corporate Structure
Current Cheniere Corporate Structure Cheniere Energy, Inc. (CEI) (NYSE MKT: LNG) Cheniere Energy Partners Cheniere Marketing, CQP GP Cheniere CCH LP Holdings, LLC LLC (& IDRs) Holdco II, LLC (NYSE MKT: CQH) (CMI) Cheniere Energy Cheniere CCH Partners, L.P. Holdco I, LLC (NYSE MKT: CQP) Creole Trail
Slide 46: New LNG Investment Considerations
New LNG Investment Considerations Fundamentals that have evolved for Cheniere Strong cash flows from first trains and corporate debt capacity enable flexibility • Portfolio management with contract ladder versus long-term only • Attractive foundation contracts with investment grade counterparties
Slide 47: Key Takeaways
Key Takeaways 1 Cheniere’s first mover advantage and successful financial and operational execution have Cheniere well placed for the next wave of new LNG build No debt maturities until 2020 First three trains online ahead of schedule; remaining trains on time and on budget Two world-class LNG
Slide 48: VI. Financial Appendix
VI CHENIERE ENERGY, INC. FINANCIAL APPENDIX
Slide 49: Forecasting Points
Forecasting Points CEI Cash Tax Payments Begin Late 2020s CQH Tax Sharing Payments Begin Early 2020s 2020 - 2040 Tax Rate Percentage of Pre-Tax Cash Flow CEI High Teens CQH Mid 20%s As of December 31, 2016, CEI’s and CQH’s federal NOL carryforwards are equal to $3.8 billion and $1.7 billion, respe
Slide 50: Insurance Summary
Insurance Summary Property and Business Interruption – SPLNG, SPL and CTPL • Assets Under Construction • Trains 4 and 5 are insured by Bechtel until transfer of care, custody and control to Sabine • Assets in Operation • SPLNG, CTPL and SPL Trains 1-3 are insured under a Cheniere program • $3.5B l
Slide 51: Cheniere Energy, Inc. Analyst Day April 19, 2017
CHENIERE ENERGY, INC. ANALYST DAY April 19, 2017
Slide 52: Commercial Strategy and Initiatives
COMMERCIAL STRATEGY AND INITIATIVES Anatol Feygin, EVP and CCO
Slide 53: Table of Contents
Table of Contents I Commercial Strategy and Initiatives II LNG Strategy and Communications – Andrew Walker, Vice President III Gas Supply – Corey Grindal, Senior Vice President IV Commercial Operations and Asset Optimization – Eric Bensaude, Managing Director V Origination – Ramzi Mroueh, Managing D
Slide 54: I. Commercial Strategy and Initiatives
I CHENIERE ENERGY, INC. COMMERCIAL STRATEGY AND INITIATIVES
Slide 55: Commercial Group Organization – World Class and Performing
Commercial Group Organization – World Class and Performing Seven Groups United By Clear Objectives Commercial Structuring & LNG Strategy & Gas Supply Business Development Corporate Development Communications Commercial Operations & Commercial Support & Origination Asset Optimization Integration Serv
Slide 56: Market Leading Position Along the Value Chain
Market Leading Position Along the Value Chain Commercial Operations & Gas Supply Origination Business Development Gas Supply Asset Optimization Ensure reliable gas delivery Optimize and monetize Deliver term contracts to Invest along LNG value to LNG facilities excess cargoes; deliver to underwrite
Slide 57: Projected Company Ranking by LNG Sales in 2020
Projected Company Ranking by LNG Sales in 2020 On Track to Be a Top-5 Seller Less Than 5 Years After First Cargo 60 Projected Top LNG Suppliers by Company - 2020 Volumes for Projects Existing and Under Construction 50 40 mtpa 30 20 10 0 Source: Cheniere Research, Wood Mackenzie Note: volumes include
Slide 58: U.S. LNG Expected to be Key in Satisfying Robust Global Gas Growth
U.S. LNG Expected to be Key in Satisfying Robust Global Gas Growth Forecast GDP Growth Levels by Region 6% Emerging economies 5% 2015-2020 drive global growth and 4% 2021-2025 gas demand 3% 2% 1% China and India plan to 0% Emerging Africa Central Asia MENA Canada & Latam & Europe Asia grow gas share
Slide 59: Cheniere Full Service a Structural Competitive Advantage
Cheniere Full Service a Structural Competitive Advantage U.S. Pipeline, Storage Liquefaction Shipping/DES Sales LNG to Power and Gas Supply Feed FOB DES Gas sales sales One of largest pipeline 3 trains in operation, 1 train Cheniere Marketing Global origination team capacity holders in U.S.:
Slide 60: Cheniere Marketing: Robust Strategy for Excess Volumes
Cheniere Marketing: Robust Strategy for Excess Volumes Cheniere Marketing’s LNG portfolio is currently being marketed on a short, medium and long term basis Excess volumes have seasonality with incremental volume available during the premium Northern Hemisphere winter – potential for marketing s
Slide 61: Global LNG SPAs Signed in 2016: A Buyer's Market
Global LNG SPAs Signed in 2016: A Buyer’s Market 12 LNG Deals by Volume LNG Deals by Term mtpa JERA Portfolio 12 10 No. of 9 Plan 10 Deals 45 10 8 7 Deals 8 40 mtpa 6 6 ST 5 6 3 8 4 35 3 4 Short- term 2 2 1 30 0 0 0 mtpa < = 0.5 >0.5 to >1.0 to >1.5 to >2.0 to > 2.5 5 yrs >5 to 10 yrs >10 to 15 yrs>
Slide 62: Key Takeaways
Key Takeaways Cheniere Positioned to Leverage Platform and Deliver Growth 1 Affordable, reliable U.S. and Canadian gas supply will supply growing global gas demand Deep and liquid resource base ensures affordability and scalability of gas supplies Cost curve continues to fall while resource base
Slide 63: Commercial Panel
COMMERCIAL PANEL CHENIERE ae
Slide 64: II. LNG Strategy and Communications
II CHENIERE ENERGY, INC. LNG STRATEGY AND COMMUNICATIONS Andrew Walker, Vice President
Slide 65: LNG Fundamentals are Supportive of Long-Term Growth
LNG Fundamentals are Supportive of Long-Term Growth LNG Demand vs. Supply (mtpa) 500 Global LNG market 450 Market tightening needs competitive new 400 New Supply (127 mtpa) supplies to fill the 350 Under Construction 300 approaching supply 250 Newly Operational gap 200 150 Existing Capacity 100 50 0
Slide 66: Cheniere Has Speed To Market Advantage as Balance Tightens
Cheniere Has Speed To Market Advantage as Balance Tightens mtpa LNG Capacity FID 50 Forecast FID slowdown Incremental supply started in 2014 - 40 setting up a tightening cycle post- 30 2020 20 10 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20
Slide 67: Cheniere Offers Low Cost Incremental LNG Liquefaction Capacity
Cheniere Offers Low Cost Incremental LNG Liquefaction Capacity U.S. natural gas is abundant and cost competitive with other sources of global supply U.S. Gulf Coast liquefaction project costs are also significantly lower due to less project development needed and access to affordable and skilled
Slide 68: Emerging & New Markets Forecast to Underpin LNG Demand Growth
Emerging & New Markets Forecast to Underpin LNG Demand Growth Global LNG demand doubled since 2004 and is expected to grow at similar rates to 2030 Asian markets will continue to anchor new LNG capacity, but focus changing Europe to play a growing role in balancing the market; its reliance on
Slide 69: Floating Regasification Continues to Unlock New Markets
Floating Regasification Continues to Unlock New Markets Price environment, technological solutions and LNG availability encouraging access • New importing markets and emerging new players entering the market creating a more diversified buyer pool with need for more tailored, creative structures
Slide 70: Key Takeaways
Key Takeaways Market Remains Cyclical but Cheniere Positioned as Most Responsive 1 Despite robust supply growth in the near term, the global LNG market is expected to rebalance and start tightening from 2020 2 New competitive supply capacity needs to be sanctioned soon to replace maturing supply and
Slide 71: III. Gas Supply
III CHENIERE ENERGY, INC. GAS SUPPLY Corey Grindal, Senior Vice President
Slide 72: Gas Supply Guiding Principles
Gas Supply Guiding Principles Continued Execution of Our Core Strategy Establish counterparty / market liquidity Transacted with 68 counterparties in 2016 Pipeline capacity contracted at terminal level Pipeline capacity contracted upstream of terminal Term gas purchases into pipeline capacity
Slide 73: Sabine Pass Liquefaction Gas Supply
Sabine Pass Liquefaction Gas Supply Pipeline Volumes Delivered to Sabine Pass Liquefaction 3.0 CTPL deliveries to SPL NGPL Deliveries to SPL Transco deliveries to SPL 2.5 2.0 TBtu/day 1.5 1.0 0.5 0.0 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Delivered over 300 TBtu to the terminal with 99.9% sched
Slide 74: Managing Changing Feed Gas Needs
Managing Changing Feed Gas Needs Adjustments to Production Forecast During Train 3 Commissioning Expected Sabine Pass Feed Gas Requirements for January 15, 2017 2.4 Actual E&C Contractor Estimates 2.2 TBtu 2.0 1.8 1.6 Weds Jan 11 Thurs Jan 12 Fri Jan 13 Sat Jan 14 Sun Jan 15 Production forecast and
Slide 75: Sabine Pass Gas Supply Infrastructure Advantage
Sabine Pass Gas Supply Infrastructure Advantage Transportation into SPL (TBtu/day) Pipeline Contracted Total Capacity Capacity CTPL 1.530 1.530 NGPL 0.550 0.750 Transco 1.200 1.500 CTPL KMLP 0.600 1.200 Total 3.880 4.980 Sabine Pass Facility Diverse and redundant pipeline network has allowed SPL t
Slide 76: Corpus Christi Liquefaction Gas Supply
Corpus Christi Liquefaction Gas Supply Following the Sabine Pass Model Establish counterparty / market liquidity Currently enabled with 80 market participants Pipeline capacity contracted at terminal level Contracted for Train 1 and Train 2 load Pipeline capacity contracted upstream of terminal
Slide 77: Corpus Christi Liquefaction Pipeline Infrastructure Secured
Corpus Christi Liquefaction Pipeline Infrastructure Secured Potential Supply Points Sufficient firm pipeline capacity for Train 1 and Train 2 operations secured NGPL Tennessee Gas Once CCPL is completed by end of HPL 2017, Gas Supply ready to commission KM Tejas pipeline and compression needed f
Slide 78: Key Takeaways
Key Takeaways 1 People, systems, and processes are in place to manage supply and logistics Scalable, difficult to replicate Management of intra-month price and gas supply volatility requires fully staffed trade floor in- tune with plant operations Competitive pipeline capacity and term supply
Slide 79: IV. Commercial Operations and Asset Optimization
IV CHENIERE ENERGY, INC. COMMERCIAL OPERATIONS AND ASSET OPTIMIZATION Eric Bensaude, Managing Director
Slide 80: Commercial Operations & Asset Optimization Organization
Commercial Operations & Asset Optimization Organization Long-Term Scheduling Customers Long-Term Commercial Customer Operations Relationships HOUSTON Institutionalize Deliver into SPA Procedures Liquefaction LONDON Manage Risk Asset Maximize Optimization Margin Capture Short/Medium-Term Short-Term
Slide 81: Foundation Customer Deliveries
Foundation Customer Deliveries More than 100 Cargoes Loaded from Sabine Pass, with Over 50 to Foundation Customers 25 Projected Foundation Customer Deliveries KEY MILESTONES 20 September 16, 2016 • GNF Pre-commercial Achieved 15 November 15, 2016 • BG DFCD June – November 2017 10 • Kogas DFCD
Slide 82: Seasonality Can Impact Short-Term Margins
Seasonality Can Impact Short-Term Margins Historical Margins 4 CMI lifted 25 cargoes in 2016 3 $/MMBtu 2 1 0 Asia Margin Europe Margin Drivers that moved margins last winter: Lower margins in forward curve: • Low Korean stocks and cold start of winter • Weaker oil and coal prices • Nuclear issues in
Slide 83: Cheniere is One of the Top LNG Shippers
Cheniere is One of the Top 5 LNG Shippers Panama Canal Transits LNG Cargoes Vitol Petrobras 2% Gas 3% Natural BP 11% 3% Cheniere 28% Over 25 vessels chartered Shell 53% • Ranging from 138,000 m3 to 174,000 m3 • 1,500 days in 2016 • 11 ship owners and 5 portfolio players 8 vessels on a multi-mont
Slide 84: Sabine Pass Cargoes Delivered to 19 Countries to Date
Sabine Pass Cargoes Delivered to 19 Countries to Date Spain Turkey Italy Japan Portugal Malta Jordan South Korea Sabine Kuwait Egypt Pass Dominican UAE China Republic Mexico India Pakistan Brazil Chile Argentina Sabine Pass LNG Facility Cargo Delivery Destination Source: DOE, Kpler 84
Slide 85: Optimization Example – Trade 1
Optimization Example – Trade 1 Sabine LNG cost Asia $3.25 / MMBtu $7.00 / MMBtu Freight $2.50 / MMBtu Illustrative Cheniere Profit Calculation ($/MMBtu) Asia LNG price 7.00 Shipping cost to Asia (2.50) Cost of LNG from Sabine (3.25) Cheniere profit 1.25 85
Slide 86: Optimization Example – Trade 2
Optimization Example – Trade 2 Sabine LNG cost $3.25 / MMBtu Asia cancellation fee $2.00 / MMBtu Americas $10.00 / MMBtu Illustrative Cheniere Profit Calculation ($/MMBtu) Americas LNG price 10.00 Freight $1.00 / Asia cancellation cost (2.00) MMBtu LNG price realized, net of cancellation 8.00 Shippi
Slide 87: Key Takeaways
Key Takeaways 1 The right people in the right places with the right systems and processes to market excess volumes across the globe Scalable to market additional growth capacity 2 Committed to deliver on commercial obligations to foundation and spot customers 3 Capturing global optimization opport
Slide 88: V. Origination
V CHENIERE ENERGY, INC. ORIGINATION Ramzi Mroueh, Managing Director
Slide 89: Origination Group: A Strong Team in Place for Global Coverage
Origination Group: A Strong Team in Place for Global Coverage Americas Nationalities EMEA Asia Pacific Spanish, 1 Singaporean, 1 Lebanese, 1 USA, 5 Japanese, 1 Hungarian, 1 London, U.K. French, 1 Dutch, 1 UK, 3 Chinese, 1 Bolivia, 1 Argentinian, 1 Tokyo, Japan Houston, TX Singapore Languages Malaysi
Slide 90: Demand Forecast to Grow More than 200 mtpa by 2030
Demand Forecast to Grow More than 200 mtpa by 2030 Driven by Supplemental & Growth Markets Demand mtpa LNG Market Segmentation Type Characteristics Locations Growth 500 (mtpa) Indonesia 450 Malaysia Countries with maturing Egypt indigenous resource Supplemental Pakistan +85 bases require new 400 Tha
Slide 91: Origination Model Designed to Serve 3 Segments of Opportunities
Origination Model Designed to Serve 3 Segments of Opportunities Cheniere Marketing’s Flexible Liquefaction Capacity Enhances Ability to Serve Evolving End User and Market Development Segments Competitively Segment Example Customers Characteristics FOB deliveries Competitive / price driven proces
Slide 92: Key Takeaways
Key Takeaways Cheniere Ideally Positioned to Capture Significant Share of LNG Demand Growth 1 Cheniere professionals are strategically located across the globe to meet customer needs 2 Active ongoing contracting discussions with multiple counterparties in the three core market segments 3 Able to ser
Slide 93: Cheniere Energy, Inc. Analyst Day April 19, 2017
CHENIERE ENERGY, INC. ANALYST DAY April 19, 2017
Slide 94: Construction, Pipeline and Operations Panel
CONSTRUCTION, PIPELINE AND OPERATIONS PANEL
Slide 95: Engineering and Construction
ENGINEERING AND CONSTRUCTION Ed Lehotsky, Senior Vice President
Slide 96: Engineering & Construction Team
Engineering & Construction Team Over 1,500 years of experience in construction of oil and gas facilities (~25 years average per person) Over 750 years of total LNG experience (over 12 years average per person) Ed Lehotsky SVP, Engineering & Construction Sabine Pass Corpus Christi New Project Mid
Slide 97: Sabine Pass Liquefaction Construction Progress
Sabine Pass Liquefaction Construction Progress Trains 1, 2, and 3 in Operation, Train 4 Expected 2H 2017, Train 5 Expected 2019 2012 2013 2014 2015 2016 2017 2018 2019 2020 Train 1 Train 2 Sabine Pass Train 3 Train 4 Nov 2017 Train 5 Aug 2019 Guaranteed Schedule DFCD Window Current Completion Schedu
Slide 98: Sabine Pass Liquefaction Project Execution – April 2017
Sabine Pass Liquefaction Project Execution – April 2017 Train 4 Commissioning Trains 1, 2 & 3 Operational Train 5 Under Construction Train 6 Fully Permitted
Slide 99: Corpus Christi Liquefaction Construction Progress
Corpus Christi Liquefaction Construction Progress Trains 1 & 2 Expected Completion 2019 2012 2013 2014 2015 2016 2017 2018 2019 2020 Corpus Christi Train 1 1H 2019 Train 2 2H 2019 Guaranteed Schedule DFCD Window Opens(1) Current Completion Schedule Progress Stage 1 (Trains 1 & 2) 59.1% complete ov
Slide 100: Corpus Christi Liquefaction Project Execution – April 2017
Corpus Christi Liquefaction Project Execution – April 2017 Stage 1: Trains 1& 2, Tanks A & C, Marine Berths Under Construction Stage 2 Train 3, Tank B Fully Permitted
Slide 101: A Multi-Billion Dollar Investment in American Manufacturing
Sabine Pass Liquefaction & Corpus Christi Liquefaction A Multi-Billion Dollar Investment in American Manufacturing Teledyne Instruments 26 States Inc. GE 69 Manufacturers Sundyne Corporation Rosemount Inc. Chart Durham Geo Enterprises Inc. Milwaukee Valve GE Atlas Copco Rotork Inc. ITT Goulds Pumps
Slide 102: Construction Labor at Liquefaction Facilities
Construction Labor at Liquefaction Facilities On-Site Workforce Peaking in Early 2017 at ~8,200 Approximately 78 million construction man hours and more than $7 billion in wages 102
Slide 103: Key Takeaways
Key Takeaways Cheniere Ideally Positioned to Capture Significant Share of LNG Demand Growth 1 First three trains at Sabine Pass facility transferred to Cheniere’s care, custody, and control ahead of schedule and within budget 2 Commitment to completing remaining four trains under construction Safe
Slide 104: Pipelines
PIPELINES Chad Zamarin, Senior Vice President
Slide 105: Cheniere Pipeline Overview
Cheniere Pipeline Overview Pipeline Mission Ensure reliable supply and operational flexibility for Cheniere’s LNG terminals Extend Cheniere’s supply reach to ensure basin and producer diversity Develop attractive investments that enhance Cheniere’s integrated value chain Proposed Midship Pipel
Slide 106: Creole Trail Pipeline: Critical Infrastructure Serving Sabine Pass
Creole Trail Pipeline: Critical Infrastructure Serving Sabine Pass Overview: Safety: 94 miles of 42” pipeline, 53,000 HP of Zero Lost Time, Reportable, and First Compression Aid cases Interconnections with Trunkline, Transco Ongoing safety initiative; championing and TETCO an “Own it; Live i
Slide 107: Creole Trail Pipeline Map
Creole Trail Pipeline Map 53,000 HP GILLIS COMPRESSOR STATION JOHNSON BAYOU METER STATION SABINE PASS LNG 107
Slide 108: Corpus Christi Pipeline: Critical Infrastructure Serving CCL
Corpus Christi Pipeline: Critical Infrastructure Serving CCL Overview 22 miles of 48” pipeline, 1.5 miles of dual 36” header 73,000 HP compressor station – 2 Solar Titan and 2 electric driven Solar compressors 5 receipt meter stations and one delivery meter to CCL Project Status Engineering
Slide 109: Corpus Christi Pipeline Map
Corpus Christi Pipeline Map 109
Slide 110: Proposed Midship Pipeline: Extending and Diversifying Supply Reach
Proposed Midship Pipeline: Extending and Diversifying Cheniere’s Supply Reach 200 miles of mainline and 33 miles of laterals Key Regulatory Milestones Target originating in Kingfisher County, OK and Date terminating in Bryan County, OK FERC meeting to provide project 10/20/16 overview Initial ca
Slide 111: Proposed Midship Pipeline Map
Proposed Midship Pipeline Map 111
Slide 112: Key Takeaways
Key Takeaways Develop, Construct, and Operate Pipelines to Support LNG Value Chain 1 Develop attractive investments to enhance integrated, full-service LNG offering 2 Construct pipeline projects ahead of schedule and within budget 3 Operate critical infrastructure for our LNG facilities Leverage pos
Slide 113: Operations
OPERATIONS Doug Shanda, Senior Vice President
Slide 114: Operations Organization
Operations Organization SVP, Operations Full Headcount ~30 SVP, Operations – Douglas Shanda, 23 years of experience with 10 in LNG Management Operations and Support Operations Support Health and Safety Total Operations liquefaction experienced Technical Services employees have combined ~13
Slide 115: Liquefaction Capacity
Liquefaction Capacity How do we define nominal production capacity? Nominal production capacity is the approximate expected capacity before adjustments, which include: • Planned maintenance • Reliability • Over design • Debottlenecking • Process conditions Are the adjustments the same for Sabine P
Slide 116: Liquefaction Capacity
Liquefaction Capacity What adjusted capacity can be expected from Cheniere’s 7 trains? Adjusted nominal capacity is expected to range between 4.3 and 4.6 mtpa in run-rate years • Preliminary overdesign assessment in progress; require warm weather data • Low end is driven by years with major planne
Slide 117: Performance Versus 115% of HH
Performance Versus 115% of HH How do we measure performance? Performance is measured as a percentage to LNG Produced (%) • Defined as the percentage of feed gas utilized, converted to condensate, or lost plus realized price in the supply and transportation of feed gas and production of LNG versus
Slide 118: Facility Maintenance
Facility Maintenance Maintenance requirements for a liquefaction facility • Refrigerant turbines, compressors and ancillary equipment package represents the majority of maintenance • Covered by a Contractual Services Agreement (CSA) with GE • Pipeline quality gas and no front end liquids removal u
Slide 119: Key Takeaways
Key Takeaways Operational Excellence to Maximize Production Performance 1 Experienced Operations leadership team and site teams 2 Current guidance for expected adjusted nominal capacity of 4.3 to 4.6 mtpa 3 Debottlenecking opportunities identified 4 Facility gas utilization performance expec
Slide 120: Cheniere Energy, Inc. Analyst Day April 19, 2017
CHENIERE ENERGY, INC. ANALYST DAY April 19, 2017
Slide 121: Closing Remarks
CLOSING REMARKS Jack Fusco, President and CEO
Slide 122: Cheniere's Existing LNG Platform Creates Advantages for Growth
Cheniere’s Existing LNG Platform Creates Advantages for Growth Construction Operations Significant infrastructure investment at Ability to scale quickly and effectively Corpus Christi and Sabine Pass sites Scale helps reduce operating expense – • Site preparation Operating expense associated
Slide 123: Cheniere Energy, Inc. Analyst Day April 19, 2017
CHENIERE ENERGY, INC. ANALYST DAY April 19, 2017
Slide 124: Appendix
APPENDIX CHENIERE ae
Slide 125: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Regulation G Reconciliations In addition to disclosing financial measures in accordance with U.S. GAAP, the accompanying presentation contains non-GAAP financial measures. EBITDA, Adjusted EBITDA, Contracted EBITDA, Distributable Cash Flow, Distributable Cash Fl
Slide 126: Reconciliation of Non-GAAP Measures (Continued)
Reconciliation of Non-GAAP Measures (Continued) ($bn, except per share amounts or unless otherwise noted) 2017 Net Income (Loss) Attributable to Common Stockholders ($0.5) - ($0.3) Net Income (Loss) Attributable to Non-Controlling Interest $0.8 - $0.9 Income Tax Provision (Benefit) ($0.0) Interest E