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Cheniere Partners (CQP) Strikes LNG Cargo Deal for 2021

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Cheniere Energy Partners, L.P. (CQP - Free Report) recently announced a deal for the Sabine Pass Liquefaction unit to sell 30 liquefied natural gas (LNG - Free Report) cargoes to a subsidiary of Cheniere Energy, Inc. (LNG - Free Report) . The cargoes are expected to be delivered in 2021.

The cargoes are expected to be priced at 115% of Henry Hub natural gas futures, added with a premium of 72.8 cents per one million British thermal units. The deal highlights the recovering energy demand scenario. The coronavirus pandemic dampened global energy demand growth for significant part of this year. However, many analysts opine that the current availability of COVID vaccine and several other measures will help energy demand to recover.

With the overall energy sector suffering this year, some of the companies were forced to slash dividends. Cheniere Partners stood tall, thanks to its resilient business model. In fact, the partnership reiterated its full-year 2020 guidance for distribution per unit in the range of $2.55-$2.65. For the next year, distribution per unit is expected in the range of $2.60-$2.70. The partnership expects current distributable cash flow per unit in the range of $3.75-$3.95, reflecting an increase from the previous expectation of $3.70-$3.90.

Notably, most of the industries around the globe are looking for ways to decrease greenhouse gas emissions. As such, demand for LNG is expected to grow gradually, which in turn will enable the partnership to make massive profits from its export facility. Long-term and fixed-fee contracts with clients provide the partnership with a steady revenue source. Hence, Cheniere Partners is least exposed to commodity price fluctuations.

Price Performance

Cheniere Partners has gained 9.2% in the past three months compared with 12.9% rise of the industry it belongs to.

Zacks Rank & Key Picks

Currently, Cheniere Partnershas a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Covanta Holding Corporation (CVA - Free Report) and Antero Midstream Corporation (AM - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Covanta Holding’s bottom line for 2021 is expected to rise 95.3% year over year.

Antero Midstream’s bottom line for 2020 has witnessed two upward estimate revisions and no downward movement in the past 60 days.

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