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Cheniere Energy (LNG) Posts Q2 Loss, Lags Sales Estimates

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Cheniere Energy, Inc. (LNG - Free Report) reported second-quarter 2018 net loss per share of 7 cents against the Zacks Consensus Estimate of profit of 32 cents. The weaker-than-expected results can be attributed to lower-than-anticipated revenues and high costs incurred during the quarter. The company failed to pull off a hat-trick of earnings beat owing to the dismal results. However, the reported loss narrowed from the year ago quarter’s net loss of $1.23 on the back of increased operations from the additional trains in the Sabine Pass project.

The U.S. gas exporter’s quarterly revenues increased 24.3% to $1,543 million from $1,241 million recorded in the year-ago quarter. As such, adjusted EBITDA rose to $531 million from $371 million in second-quarter 2017. However, the top line missed the Zacks Consensus Estimate of $1,612 million.

Cheniere Energy, Inc. Price, Consensus and EPS Surprise

Cheniere Energy, Inc. Price, Consensus and EPS Surprise | Cheniere Energy, Inc. Quote

During the quarter, the company shipped 61 cargoes from the Sabine Pass liquefied natural gas terminal in Louisiana, reflecting an increase of 27%. Total volumes of LNG exported in the reported quarter were 219 trillion British thermal units (TBtu) compared with 170 TBtu in the year-ago quarter.

Costs & Expenses

Overall costs and expenses rose 24.8% to $1,207 million from the same quarter last year. The increase is mainly attributed to higher cost of sales that jumped to $873 million from $692 million in the prior-year quarter, and a rise in operating and maintenance expenses by 25.6% year over year to $147 million. Depreciation and amortization expenses also increased from $90 million a year ago to $111 million in the reported quarter.

Balance Sheet

As of Jun 30, 2018, Cheniere Energy had approximately $874 million in cash and cash equivalents. The company recorded $26,782 million in net long-term debt compared with the prior-year level of $25,656. The debt-to-capitalization ratio of the company now stands at 94% versus 93% reported in the first quarter of 2018.

Guidance

Cheniere Energy reaffirmed its EBITDA guidance for full-year 2018 and raised the lower end of the distributable guided range. Adjusted EBITDA is expected between $2,300 million and $2,500 million. Distributable cash flow is projected between $400 million and $550 million, up from the prior guided range of $350-$550 million.

Progress Report

Sabine Pass Liquefaction Project (SPL): Sabine Pass is North America’s first large-scale liquefied gas export facility. Altogether, Cheniere Energy intends to construct up to six trains at the Sabine Pass, with each train expected to have a capacity of about 4.5 million tons per annum (Mtpa). While Trains 1, 2, 3 and 4 are functional; Train 5 is undergoing commissioning. Train 6 is being commercialized and has secured the necessary regulatory approvals.

Corpus Christi Liquefaction Project (CCL): Cheniere Energy’s Corpus Christi LNG project, under which the company intends to develop three trains, is expected to come online in 2019. Each train is expected to have a nominal production capacity of 4.5 Mtpa of LNG. Train 1 is undergoing commissioning, whereas Train 2 and 3 are under construction. Notably, the company made its final investment decision on Train 3 in May, with its construction being handed over to contractor Bechtel Oil, Gas and Chemicals, Inc.

Corpus Christi Expansion Project: Cheniere Energy intends to develop seven midscale liquefaction trains adjacent to the CCL Project. In June, the company filed an application with the Federal Energy Regulatory Commission regarding the same. The total production capacities for these trains are expected to be approximately 9.5 Mtpa.

Zacks Rank & Key Picks

Currently, Cheniere Energy carries a Zacks Rank #3 (Hold).

Meanwhile, one can opt for some better-ranked energy players in the same industry like Bonanza Creek Energy, Inc. , Carrizo Oil & Gas, Inc. and Murphy Oil Corporation (MUR - Free Report) . While Bonanza Creek sports a Zacks Rank #1 (Strong Buy), Carrizo and Murphy Oil both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bonanza Creek surpassed earnings estimates in three out of the last four quarters, with an average of 74.88%.

Carrizo topped earnings estimates in each of the trailing four quarters, delivering a positive earnings surprise of 26.11%.

Murphy Oil delivered an average positive earnings surprise of 96.50% in the trailing four quarters.

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