EUR 850.00 For Business Accounts Only

Morningstar | Cheniere Reports Solid 4Q; We Expect to Maintain Our FVEs

Cheniere reported a solid fourth quarter, and we expect to maintain our wide moat ratings and fair value estimates for both Cheniere Energy and Cheniere Energy Partners. Full-year EBITDA of $2.6 billion was slightly above our expectations, while 2019 guidance of $2.9 billion-$3.2 billion in EBITDA was below our expectations, mainly due to what we believe are timing differences regarding the ramp-up of trains. However, we continue to think Cheniere's guidance of $4.4 billion-$4.9 billion in EBITDA for when eight trains are on line is reasonable, and we project $5.2 billion in EBITDA by 2022, reflecting healthy marketing margins.

The entities continue to benefit from strong demand from China for liquefied natural gas and an uptick in industry demand, signing contracts worth 7.5 million tons per annum in 2018. Key efforts for 2019 will be bringing three trains into service and making permitting progress on Corpus Christi Train 3, which is Cheniere's midscale LNG effort. To date, we've been impressed by Cheniere's ability to bring in its projects ahead of schedule and on budget. The project would reflect seven trains with expected capacity of 1.4 million tons per annum each, versus its existing trains, which can handle up to 4.9 million tons per annum each. We like this effort as it provides both customers and Cheniere with more flexibility regarding the timing and size of contracts, letting it move projects forward potentially faster.

For more on our LNG forecast, please see our November 2018 Energy Observer, "China Oil & Gas Demand: Above-Consensus Forecasts for Medium-Term Growth, but Electric Vehicles Loom Large for Oil."