Transcript • Feb. 26, 2026 4:00 PM • Cheniere Energy Partners, LP (CQP)
Transcript
Feb. 26, 2026 4:00 PM
Cheniere Energy Partners, LP (CQP)
Anatole Maruéjouls: as we've said to you and others, at this point, I can't tell you that if we needed to get to 20 million tons of additional contracted volumes, we would be able to maintain that.
spk08: So to... That level, in fact...
Anatole Maruéjouls: we would say that they're below that level. It is kind of, as Jack already mentioned and I mentioned, it is the counterparties that value our reliability
spk08: So as you look at where price elastic markets can with what's under construction, right?
Anatole Maruéjouls: You have markets like Vietnam, which, you know, a silly number, but it grew over 200%, obviously from a very small base, but that is a market that in and of itself, will probably be well north of 10 million tons by the time we get into next decade. So you're going to see Asia grow from, we think, from the kind of 270 million ton market where it's been stuck for the last few years because of the high prices to well over 400 million tons that will continue to grow once that not only affordable supply, but also the fact that it is radically affordable over years continues to stimulate investment. Again, very sanguine, and at the end of the day, as long as we keep contracting at those economics and underwriting our discipline expansion plans, we hope the market remains constructive and continues to grow, but as you understand, we are quite immune from those dynamics.
spk03: That's very helpful. Thank you.
spk01: Switching gears a bit, as gas-to-power demand reaches new highs across the U.S., partly driven by growing data center electricity needs. There are concerns that rising LNG exports could exacerbate domestic affordability pressures. What is your view on this? Do you see these dynamics affecting Chinese ability to permit and or commercialize incremental capacity? And how did the domestic affordability issues reconcile with LNG's importance as a strategic trade and geopolitical lever for the U.S.? ?
Jack Fusco: So I'm going to start because and then I'm kind of pushing Anatole back because he's jumping at the microphone right now. But, Teresa, so we it takes us 18 months to two years to get a permit. And our pipeline plans have to be filed with FERC and made public. And then it's another three to four years for construction. And in all cases, we buy FT firm transportation. As you know, we have it to all five basins. We process seven days a week, 24 hours a day, and we provide a stability in cash flow to the producers and the midstream companies that they've never existed before in their lifetime. So that has allowed them to grow fairly significantly. So when that first cargo left the shore of Sabine Pass and headed to Brazil in February of 2016, natural gas production in the U.S. was, I think it was 67, 68 BCF a day. Today it's over 110 BCF a day. And that in part is because they see what's coming and they see the amount of exports. Having been for most of my career on the gas to power side, gas to power doesn't like buying firm transportation. They don't like paying for gas forward because they want to price it into the real-time market. And they're not real supportive. They'd rather have interruptible supply at the cheapest price possible. And it helps take some of the product up, but it's not going to be helpful longer term for production. So I think you're starting to see that whole price paradigm on exports shift in Washington as we continue to explain to the legislators and regulators how the markets really work, and then I'll turn it over to Anatole.
Anatole Maruéjouls: Yeah, to not take up too much time, three quick points. One is we don't think we compete for molecules with those incremental demand centers, right? By definition, they will try to build in places that have trapped resource and can't have the infrastructure to access the markets where we see points of liquidity, and that is, as Jack already mentioned, a quasi-religion for us as we supply our customers, too. We think that the market will be very disappointed, let's say, by the rate at which gas demand into power grows. Even the EIA says that 26 and 27 won't see the same level as 24 saw in terms of gas for power generation. And three, as you know, for our product and for our customers, NYMEX is a pass-through, and we don't expect tremendous competition in the southwest Louisiana pool that is NYMEX for those molecules. So, we're very optimistic that the domestic resource is there to meet all needs and we are very careful about how we approach the expansions and our current infrastructure is more than sufficient to avail us of the molecules that we need.
spk03: Thank you for that comprehensive answer.
Operator: And we'll go to Jean Ann Salisbury with Bank of America.
Jean Ann Salisbury: Hi, good morning. In 2025, I believe there was really significant EPC CapEx escalation in LNG greenfield casts. Can you talk about what you see as the drivers of that and whether that has begun to moderate? And as a CapEx escalation is impacting brownfield projects like yours as materially?
Jack Fusco: Gina, as you know, we have FID trains eight and nine, and we're able to do it within our financial parameters that Zach has laid out for the company and for all of you in the past. We do see some escalation. We're working through it with our partners, Bechtel. We've been able to manage it by doing some limited notices to proceed on some longer lead time items, I would say, at this point. It's the lead time that worries me more than the inflation. And it's just the way that we've been able to manage our projects. We also have went back and basically went back to our ConocoPhillips optimized plan to get economies of scale, to get our dollars per ton down. And we've asked both for the SPL expansion as well as the CCL expansion to just give us exactly the same train you gave us the last time. So for SPL 7, I just want another SPL 6, identical. And for CCL 4, I just want CCL 3 again, identical. And I think that's going to help us on all fronts.
Zach Davis: And I'll just add, when it comes to the math, the math is pretty transparent as we file quarterly what our CapEx is and our PP&E is. But basically, we have the lowest cost per ton, the best or the highest SBAs, the lowest leverage, and the least amount of equity partners. So I think we're pretty well placed for the FIDs of Train 7 and Train 4. And what we've said before, we're permitting a lot more than that, but we see a path to hold to the standard by being as super brownfield as possible right now.
spk08: Very clear. Thank you. And moving on to Michael Bloom with Wells Fargo.
Michael Bloom: Thanks. I guess it's still morning here. In terms of your December filing to increase CCL Stage 3 and mid-scale 8 and 9 by 5 million tons. Can you just talk about the timing to achieve that expansion and how do we think about the use case for that incremental capacity at those two facilities?
Zach Davis: Yeah, those types of filings are the fact that we continue to de-bottleneck and engineer the site in a way that there might be more opportunity than, say, the 60-plus million tons from the existing assets that we plan to try to take advantage of over time. And that's what that increment would be, is to kind of accommodate peak production at certain times of the year at that site. And it kind of folds into this whole story that we're not just going to FID likely a train at each site, but we're going to FID a train at each site and some other de-bottlenecking projects And that's how we get to 75 million tons. So this is just part of the overall plan, that there's going to be ideally a first phase of a train four at Corpus, but some other stuff that's going to make the economics so crystal clear that they're creative and within our parameters.
Michael Bloom: Okay, got it. That makes sense. Thanks for that. And then in terms of the new CPC contract you announced this morning. When do you expect it to kick in during 2026? Thanks.
Anatole Maruéjouls: It starts mid-year. And to your previous question, some of the transactions and how we negotiate them kind of going forward, to Zach's answer, includes some of that flexibility that we can take advantage of as we de-bottleneck. That's why we're a little cagey with the 1.2 million tons. That is the number through the vast majority of the term, but it includes some flexibility starting middle of this year.
spk08: Understood. Thank you. And the next question comes from Jason Gabelman with TD Callen.
Jason Gabelman: Yeah, hello. Thanks for taking my question. You mentioned the ramp-up and Corpus Stage 3 is going very well, and it seems like those trains can kind of come online perhaps earlier than what you have contemplated in your volume guidance. So, just wondering how you think about the upside to that volume guidance that you gave.
Zach Davis: Still early on in the year, and I think everyone could take comfort in the guidance that we gave did not update substantial completion dates of trains five through seven. But mind you, we just had earlier this month, first LNG at train five of stage three. But to put some math on it, if all three trains were a month early, that's comfortably over $50 million of incremental EBITDA. at current margins over the year. So that could be upside, but today in February, too soon to tell, and we'll give updates as these trains come online over the coming year, but things are progressing really well. And yeah, we're already four for four, and it's looking like five for five of being early.
Jason Gabelman: Yep. Thanks for that. And my follow-up is just, thinking about the additional expansions that you have at Sabine and Corpus beyond these very brownfield trains. You know, I think, Anatole, you mentioned that you have kind of 20 million tons worth of SBA opportunities at the higher margin guidance that you kind of embed in your economics. Do those support these higher cost kind of trains beyond the initial brownfield opportunities? Because it sounds like the trains after the initial ones, that's the Bean Baskin-Corpus, are probably going to be a bit more expensive.
Anatole Maruéjouls: Yeah, Jason, sorry if I misspoke. It's kind of the other way around. I was saying that if we had to do 20, we would not be able to today maintain the $2.50 to $3 standard, right? Quote, the market for the U.S. product is up $2.50 today. It is our... performance and our reliability and our commercial engagement that gives us the ability to capture these premium contracts. But we are in an enviable position standing on the shoulders of the teams at Chenier that have continued to deliver this performance over, as Jack said, a decade plus a couple of days that we're able to capture these additional volumes that should allow us to maintain those brownfield super brownfield economics and meet our investment parameters. Beyond that, I'll let the guys chime in, but it's kind of a step function change in capex per ton. And that market, the market economics today, we don't see supporting meeting our investment parameters.
Zach Davis: Jack's whiteboard got us to 75 million tons, and we'll go from there.
spk08: Got it. Thanks for the answers.
Operator: And our last question will come from John McKay with Goldman Sachs.
John McKay: Hey, guys. Thank you for the time. A quick one on just going back to the macro for you, Anatole. I just want to go back to slide nine where you guys are showing this pretty strong growth rate for China through 2030. I was just wondering if you'd underline that a little bit more with what price you think you need to underwrite that growth And, you know, you have the subcomment around coal, big kind of gas switching in there. Just what your general framework for that in terms of magnitude could be.
Anatole Maruéjouls: Yeah, I'll give you our guess, obviously subject to a lot of hedging, but we think somewhere in the $8 to $9 delivered range. You know, the great thing about the Chinese market is it is massively fragmented and distributed. It is going to be approaching 300 million tons of regas capacity, a TTF of storage. It's going to blow through 200 gigawatts of installed generation capacity, mostly along the coast. So at the right price, it has the capacity to consume a very substantial amount of volume. But as you saw in 25, for a host of reasons, it behaves as a as the quintessential invisible hand and redirects cargoes to where they are most profitable. Dozens and dozens of companies, multiple business models, obviously competing fuels, et cetera, but we think that at that high single-digit level number backdrop of $60, $65 Brent, you're going to see China come roaring back like it did in 1819.
John McKay: Super interesting. Thank you. Last quick one for me. I think that's for Zach, but maybe Jack as well. I'd just be curious to hear your latest thoughts on the dividend in terms of where that could grow over time, particularly now that you're framing up this $30 per share number and how that maybe plays back and forth with buybacks. Thank you.
Zach Davis: Sure. So everything we even announced today is just following through with what we've said in the past. And one of the things we said in the past is that we're committed to growing the dividend by basically 10% a year through the decade. And eventually, over time, we'll get to something over 20% of a payout ratio. Clearly, our shareholder return policy is just different than everyone else in midstream. We pay out about 60%, which is probably above, on average, the rest. But 50% of that 60% is buybacks, whereas it's basically all dividend for the others. This flexibility allows us to not only basically self-generate the cash flow to fund the equity for stage three, miscalculated nine, and the first phases at both projects, but this flexibility to be opportunistic like we were the last couple quarters and earlier this year on the buyback. So I think we're going to keep it this way. It really enhances the financial flexibility of the company, but that 10% compounding gets very powerful later on this decade.
spk08: That's clear. Thank you. Appreciate the time.
Operator: And that does conclude the question and answer session. I'll now turn the conference back over to you.
Jack Fusco: I just want to say thank you all for the last 10 years of support. It It seems like just yesterday, but it also feels like we're just getting started.
spk08: So stay tuned. Thank you. That does conclude today's conference.
Operator: We do thank you for your participation and have an excellent day.
