The U.S. emerged as the top LNG exporter in 2023 as buyers scrambled to find alternate sources after Western sanctions squeezed supplies from Russia.
Cheniere's overall loaded LNG volumes remained roughly flat year-on-year at 601 trillion British thermal units (BTU) but higher than Wall Street expectations.
Earnings were stronger than estimated on 56 trillion Btu higher volumes contributing $190 million more margin than forecast, TD Cowen analysts said in a note.
Cheniere reported adjusted earnings before interest, taxes, depreciation, and amortization of $1.77 billion, down 51% from a year earlier but above the average analyst estimate of $1.54 billion, according to LSEG data.
The Houston, Texas-based firm reported LNG revenue of $4.04 billion for the three months ended March 31, compared with $7.09 billion in the year-ago quarter, due to lower U.S. natural gas prices.
The company attributed a $697 million reduction in revenue to U.S. Henry Hub gas pricing, to which the majority of its long-term LNG sales contracts are indexed.
Cheniere's revenue from short-term agreements slumped 75.6% to $793 million as international gas prices scaled back from the peaks of 2022 and global LNG supplies improved.
CEO Jack Fusco also said that an Arctic freeze in January impacted its operations and made it difficult to meet commercial commitments.
U.S. LNG production has been hurt by Freeport LNG experiencing mechanical challenges caused by the January freeze that damaged electric motors.
In the second and third quarters of 2024, when the temperatures on the U.S. Gulf Coast are high and plants less efficient, Cheniere will conduct most of its maintenance work leading to lower volumes, said Zach Davis, executive vice president and chief financial officer.
Cheniere expects there will be a short-term tightening global LNG supplies as demand grows in Asia on higher temperatures and increased maintenance on some LNG plants, said company Vice President and Chief Commercial Officer Anatol Feygin.
Cheniere is predicting growing LNG demand in Asia as prices decline and Europe's high storage levels led to a 13% fall in demand on the continent, said Feygin at the company's earnings call.
The additional regasification capacity globally will support LNG prices in the long term at high single digits or low double digits, he said.
Price sensitive countries like India and China are expected to lead the growth in LNG imports, with India increasing its regasification capacity to over 70 million metric tons per annum (MTPA), said Feygin.
The labor challenges in the U.S. market have so far not impacted Cheniere and its contractor Bechtel's timeline for the delivery of its expansion projects but traditionally LNG projects have suffered from delays, said Feygin.
Exxon Mobil (XOM.N), opens new tab and Qatar Energy's Golden Pass LNG project has been delayed several times and is now expected to produce first LNG next year.
