Cheniere $LNG

  • 18 April 2025
 

Introduction

Cheniere Energy is the leading LNG exporter in the US (and the second-largest exporter in the world). It has been one of the key players in the LNG revolution since the commissioning of its first liquefaction terminal in 2016 (Sabine Pass, originally designed as an import terminal, but with the fracking revolution, they were pioneers in the idea of exporting LNG and adapted the facility accordingly).

Cheniere owns two terminals located on the Gulf of Mexico: Sabine Pass and Corpus Christi. The first is fully owned by its LP, Cheniere Energy Partners (CQP) — a listed company, of which Cheniere holds 50.6% ownership (and fully consolidates; the rest is held by Blackstone, Brookfield, and free float). Corpus Christi, meanwhile, is 100% owned by Cheniere. Additionally, the company has a “marketing” division dedicated to trading activities.

Both terminals have experienced rapid growth in recent years: Sabine Pass already has 30 MTPA of operational capacity, and Corpus Christi has 15 MTPA, with another 10 MTPA currently being brought online throughout 2025 and early 2026. Beyond this, Cheniere has already begun the permitting process to further expand both terminals.

 
Corpus Christi Stage 3 (10 MTPA), scheduled for commissioning in 2025 / 1H26 alone is expected to add approximately 140 cargoes annually

Cheniere’s business model relies on long-term contracts (10–20 years) that generate predictable cash flows with tier-1 energy companies for a fixed amount of LNG per year (take-or-pay contracts). The typical contract structure is based on a fee of $2.5-3/MMBtu + 115% of the Henry Hub natural gas price (spot) — although this depends on the type of contract (FOB, DES, … ), as we will discuss later.

In terms of management, this is arguably one of the best-run companies in the world. They have consistently completed construction months or even a year ahead of schedule, their capital allocation strategy (buybacks, growing dividends, and organic growth) is textbook-worthy, and they are the industry benchmark for LNG thanks to their quarterly market updates and insight.

We have been following Cheniere since 2020, and it was in fact one of our top investments during the COVID period, delivering fantastic returns. Strongly benefited by the boom in US exports and high natural gas prices in recent years, Cheniere has become the absolute reference in the sector, thanks to the outstanding performance of its management, combining massive organic growth with a shareholder-friendly capital return policy.

Today we update our analysis of Cheniere Energy with:

  • A review of how the LNG industry works and the current environment

  • Analysis of Cheniere’s assets, contract structures, and growth plans

  • Status of its “peers” (Venture Global, Kinder Morgan, Sempra, Next Decade, Brookfield Infrastructure,… and the new US export terminals

  • Analysis of its debt, interest payments, and capital allocation strategy

  • A detailed EBITDA forecast with expansion plans and sensitivity to Henry Hub prices

  • Valuation and our independent opinion

     

 

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