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Why Cheniere Energy Could See a Sequential Revenue Fall in 1Q18

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Apr. 30 2018, Updated 11:08 a.m. ET

Cheniere Energy’s 1Q18 revenue estimates

Cheniere Energy (LNG) and its MLP subsidiaries, Cheniere Energy Partners (CQP) and Cheniere Energy Partners Holdings (CQH), are scheduled to release their 1Q18 earnings on May 4, 2018.

Wall Street analysts’ consensus 1Q18 revenue estimate for Cheniere Energy is $1.6 billion, 33.9% higher than its 1Q17 revenue and 7.2% higher than its 4Q17 revenue. The company beat its revenue estimate in the previous quarter. The 4Q17 revenue estimate for Cheniere Energy was $1.6 billion, while it reported revenue of $1.8 billion, an 8.6% beat.

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The YoY (year-over-year) jump in Cheniere Energy’s 1Q18 revenue is expected to be driven by the commencement of LNG (liquefied natural gas) exports from Train 3 and Train 4 at its SPL (Sabine Pass liquefaction) facility, higher US LNG exports, and higher LNG prices. The company commenced its 20-year LNG contract with GAIL during 1Q18.

Higher YoY LNG volumes resulted from higher LNG demand from Asia, particularly from China and South Korea. According to the EIA (U.S. Energy Information Administration), US LNG exports totaled 72.4 Bcf (billion cubic feet) in January 2018 compared to 51.3 Bcf in January 2017.

However, shipments in January were lower compared to the previous quarter’s average of 80.7 Bcf. The fall can be attributed to the disruption of natural gas supplies to the Sabine Pass facility in January. Moreover, the Sabine Pass Terminal was shut down for a brief period in February due to leakage from storage tanks. These LNG supply disruptions could be the reason behind analysts’ expectations of a quarter-over-quarter fall in revenue in 1Q18.

Cheniere Energy’s 1Q18 EBITDA

Analysts expect Cheniere Energy’s 1Q18 EBITDA (earnings before interest, tax, depreciation, and amortization) to be $602.3 million, 35.0% higher than its EBITDA in the same quarter of the previous year and 10.5% higher than its EBITDA in the previous quarter. Its strong YoY (year-over-year) EBITDA growth is expected to be driven by higher LNG revenue and lower operating expenses.

In the next article, we’ll look into Cheniere Energy Partners’ recent market performance. Later in the series, we’ll talk about Cheniere Energy’s technical indicators, price forecasts, valuations, and analyst ratings.

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