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Cheniere Energy Beats Wall Street Again, Increases 2018 Guidance

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Cheniere Energy beats Wall Street yet again

Cheniere Energy (LNG) surprised Wall Street yet again with its strong operating performance today. The US LNG (liquefied natural gas) exporter posted quarterly revenue of $2,242 million, beating analysts’ estimates by a distant $513 million (or 29.7%). Wall Street called for 1Q18 revenue of $1,729 million. Cheniere Energy has beaten analysts’ estimate for the fifth consecutive quarter.

The company’s 1Q18 saw an 85.1% increase from 1Q17 and a 28.4% increase compared to the previous quarter. Wall Street was expecting a quarterly decline in revenue this time.

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The year-over-year jump in Cheniere Energy’s 1Q18 revenue is mainly due to higher LNG prices and an increase in LNG volumes resulting from the commencement of LNG exports from trains 3 and 4 at Sabine Pass. Cheniere Energy exported 67 cargoes in 1Q18, compared to 43 in the same quarter of the prior year. Total LNG volume rose in 1Q18 to 244 TBtu (trillion British thermal units). Overall, the company has exported 350 cargoes to date.

Cheniere Energy’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) increased to $907.0 million in 1Q18, compared to $483.0 million in 1Q16. The year-over-year increase in the company’s EBITDA is mainly due to an increase in LNG export revenues.

Increased guidance for the second time

Cheniere Energy announced an increase in its 2018 EBITDA guidance for the second time this year. The company now expects its 2018 adjusted EBITDA to lie between $2.3 billion and $2.5 billion, compared to the previous guidance of $2.0 billion–$2.2 billion. The increase in guidance was driven by strong YTD operating performance, a strong LNG market environment, and higher-than-expected LNG prices.

How the market could react

The strong 1Q18 earnings and increase in year-end guidance would likely boost Cheniere Energy and its subsidiaries, Cheniere Energy Partners (CQP) and Cheniere Energy GP Holdings (CQH). Cheniere Energy has risen 9.4% year-to-date. At the same time, the Energy Select Sector SPDR Fund (XLE) is up 1.7%. Cheniere Energy is outperforming XLE by 770 basis points.

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