Cheniere Energy (LNG) Announces Comprehensive Long-Term Capital Allocation Plan
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Cheniere Energy, Inc. (“Cheniere” or the “Company”) (NYSE American: LNG) today announced that its board of directors has approved a comprehensive long-term capital allocation plan (the “Plan” ) designed to make a quality, balance sheet investment, return significant capital to shareholders over time and continue to invest in accretive organic growth.
- ~ $ 1 billion in debt repayment per year until investment quality metrics are met
- Launch of the quarterly LNG dividend for the third quarter of 2021 at $ 0.33 / share
- Share buybacks resumed in Q3; Program reset to 3 years $ 1 billion in fourth quarter
- Corpus Christi Stage 3 FID expected in 2022
With 2021 financial results expected at the high end of benchmarks and the substantial completion of Sabine Pass Train 6 now expected in Q1 2022, the Company has reached an inflection point in its cash flow and expects generate approximately $ 10 billion Cumulative Distributable Cash Flow1 (“DCF”) through 2024 with an annual DCF execution rate of $ 2.6 to $ 3.0 billion, allowing on-balance sheet execution , returns on capital and accretive growth priorities. The plan is designed to achieve a DCF at the going rate of $ 15 to $ 17 per share over the long term, including the Corpus Christi Stage 3 project (“Corpus Christi Stage 3”).
“Over the past five years, we have successfully achieved our operational, commercial and financial objectives, which now serve as the foundation for this comprehensive capital allocation plan for Cheniere stakeholders. The plan is based on our guiding principles of maintaining a strong and sustainable balance sheet, funding financially disciplined accretive growth and returning capital to shareholders through share buybacks and dividends, ”said Jack Fusco, President and CEO of Cheniere. “Our accomplishments over the past five years have brought us to this point, and the plan helps ensure Cheniere’s long-term success by strengthening our financial position, starting significant returns for shareholders and committing to our disciplined approach to deploying growth capital. ”
Sustainable balance sheet and liquidity
- Project approximately $ 1 billion in annual debt repayment, targeting quality consolidated credit measures by early to mid-2020s
- Prioritize repayment of repayable or maturing project debt to strengthen project credit measures and reduce subordination of corporate-level credit profiles
Return on capital to shareholders
- Declare an inaugural quarterly dividend of $ 0.33, or $ 1.32 annualized, per share. The dividend is payable on November 17, 2021 to shareholders of record on November 3, 2021
- Plan to increase the dividend at an average single-digit growth rate, positioning the inaugural dividend approximately in line with the average rate of return and growth of the S&P 500
- $ 1 billion share buyback program for an additional 3 years starting in the fourth quarter of 2021. Share buybacks under the previous $ 1 billion authorization resumed in the third quarter
- Leverage the existing LNG infrastructure platform to advance Phase 3 of Corpus Christi, a shovel-ready brownfield expansion project of approximately 10 mtpa, toward the financial investment decision ( “FID”) in 2022 once the remaining investment and commercial parameters are met
- Develop new liquefaction growth opportunities in both Sabine Pass and Corpus Christi with an ongoing commitment to Cheniere’s disciplined investment metrics
- Develop opportunities for environmental solutions throughout the LNG value chain to further improve the resilience and sustainability of Cheniere’s assets
“This ‘all of the above’ capital allocation plan provides a long-term strategic financial framework for Cheniere. Under the plan, we expect to achieve high quality consolidated credit metrics while funding profitable growth within our disciplined investment parameters and returning billions of dollars to our shareholders. This plan not only helps to strengthen the long-term sustainability of the business we have built in Cheniere so far, but significantly improves our competitive position as we plan to FID Corpus Christi Stage 3 next year and expand further growth for years to come, ”said Zach Davis, senior vice president and chief financial officer of Cheniere.
INVESTOR CONFERENCE CALL AND WEB BROADCASTING
Cheniere will hold a conference call to discuss the capital allocation plan on Tuesday, September 7, 2021 at 5:30 p.m. EST / 4:30 p.m. Central time. A listen-only webcast of the call and accompanying slide presentation can be found on our website at www.cheniere.com. Following the call, an archived recording will be made available on our website.
1 Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for more details.