Alex Kania

Alex Kania sought to understand the relationship between the 4.5 GW of incremental power equipment and the projects in MISO's expedited resource addition study (ERAS) queue, specifically asking if the 4.5 GW ties to the four extra incremental projects. He also asked if the ERAS process is functioning as intended to meet forward needs and if the extra turbines in the queue represent nearer-term demand.

Answer

Drew Marsh, Chair and CEO, clarified that the 4.5 GW (representing six additional turbines) is not yet included in the ERAS queue, as these units are targeted for commercial operations in 2031-2032. He stated that projects currently in the ERAS queue are much more near-term. Drew Marsh, Chair and CEO, confirmed that the extra turbines in the queue would indeed represent incremental nearer-term demand if opportunities arise.

Inquired about the evolving voluntary carbon markets, specifically the potential for long-term deals with data centers/hyperscalers to decarbonize their natural gas usage, and asked for more detail on the company's view of the European RNG market opportunity.

Answer

The transportation fuel market remains the highest value offtake for RNG molecules. While they see interest in voluntary markets, the eRIN policy for renewable electricity is seen as a more financially attractive near-term opportunity for serving data center demand. The European export market is seen as a potentially attractive medium-term opportunity, particularly in compliance markets, but is currently paused due to regulatory changes (ISCC certification). They are working with European regulators to reopen these export pathways.

Alex Kania of Wolfe Research, LLC asked about the landscape of partially contracted LNG projects, whether many might fail, and if this creates a commercial opportunity for Cheniere. He also inquired about the path to achieving a uniform investment-grade credit rating.

Answer

EVP and CCO Anatol Feygin noted that many contracted projects have yet to be built, creating a mix of committed and opportunistic buyers, which positions Cheniere to capture demand from those needing reliable supply. EVP and CFO Zach Davis expressed high confidence in reaching investment-grade status by H1 2023, citing strong credit metrics, debt paydown, and a robust, long-term contracted cash flow profile.

Alex Kania of Wolfe Research inquired about customer demand for seasonally shaped contracts and whether recent debottlenecking announcements by ConocoPhillips were already factored into Cheniere's updated production guidance.

Answer

EVP & CCO Anatol Feygin confirmed the company has the flexibility to structure seasonally shaped contracts to meet customer needs. President & CEO Jack Fusco clarified that while ConocoPhillips is a key partner, their recent announcements were likely for future projects and Cheniere's own successful debottlenecking efforts are already reflected in guidance.

Alex Kania asked about the company's willingness to engage in third-party marketing deals to capture local spot price opportunities. He also questioned if there was an opportunity to capture demand from other U.S. LNG projects that are struggling.

Answer

EVP & CCO Anatol Feygin confirmed their marketing team is actively taking advantage of volatility in shipping and local indices to optimize their portfolio. President & CEO Jack Fusco added that Cheniere offers a premium product and expects to emerge from the pandemic in a stronger competitive position, which they will seek to capitalize on.