Good day, and welcome to the Second Quarter 2025 Cheniere Energy Earnings Call and Webcast. Today's conference is being recorded. At this time, I'd like to turn the conference over to Randy Bhatia, Vice President of Investor Relations. Please go ahead.

Thank you, operator and good morning, everyone. Welcome to Cheniere's Second Quarter 2025 Earnings Conference Call. The slide presentation and access to the webcast for today's call are available at cheniere.com. Joining me this morning are Jack Fusco, Cheniere's President and CEO; Anatol Feygin, Executive Vice President and Chief Commercial Officer; and Zach Davis, Executive Vice President and CFO. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions may contain forward- looking statements, and actual results could differ materially from what is described in these statements. Slide 2 of our presentation contains a discussion of those forward-looking statements and associated risks. In addition, we may include references to certain non- GAAP financial measures, such as consolidated adjusted EBITDA and distributable cash flow. A reconciliation of these measures to the most comparable GAAP financial measure can be found in the appendix of the slide presentation. As part of our discussion of Cheniere's results, today's call may also include selected financial information and results for Cheniere Energy Partners L.P., or CQP. We do not intend to cover CQP's results separately from those of Cheniere Energy, Inc. The call agenda is shown on Slide 3. Jack will begin with operating and financial highlights. Anatol will then provide an update on the LNG market, and Zach will review our financial results and 2025 guidance. After prepared remarks, we will open the call for Q&A. I will now turn the call over to Jack Fusco, Cheniere's President and CEO.

Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review our results from the second quarter of 2025. Our momentum from the first quarter propelled us forward in the second quarter, which was highlighted by our formal FID on Corpus Christi Midscale Trains 8 & 9 project and our upwardly revised run rate production and financial forecast. Our proven growth strategy is built upon leveraging our significant brownfield platform to deliver highly visible, financially accretive growth projects. And Corpus Christi Midscale Trains 8 & 9 is further execution of that strategy. In addition, our tireless debottlenecking efforts are bearing real fruit as we were able to increase the run rate production capacity of our existing large-scale trains to 5.0 million to 5.2 million tonnes per annum each, economically adding about 1 million tonnes per annum of production on a run rate basis. Our intent is to execute our growth strategy with a phased approach. First, on the regulatory front, we will seek to permit the maximum site capabilities for both Sabine Pass and Corpus Christi. These additional development projects represent an opportunity to further leverage our brownfield platform to over 100 million tonnes per annum. Second, we will execute our strategy in a financially disciplined way, and we currently have line of sight to grow our operating platform by approximately 25% to a total of 75 million tonnes by the early 2030s, and retain optionality for even more brownfield growth beyond this. We are focused on capturing the moment and delivering accretive growth into the next decade. Please turn to Slide 5, where I'll highlight our key results and accomplishments for the second quarter of 2025. In the second quarter, we generated consolidated adjusted EBITDA of approximately $1.4 billion, distributable cash flow of approximately $920 million…

Thanks, Jack, and good morning, everyone. Please turn to Slide 8. Throughout the second quarter, the LNG market continued to navigate global uncertainty and persistent volatility driven by various trade policy issues, rhetoric and geopolitical tensions. Conflicts in the Middle East contributed to gas prices rising in Europe and Asia near the end of the quarter, renewing concerns around infrastructure damage, flow disruptions and security of supply. While these initial concerns have fortunately proved overstated with prices quickly moderating, these events and the subsequent market reaction serve as a reminder of the delicately balanced LNG market today as well as the critical role of destination flexible LNG in addressing regional shortages and maintaining global energy balances. During the quarter, these conditions continue to support elevated prices with JKM and TTF each strengthening relative to last year as a result of tighter supply conditions in Europe, lower storage levels and extended periods of low renewable output, all amidst the backdrop of increased geopolitical tension, putting LNG flows at risk for disruption. Monthly price settlements during the second quarter averaged $12.53 an MM for JKM and $11.70 for TTF, 31% and 22% higher year-on-year, respectively. However, prices during the second quarter moderated from the first, reflecting not only seasonal changes marking the start of the shoulder season, of course, but also increased confidence in near-term LNG supply growth. For the first half of 2025, global LNG imports reached record levels despite the aforementioned market uncertainty. And looking ahead, we anticipate the forecast increase in global LNG demand to be efficiently met by growth in global liquefaction capacity with about 88 million tonnes of liquefaction capacity projected to come online in 2025 and '26. North American LNG exports, in particular, continue to ramp up as our Stage 3 project comes online alongside other…

Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our second quarter 2025 results and key financial accomplishments and to discuss our increased and tightened financial guidance ranges for 2025. Turning to Slide 12. For the second quarter 2025, we generated net income of approximately $1.6 billion, consolidated adjusted EBITDA of approximately $1.4 billion and distributable cash flow of approximately $920 million. Compared to the second quarter of 2024, our 2025 results reflect higher total margins as a result of the higher gas prices and optimization downstream of our facilities with third-party cargoes that freed up incremental SPL and CCL sourced cargoes for CMI to sell in the spot market opportunistically. This increase was partially offset by higher operating expenses due to a full quarter of operations of Stage 3 Train 1 and ADCC, the planned major maintenance turnaround at Sabine Pass and the accelerated maintenance at Corpus Christi previously forecast for 3Q. The successful planned maintenance activities across both of our sites during the second quarter resulted in a combined impact to LNG production, which was in line with our forecast, along with the expectation of lower seasonal production in the warmer months of Q2 and Q3, making Q2 what we expect to be our lowest production quarter of 2025. We have generated approximately $3.3 billion of consolidated adjusted EBITDA and approximately $2.2 billion of distributable cash flow in the first half of 2025, supporting our confidence in our updated forecast for the remainder of the year, which I'll address further on the next slide. During the second quarter, we recognized in income 558 TBtu of physical LNG, which included 550 TBtu from our projects and 8 TBtu sourced from third parties, respectively. The 550 TBtu exported from our projects was about 10% lower…

[Operator Instructions] We'll go first to Spiro Dounis with Citi.

First question, just want to maybe start with commercializing new SPAs from here, and it's a two-part question. So one, seeing a lot of trade deals working out now and LNG seems to be at the center of some of these. And so I'm curious, do you see the pace of SPAs accelerating from here on that backdrop? And then two, there also seems to be a view that SPA liquefaction fees will need to come down to be competitive. I don't believe you're doing that just based on prior comments. And so I'm curious, what is it about the market structure in place now that allows you and a lot of your peers to sign SPAs at what seems to be very different price points?

Spiro, thanks. This is Jack. I'll start, and then I'll turn it over to Anatol. So first off, yes, it makes a huge difference when you go from a pause to where you have an administration that is very, very supportive of LNG in regards to customer conversations. So as you all know, we're the single largest LNG supplier to Europe. We're working very closely with both sides of the pond to make sure that they have certainty of supply from the U.S. And it is nice to have an administration that actually appreciates that we help with trade, we help with energy security, we also help with the energy transition. So we're very, very grateful to have those tailwinds behind us in our conversations with customers. And then I'll see if Anatol has anything to add.

Yes. Thanks, Spiro. Thanks, Jack. We have a decade track record now of performance, and that's not lost on the industry. As we've mentioned in previous discussions and calls, the 20-year [ CET-ed ] FOB product is now roughly 15 years old. It's very competitive. The U.S., as you know, is well underway to have 250 million tonnes of exports, and we just don't compete in that market. We work with long-term partners that value our performance. As Jack mentioned, the government here, EU, many Asian countries really value and appreciate the reliability and the consistent product that we have supplied. And that's really what differentiates us, and we engage with counterparties that value that, and deliver the economics that makes all of these pieces fit together and deliver the superior risk- adjusted returns that Zach and Jack mentioned.

Great. That's helpful color. Second question, just moving to optimization. Zach, I realize that it's not baked into the guidance and maybe a little bit difficult to predict. But just curious maybe what have been the drivers year-to-date so far that you've been able to capitalize on, and just how you're thinking about the durability of some of those moving forward here?

Spiro, it's Zach. I'd go back to February. So in February, when we made initial guidance, I'd say margins were in the $8 to $9 range. Those dropped down to, let's say, $5 in the middle of the year and coming back to over $6 at this point. And on the May call, basically, our guidance stayed intact. And the main driver of that, despite having, let's say, around 2 million tonnes still open upon the initial guidance, it was the optimization. All three pillars of it from downstream, and you could see some of the activity that we're doing by sourcing from third parties to subchartering our shipping and then on the lifting margin as well and upstream of the facilities. They've all pretty much come through. Mind you, subchartering is probably less of a driver than last year as just overall shipping rates are lower. But that allowed us to offset some of the, let's say, $2 or so of margin decrease so far this year. Going forward from May, we basically just started derisking the whole platform from having now less than 25 TBtu open, meaning that the team sold like another 1 million tonnes and likely locked in our CMI average margin for the year closer to $8 to getting through the major turnaround on Trains 3 and 4 at Sabine, and now being able to announce substantial completion of Train 2 at Midscale 1 through 7 or Stage 3. Those things allowed us to really lock in where we see guidance going this year and increase that downside. From here, we'll see maybe a bit more optimization, progress on Trains 3 and 4 at Stage 3, and those two things alone could maybe help us get to the higher end of the range.

We'll take our next question from Jeremy Tonet with JPMorgan.

Just wanted to follow up on commercial discussions. Thank you for the color this morning. The EU agreed to energy purchases as part of the tariff negotiations there. I was just wondering how this impacts your conversations, cost or demand at this point. And any interactions this dynamic might have with APAC customer conversations?

Jeremy, in regards to the EU, as you know, we've provided over 2/3 of all of our volumes since 2022 are going to the EU. And we're very close with governments and regulators there on helping them with their needs for whatever duration that they feel is appropriate. Anatol, do you want to?

Yes. Thanks, Jeremy. Kind of following up on the Spiro dynamic. All of this creates an environment where our product with large is appreciated and desired. But in all of these arrangements, whether it's our transaction with JERA, that backdrop helps. JERA's backdrop also includes METI's revised energy plan that shows a growth in electricity demand as opposed to decline. Same dynamics playing out in Europe, and the EU is very quick to point out that while, yes, this agreement has been reached, it is up to the commercial counterparties to come up with the products that will fill those buckets. So as Jack said, we've got a great track record. Our product has been keeping the lights on certainly since the Ukraine war broke out in early '22. And of course, that's not lost on anybody. But ultimately, it is the commercial agreement that is key to us, and that commercial agreement needs to meet our very strict parameters. So all of it is a good backdrop and a very healthy environment and a tailwind to those commercial terms.

And I would say, Jeremy, I'll just parrot what Anatol said previously is that our reliability has been second to none. We haven't missed a foundation customer cargo. And that we're over 4,200 tankers into this journey, and it's being recognized worldwide. We deal with over 45 different countries and regions of the world today. So I think that size and scale is unmatched and appreciated. And I think that's why we're able to negotiate some more favorable transactions.

Got it. And then looking at future growth in general, both at Sabine and Corpus, you've talked a bit about that here. You already have a number of contracts in place and kind of in excess of current capacity. And so a lot of progress there. Just wondering what we should be looking for, for milestones to further commercialize towards reaching FID at this point. How should we be thinking about that?

I mean, first off, we filed with FERC and the federal government for an accelerated permitting process. So when you talk about milestones, seeing how that progresses, I think, will be very, very important. We're working through value engineering as we speak. And then we'll continue to look for ways to commercialize and meet all of our financial objectives.

So Jeremy, it's really all about permitting. As you could see, we FID 8 & 9 and then prefiled the next month for Stage 4. And I believe just in the last day or so, we were accepted into prefiling for Stage 4. So that's progressing well. And we should have more updates, especially going into next year as we have a little bit more clarity on how the FERC process is going and to be in a position to FID something, let's say, late '26 or early '27 at Sabine first, most likely and then Corpus. As you can tell from our filings, we're permitting a lot. We're permitting basically 20 or so million tonnes at each site. You add that all up, we get to over 100 million tonnes, but you're not going to hear from this company that that's the ultimate goal. The ultimate goal is to find these projects that we can meet all of the investment parameters and be truly accretive at the same standard we held every other project to, at the same standard that makes it demonstrably accretive to just buying back the stock and when you all own more of Sabine and Corpus through less shares at LNG. With that said, we see a path to do a phased approach at both where we basically FID initially one train. Those one trains will be as brownfield as they get probably globally. At Sabine, though we are permitting things like an interstate pipeline into Texas, there's a path to do one train there without the interstate pipeline, without a tank or a berth and put it right next to the first six trains. And basically bid out for Stage 4 and the first train at Corpus. Though we're permitting another berth, tank and…

[Operator Instructions] We'll go next to Theresa Chen with Barclays.

On the topic of growth, beyond the first phases of Corpus Christi Stage 4 and SPL Stage 5 that brings capacity to 75 mtpa. Can you walk us through the path to get to that next leg, the 100 mtpa? When we think about key inflection points for that long-term growth in addition to permitting, is it primarily a matter of upstream infrastructure bottlenecks to solve in commercialization? How should we view this? And over what time frame could that likely take place?

It's just the standard, the Cheniere standard. What we see today and with the guidance that we gave you in June, we see a path with the deals that we're signing in our, let's say, $2.50 to $3 range, that we can still hit those 6 to 7x CapEx to EBITDA levels for those first trains. As you start adding incremental equipment or incremental pipelines and interstate pipelines for that matter, we're not here today to tell you that we're absolutely 100% FID-ing those projects in the near term. We'll see where SPA levels get to, and we'll see where costs shake out with Bechtel over time. And those two things together ideally will align one day to help us march methodically up to 100 million tonnes. But that's not the game here. Like we're focused on the stock, not just trying to get to 100 million tonnes.

Got it. And I want to go back to Anatol's Slides 9 and 10 on the supply and demand outlook. As this wave of new LNG capacity enters the market over the next few years, increasing liquidity and supply, when would you expect to see more evidence of demand elasticity, consistent with the visible structural need for additional gas from developing countries? And what would you view as key signals to observe in the market on that front?

Yes. Thanks, Theresa. Well, you'll see it kind of on a quarterly basis as all of this infrastructure, which in many cases, is pre- investment for these various business models plays out. We'll see it a little bit before you as tender activity and diversion start to take place, but that's a little harder to observe outside of the day-to-day industry. But you're seeing not only, again, this investment in infrastructure, but also the contractual commitments. And yes, while the contractual commitments are for flexible supply, there is a tremendous amount of, again, infrastructure being developed. The advantage for us and our industry, we were a little over 400 million tonnes last year. As we've discussed, we're about 3% of primary energy. So it does not take a lot of the 150 gigawatts of Chinese gas power generation running at slightly better utilization to absorb tens and tens of millions of tons of additional LNG. So a lot of price elastic markets, and you'll see that play out. We think that now in the kind of very low double digits, high single-digit markets like India will become much more active, but you'll see more and more of that again, unrestricted by infrastructure, which was a constraint in the second LNG supply cycle of 5, 6 years ago.

We'll go next to Burke Sansiviero with Wolfe Research.

Just one for me today. What level of capital costs do you foresee expansions at Sabine and Corpus for the next round of growth? 8 & 9 and the Debottlenecking looks closer to $600 a tonne. One of your peers cited all-in costs closer to $1,100 per tonne. And Zach, you mentioned before as brownfield as it gets for another train at Sabine. So just curious on where you think a fresh EPC contract will shake out.

Little too soon to say, especially on an earnings call, where we think it will work out by the time we FID a project in late '26 or early '27. What I focus on clearly the most is that 6 to 7x CapEx to EBITDA, working with the E&C team as well as our commercial team to align that to get to the right place. But as you can imagine, like laws of gravity, laws of brownfield growth, when you're only building a train and the rest of the infrastructure and pipeline connectivity and tanks and berths is all set up, it's going to be the cheapest. So we feel confident that it will be closer to the numbers that we're able to achieve so far than to some of those other numbers out there.

We'll take our next question from John Mackay with Goldman Sachs.

I wanted to go to the cash tax savings, Zach. I know you talked through a lot of it. But maybe if you could kind of just pull it to the June capital allocation update. How much incremental cash do you think we could see kind of on average in the next couple of years work out once you've worked through this? And where do we think that cash is going relative to how you laid it out a couple -- a month or 2 ago?

Sure. So there's quite a few moving parts here. But like just for this year alone, as you can see, we raised the midpoint of EBITDA guidance by $50 million, and that's really just following through with what was expected this year. We raised DCF guidance by $250 million. The incremental $200 million is solely related to taxes. Originally, the plan was that these trains would come online this year and receive 60% bonus depreciation, dropping down to 40% bonus depreciation next year. Going forward, including this year, it's 100% bonus. That benefit alone allowed us to reduce taxes this year by $200 million. It will also help reduce taxes next year as the rest of Stage 3 comes online. Mind you with 100% bonus, we won't have much depreciation in 2027. However, based on the 8 & 9 at least guaranteed completion dates that are in 2028, we'll get a big benefit from that as well. So with the 100% bonus, we're talking about comfortably under 10% tax rate on average between 2025 to 2030. Going forward, inclusive of, say, the bonus depreciation benefits, the foreign export deduction that we have by producing a product in America and exporting it to the rest of the world also is quite beneficial. And you can see in at least the run rate guidance that we gave in the back of this earnings presentation, it went up by $100 million to $200 million versus even what we showed everybody in June. So up $1 per share or so. So that clearly is also quite beneficial, that we're able to take advantage of just being an export product. In terms of where the cash would go, more cash on the balance sheet is basically more cash to execute on capital allocation, more wind in our sales to load up the buyback quarter after quarter, keep on funding these projects with a little less leverage to have the balance sheet as strong as possible, et cetera.

That's helpful. I appreciate that. And then just second one for me. You talked about being comfortable with kind of where SPA prices are for the first big trains on each side, but talked about them effectively needing to move higher to maybe to get to that 100 million tonnes eventually. I guess I'd be curious to hear your view on kind of what pushes those SPA prices higher from here? Is it just demand growth? Is it cost overruns at other facilities? What's kind of the moving pieces of that, that we could watch from our side?

Yes. Thanks, John. This is Anatol. We have gone through a number of cycles in SPA pricing just in this last post-Ukraine war build. The ebbs and flows are hard to predict. But as you said, as projects that are, let's say, very aggressive in trying to get to the finish line and that finish line may be determined by validity of the EPC contract or something similar, if that doesn't work out from the start of '22, there's order of magnitude, 50 million tonnes of binding agreements that have yet to reach FID, right? So as those dynamics play out, as the EPC market continues to firm potentially, as the 250 million tonnes of exports are executed one way or another, and you see projects not move forward beyond that, I think you can see another period of firming. And as Zach said, it is -- for us, it is all about the ratio, not about the absolute level of the numerator or the denominator.

We'll take our next question from Alexander Bidwell with Weber Research and Advisory.

Can you talk through some of the OpEx differences between midscale, larger-scale stick built and modular facilities? With some of the newer public comps, we've seen a particularly wide spread when it comes to operating costs with Cheniere sitting on the lower end. We're just trying to get a sense of where the natural differences would be in terms of OpEx and maintenance and how technology and site layout come into play.

I can't speak for the other projects here. But what I can say, it doesn't hurt being a 45 million tonne program going to 55.5 million going to 60-plus million tonnes and the scale that we get from that and the fact that, especially on the first nine trains, they're all the same. What I can get to is we even have nuances quarter-to-quarter. As you can see, this is our lowest LNG producing quarter that we'll have all year because of the major maintenance. But because of the major maintenance, it's also going to be the highest O&M quarter that we have all year. So I think there's more that you'll have to see on an annual basis to appreciate some of these differences. But who knows? We'd like to say that we're exclusively focused on Sabine and Corpus with our 1,700 people, and that's all we do. So maybe that's why our costs are pretty good.

And Alexander, we spent an awful lot of time benchmarking our operations against other worldwide LNG producers. I haven't actually looked at the data from the different technologies, but because we've only had the midscale technology now for a few months, but you bring up a valid question on how they all compare. So more to come. Let us have a little more time, but I can assure you that we are totally focused on being best-in-class in the ConocoPhillips optimized platform.

And then I'd just say, like when we talk about CapEx to EBITDA for these projects, it's everything, contingency, it's the development capital that we put in ahead of the project FID, et cetera. We also show up each and every quarter with that lifting margin as well, which probably varies quite a bit project to project as we're most likely the most interconnected of all the projects in North America.

All right. And if I could just squeeze one more in. We noticed you switched back to the ConocoPhillips technology for some of these future expansions. Can you give a little bit of insight into what drove that decision?

Yes. I think -- this is Jack. So when we switched to midscale, for us, we thought at the time, and now this is way back 2018 -- '17, we thought the market was going to be smaller and shorter term, and it would take longer to commercialize a large train. It didn't work out that way, as you know. And there's just a lot more economies of scale, right? We've learned that in power generation in spades, which is why facilities got bigger, not smaller. And we're learning it here with LNG facilities that it's overall cheaper to build and operate larger trains than it is the smaller facilities. And that's why we pivoted back to trains that we know very, very well.

We'll take our last question from Robert Mosca with Mizuho Securities.

So could you or have you delineated the EPC cost for Trains 8 & 9 on a stand-alone basis? I guess how much of that $2.9 billion is specifically related to Trains 8 & 9?

The vast majority of it is well over $2 billion, but it comes down to what it takes for us to continue to hold to the standard of the 6 to 7x CapEx to EBITDA with a lump sum turnkey contract, get to 10-plus unlevered contracted returns, et cetera. And in a competitive environment and with a lot of folks building projects, it took some of this debottlenecking, which actually needed hundreds of millions of dollars of equipment to unlock those types of returns that are basically second to none around the world. So I'd say 8 & 9 is still a vast majority of it. But for the first time, there was real equipment in the hundreds of millions of dollar range that we're invested in that's incorporated into the construction plan to get the most out of not just 8 & 9, but Trains 1 through 7 of Stage 3.

Got it. That's helpful. And am I interpreting it correctly that OBBB isn't in your DCF outlook provided in June?

It wasn't. And if you look in the appendix, we give you the run rate guidance, and it's up another $100 million to $200 million. Basically, what that shows with now having less than 220 million shares outstanding, at the midpoint, we're already at $20 per share of DCF. So that's why it's moved on to $25 per share as we continue to develop the platform.

Got it. So it seems like that $15 billion excess cash target might even screen conservative when you take into account the remaining FID CapEx, tax savings, Phase 1 expansions, assuming 50% leverage. So how do you think about deploying that excess cash if you come in materially above that $15 billion bogey? And I understand you just issued this 1.5 months ago, but I wanted to get your thoughts there.

Well, I'd say that even in June, we said it was over $15 billion. So we're pretty confident there's a lot of money here to deploy across the platform and into capital allocation. And it goes back to what I said to even get to 75 million tonnes, we're not even talking about using for equity funding 1/3 of our distributable cash flow per year. So what you can see from us is we're growing the dividend by over 10% in the next quarter. We're going to have to, at some point, ask the Board for a reauthorization to upsize the buyback program in the next year or 2 as we continue and it will be even quicker if we go at the pace we just did in July and just more of the same. Ideally, there will be bigger projects that's being Corpus to take care of. But if they're not demonstrably accretive, you're going to see a lot more buybacks, a growing dividend and a pretty pristine balance sheet ready to go for eventually more growth.

That will conclude our question-and-answer session. At this time, I'd like to turn the call back over to our speakers for any additional or closing remarks.

I just want to thank all of you for your continued support of Cheniere. Be safe.

Thank you. That will conclude today's call. We appreciate your participation.