Energy

Cheniere raises 2022 profit forecast on higher LNG demand

An LNG tanker is guided by tug boats at the Cheniere Sabine Pass LNG export unit in Cameron Parish, Louisiana, U.S., April 14, 2022. REUTERS/Marcy de Luna/File Photo

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May 4 (Reuters) – Cheniere Energy (LNG.A) raised its 2022 profit forecast on Wednesday as demand and production of liquefied natural gas (LNG) has skyrocketed since Russia’s invasion of Ukraine.

The February invasion, which Moscow calls a “special military operation”, has forced European countries to seek alternative supplies, pushing up prices and output. The United States has committed to deliver additional LNG to Europe.

“The current volatility in the global energy markets signals the need for additional investment in new LNG capacity,” Jack Fusco, chief executive of the top U.S. LNG producer, said.

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Cheniere raised its full-year adjusted core earning estimate to $8.2 billion to $8.7 billion, from a prior forecast of $7 billion to $7.5 billion, helped by the ramp-up of a new train at Sabine Pass plant, and sustained higher LNG margins in 2022.

The guidance provides “significant incremental free cash flow to accelerate the capital allocation plan,” energy investment bank Tudor, Pickering, Holt said.

Cheniere shares rose 3.5% to $145.34 as it also delivered a 23% rise in LNG volumes at 585 trillion British thermal unit (TBtu) in the first quarter.

Still, the company posted a net loss of $865 million, compared with a $393 million profit, a year earlier, as it took a $3.5 billion charge on LNG price-related derivative losses. LNG revenue more than doubled to $7.34 billion.

Smaller peer Tellurian Inc (TELL.A) reported a $138 million rise in revenue, also aided by higher natural gas prices, an 85% rise in production and the sale of an LNG cargo, but posted a larger loss of $67 million, mainly due to higher expenses.

The company, which is looking to build the Driftwood liquefaction plant in Louisiana, ended the quarter with about $296 million in liquidity.

Tellurian shares were down 4.4% at $4.95.

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Reporting by Marcy de Luna in Houston and Arunima Kumar in Bengaluru; Editing by Shounak Dasgupta, Bernadette Baum and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles.

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