Cheniere tops earnings estimates, raises full year profit view

HOUSTON (Reuters) -Top U.S. liquefied natural gas exporter Cheniere Energy Inc reported second-quarter earnings that topped Wall Street forecasts, and raised its full-year profit outlook.

The better-than-expected results, despite lower LNG prices and weaker LNG shipments, sent its share price up 2.8% in mid-day trading to $163.54. Results included a $782 million gain in the value of its derivatives portfolio compared with a loss in the same period last year.

Its LNG volumes dropped to 547 trillion British thermal units (Btu) in the quarter ended June 30, compared with 570 trillion Btu a year-ago. Volumes fell in part on maintenance outages.

President Jack Fusco said construction of its Corpus Christi, Texas, Stage 3 expansion project is 38% complete and running ahead of schedule for a late 2025 startup. Cost inflation on that and its Corpus Christi midscale project is running around 10%, he said.

Cheniere will fund future expansion itself and is not interested in taking on new equity partners, Fucso said.

"We don't see a need to have to complicate our lives with more equity partners than we currently have today," Fusco told investors on a conference call.

Cheniere's adjusted earnings of $1.8 billion beat the market consensus of $1.62 billion.

The company raised its full-year earnings forecast by $100 million to between $8.3 billion and $8.8 billion. Analysts on average had expected $8.61 billion, according to Refinitiv.

U.S. natural gas prices averaged $2.417 per million British thermal units (Btu) during the April-June quarter, down nearly 63% from the year-ago quarter, when demand skyrocketed following Russia's invasion of Ukraine.

The LNG exporter posted second-quarter net income of $1.37 billion compared with $741 million last year on gains in derivative instruments used to hedge against international gas prices.

That net profit level keeps Cheniere on track to potentially be able to be included in the S&P 500 in the future, said investment firm Jefferies.

Cheniere Executive Vice President and Chief Financial Officer Zach Davis said the company was committed to buying back 10% of its shares and would balance debt reduction and share buybacks.

"We are intent to catch up on the 1:1 cumulative ratio between debt paydown and share buy backs over time," Davis said.

The quarter's $350 million share buyback was smaller than expected, Jefferies analysts said.

The Houston, Texas-based energy firm's quarterly revenue fell 49% to $4.1 billion on the weaker prices and shipment volumes.

(Reporting by Arshreet Singh in Bengaluru and Curtis Williams in Houston; Editing by Sriraj Kalluvila, Jonathan Oatis and Sharon Singleton)