Cheniere Partners Earnings: Weak Marketing Spreads Should Have Less of an Impact Than at Cheniere

Cheniere Partners’ first-quarter earnings were predictably strong, but weaker marketing spreads are expected to damper future quarters this year, thanks to lower gas prices. Still, as this is already incorporated into our model, we will leave our $52 per share fair value estimate unchanged, and our wide moat rating intact. Cheniere Partners, by design, will see less of an impact than parent Cheniere Energy, as it only sees a fraction of the marketing profits that its parent does by a contract that ensures the majority of LNG marketing spreads in a high price environment flow to Cheniere Energy. Thus, we expect Cheniere Partners’ guidance of a $4 to $4.25 per unit distribution payout for 2023 is realistic, though we currently expect a distribution toward the low end. However, for 2024, we would not be surprised to see the base (currently $0.775 per unit quarterly) and bonus ($0.255 per unit) parts of the distribution change, with the base potentially increasing while the bonus portion is diminished.