Cheniere tops earnings estimates despite weaker LNG prices

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

The better-than-expected results came despite lower LNG prices and weaker LNG shipments during the period. 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.

Cheniere’s adjusted earnings of $1.8 billion beat the market consensus of $1.62 billion, helping to push its shares up nearly 1% at $160.66 in early trading despite a broader market decline.

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 keeps Cheniere potentially able to be included in the in the future, said investment firm Jefferies.

However, a $350 million share buyback during the quarter was smaller than expected, Jefferies analysts added.

“The strong FCF (free cash flow) generation, coupled with a share price that was under pressure for a good portion of May/June leaves us somewhat puzzled as to why the buyback declined again,” its researchers wrote.

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