Cheniere tops earnings estimates despite weaker LNG prices

(Reuters) - Top U.S. liquefied natural gas exporter Cheniere Energy 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 MM 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 B beat the market consensus of $1.62 B, 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 B and $8.8 B. Analysts on average had expected $8.61 B, 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 B compared with $741 MM 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 S&P 500 in the future, said investment firm Jefferies.

However, a $350 MM 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 B on the weaker prices and shipment volumes.

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