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Cheniere (LNG) Clears Capital Allotment Plan, Initial Dividend

Cheniere (LNG) aims to prioritize callable securities or maturing project debt repayment to improve its project credit metrics for increasing borrowin...

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Of late, Cheniere Energy, Inc. LNG announced that its board of directors sanctioned a long-term capital deployment plan (Plan) to attain an investment-grade balance sheet, returning shareholders’ funds and spending on accretive organic growth.

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The liquefied natural gas exported achieved a cash flow inflection point and aims to produce $10 billion of cumulative Distributable Cash Flow (DCF) by 2024 with an annual run-rate DCF of $2.6-$3 billion, allowing it to focus on balance-sheet performance, capital returns and accretive expansion. The Plan intends to provide a long-term DCF of $15-17 per share including the Corpus Christi Stage 3 Project.

The company believes that its performance over the previous five years have enable it to get to this point. From a long-term investment perspective, the Plan will ensure Cheniere’s financial strength, robust shareholder returns, and a continued disciplined approach to deploying growth capital.

Cheniere's long-term strategic financial framework is provided by the capital allocation plan outlined below.

Balance-Sheet Plan

Cheniere looks to repay about $1 billion of debt per year with the goal to realize investment-grade consolidated credit metrics by the early to mid 2020s.

Its target is to make secured callable or maturing project debt repayment a priority to improve project credit metrics for increasing borrowing capacity at better rates.

Shareholders' Capital-Return Plan

Cheniere intends to reward shareholders through stock dividend and extended share repurchase authorization. The Houston, TX-based firm declared its inaugural quarterly dividend of 33 cents per share, to be paid out on Nov 17, 2021 to its shareholders of record as of Nov 3.

Moreover, the company extended its $1-billion share buyback program by three years, beginning the fourth quarter of 2021. In the third quarter, share repurchases under the prior $1 billion authorisation resumed.

Accretive Growth Plan

Once the remaining investment and commercial conditions are completed, the business aims to use its existing LNG infrastructure platform to move the Corpus Christi Stage 3 project into the Financial Investment Decision (FID) stage in 2022.

With a continued commitment to Cheniere's strict investment parameters, it plans to pursue additional liquefaction development prospects at both Sabine Pass and Corpus Christi. Investors should know that the company, via its controlling interest in Cheniere Energy Partners L.P. CQP, owns and operates the Sabine Pass LNG terminal (North America’s first large-scale liquefied gas export facility) in Louisiana.

Cheniere also seeks environmental solutions throughout the LNG value chain to further solidify and improve the long-term viability of Cheniere's assets.

Shares of Cheniere have gained 21.6% over the past six months compared with the 10.3% increase of its industry.

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Zacks Rank & Other Key Picks

Cheniere currently has a Zacks Rank #2 (Buy). Other top-ranked players in the energy  space include Matador Resources Company MTDR and Continental Resources, Inc. CLR, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Cheniere Energy, Inc. (LNG): Free Stock Analysis Report


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