Cheniere Energy Partners LP
NYSE:CQP
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Cheniere Energy Partners LP
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Good day, everyone, and thank you for standing by. Welcome to today's Cheniere Energy, Inc. Third Quarter 2020 Earnings Call and Webcast. A quick reminder that today's program is being recorded. And at this time, I'd like to turn the floor over to Randy Bhatia, Vice President of Investor Relations. Please go ahead, sir.
Thank you, operator. Good morning, everyone, and welcome to Cheniere's Third Quarter 2020 Earnings Conference Call. The slide presentation and access to the webcast for today's call are available at cheniere.com. Joining me this morning are Jack Fusco, Cheniere's President and CEO; Anatol Feygin, Executive Vice President and Chief Commercial Officer; and Zach Davis, Senior Vice President and CFO.
Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements, and actual results could differ materially from what is described in these statements.
Slide 2 of our presentation contains a discussion of those forward-looking statements and associated risks. In addition, we may include references to certain non-GAAP financial measures, such as consolidated adjusted EBITDA and distributable cash flow. A reconciliation of these measures to the most comparable GAAP measure can be found in the appendix to the slide presentation.
As part of our discussion of Cheniere's results, today's call may also include selected financial information and results for Cheniere Energy Partners LP, or CQP. We do not intend to cover CQP's results separately from those of Cheniere Energy, Inc.
The call agenda is shown on Slide 3. Jack will begin with operating and financial highlights, Anatol will then provide an update on the LNG market, and Zach will review our financial results and guidance. After the prepared remarks, we will open the call for Q&A.
I'll now turn the call over to Jack Fusco, Cheniere's President and CEO.
Thank you, Randy, and good morning, everyone, and thank you for your continued support of Cheniere. We have a lot to cover this morning, and I'd like to start by thanking the Cheniere professionals that make my job look so easy.
As you will see from our results and guidance, it has been a challenging and rewarding quarter during an unimaginable year. This year continues to present us with surprising challenges, and we at Cheniere, continue to rise to those challenges, maintain our focus and execute.
I'm extremely proud of the results we are reporting today. You often hear me speak about the resiliency of our people, our assets and our business model. That has certainly been reinforced today as not only have we navigated the continued direct and indirect challenges of COVID-19 in a difficult global LNG market, but also the added challenges of 2 major hurricanes recently making landfall near Sabine Pass.
While Sabine Pass suffered no significant damage from either Hurricane Laura or Hurricane Delta, many of our coworkers, friends, neighbors and other members of the Cheniere family were impacted with lost or damaged homes. We are proud to have responded to those natural disasters quickly and impactfully, in support of our employees with shelter and clothing and in the communities where we live and work in Southwest Louisiana with a $1 million donation and a supply drive with the Astros where we delivered 2 semi tractor trailers full of goods.
We also managed volatility in the LNG market over the quarter. When the third quarter commenced, we're in a period of relatively high cargo cancellations and low facility utilization. By the time we exited the quarter, LNG market conditions have materially strengthened, which allowed us to ramp up production and capture additional margin. Throughout this year's volatility, our visibility to achieving full year 2020 financial results within the guidance ranges remained virtually unchanged.
Additionally, we've received an increasing number of questions from our shareholders regarding the global energy transition and the role of natural gas and LNG in a lower carbon future. Natural gas is an affordable, reliable, cleaner burning, global fuel source, and we are confident in natural gas playing an increasingly important role in the global energy mix for many years as countries set carbon neutrality goals for the second half of this century.
Cheniere delivers abundant, cleaner burning natural gas from North America to the rest of the world so it can displace dirtier fuel sources like coal and oil, helping these countries achieve their environmental goals. We remain steadfast on allocating capital to the most attractive risk-adjusted opportunities for continued growth in our core liquefaction platform as we simultaneously seek to optimize our environmental footprint and support our customers in their downstream economies and achieving their long-term energy security and environmental goals.
Please turn to Slide 5. This year, with cargo cancellations, our quarterly results have been difficult for you all to predict. As a reminder, during the second quarter, our long-term customers utilized the optionality in their contracts by canceling cargoes at both Sabine Pass and Corpus Christi. For cargoes canceled during 2Q that would have been delivered to our customers in 3Q, the revenue related to those cargoes, over $450 million was brought forward and recognized in 2Q since our obligations to deliver those cargoes were extinguished.
During the third quarter of 2020, we only generated $477 million of consolidated adjusted EBITDA and distributable cash flow of over $190 million on revenues of approximately $1.5 billion. Net loss attributable to common stockholders for the third quarter was $463 million. Despite a challenging 2020, I am pleased to once again confirm our 2020 full year guidance range of $3.8 billion to $4.1 billion in consolidated adjusted EBITDA and $1.0 billion to $1.3 billion in distributable cash flow. I'm also pleased to report that we are currently tracking to the midpoint of the EBITDA range and the high end of the DCF range as the market has improved, and we continue to execute and optimize.
Looking ahead to 2021, we look forward to delivering growth in our financial metrics, driven primarily by the expected completion and commencement of operations of Train 3 at Corpus Christi, early next year. I am pleased today to introduce full year 2021 guidance of $3.9 billion to $4.2 billion in consolidated adjusted EBITDA and $1.2 billion to $1.5 billion in distributable cash flow.
Construction progress continues to reinforce our legacy of best-in-class execution. Bechtel is progressing Corpus Christi Train 3 and Sabine Pass Train 6 on accelerated schedules, well ahead of the guaranteed time lines and within budget. Corpus Christi Train 3 is about 97% complete, and the commissioning process is progressing very well with feed gas introduced into the train in October. We expect first LNG production from Train 3 in the coming weeks. Bechtel now predicts substantial completion in the first quarter of 2021.
Sabine Pass Train 6 is approximately 71% complete, and Bechtel continues to project substantial completion in the second half of 2022, having recently accelerated that time frame. Once again, during the third quarter, Zach and the finance team were very busy, executing on our financial strategy. Year-to-date, we have raised over $8.5 billion from our banks and institutional capital providers in support of our long-term financial strategies and priorities. Zach will cover our third quarter capital raising activity, which was highlighted by the successful issuance of our inaugural bond for Cheniere Energy later on this call.
Now turn to Slide 6, where I'll discuss our upwardly revised run rate production guidance and its strategic implications. Our efforts to maximize LNG production have yielded continuous improvement in our per train run rate production forecast, which helped drive the range of our run rate financial guidance. At our Analyst Day in 2017, we originally forecast run rate production of 4.3 million to 4.6 million tonnes per annum per train. Today, we are raising that level once again to 4.9 million to 5.1 million tonnes per annum as our operational expertise, our maintenance optimization and our debottlenecking programs continue to produce incremental reliable production from our existing infrastructure platform.
From our initial guidance, these increases have added an aggregate of up to 7 million tonnes per year of additional marketable LNG or virtually an entire additional train. This incremental volume has strategic implications for Cheniere. From a high level, it means we are less contracted on a run rate basis than we were before. And based on our disciplined approach to capital investment decisions, we have incremental volume to sell prior to sanctioning any new infrastructure.
Make no mistake, Corpus Christi Stage 3 is shovel-ready and one of the most cost competitive LNG projects worldwide. But we are committed to capital discipline and will only sanction that project when it meets or exceeds our financial capital investment parameters. Our most important metric is the level of contracted commercialization of our production.
We have historically targeted a minimum of 80% of our production under contract. But as we continue to improve on our operation and maintenance management, I am more comfortable with increasing that contracted production target to up to 90%. Therefore, our commercial efforts are squarely focused on this incremental volume today, meaning the timing of Stage 3 FID will be dependent upon firming up not just Stage 3, but this virtual additional train worth of production as well. As we enter into additional commitments across our platform, we will continue to deploy time and resources to ensure that Stage 3 remains as competitive and efficient as possible. This incremental production is already in our portfolio and available for our marketing and origination teams to contract on a short, medium or long-term basis. The fact that this production requires no meaningful additional capital nor is it dependent on the sanctioning of new infrastructure gives us immense flexibility to tailor the structure of these agreements to the needs of our customers.
Now turn to Slide 7. On several of our recent quarterly calls, I've spent time highlighting our ESG efforts, including our company-wide focus on the challenges and opportunities these important topics present, our climate and sustainability principles and our enhanced disclosures, highlighted by the publication of our inaugural Corporate Responsibility Report earlier this year. I view the growing importance of ESG in general and the emphasis on decarbonation specifically as significant tailwinds to our business. As I said earlier, we are confident that natural gas and particularly, LNG has a key role to play in the global transition to a lower carbon future, given its place at the intersection of reliably powering economic activity and providing a cleaner energy source worldwide. With that being said, I'd like to take the discussion one step further, and give you a sense of how we are synthesizing this information, and integrating it into our strategic priorities.
At Cheniere, we are in a unique position to bring about change when considering the diverse group of partners across our entire business, from upstream suppliers to our wide range of LNG customers and shipping providers. Individually and collectively, our reach and relationships provide a strong framework to enable the integration of climate solutions that will improve Cheniere's footprint and help ensure our partners across the full value chain realize the full environmental benefits from our LNG. To carry out this integration, we are methodically reviewing our business to quantify our life cycling missions and to identify and analyze climate-related opportunities across our value chain with the strategic goals of resiliency, transparency, avoidance and reduction.
I'd like to touch on a couple of these efforts briefly. First, we are analyzing our life cycle greenhouse gas emissions across Cheniere's value chain and evaluating the areas where we have direct and indirect control. While we have achieved a 1/3 reduction in Scope 1 greenhouse gas emission intensities from 2016 to 2019, we continue to seek ways to further reduce the environmental footprint of our own operations, including assessing the economic and operational feasibility of CO2 management solutions at Sabine Pass and Corpus Christi.
Outside of our facilities, we are looking both upstream and downstream at climate-focused opportunities. These efforts involve collaborating with our partners throughout the value chain to identify and pursue actionable solutions. While our efforts are relatively early stage, we are encouraged by the mutual support for these pursuits from our value chain partners. Along these lines, we are actively pursuing opportunities in each of the following areas: LNG shipping, gas procurement and transportation, renewable power procurement, digitization, operations and supply chain management. In addition, we continue to evaluate offering environmentally beneficial products and services at our facilities that complement our core business and leverage our infrastructure position, such as LNG bunkering services for the marine fuel market. Each of these initiatives has a potential to not only positively impact the environmental profile of Cheniere and our LNG, but also the industry at large, while earning returns for our shareholders and solidifying LNG's and Cheniere's foothold in supporting growing energy demand worldwide through this century.
And now I'll turn the call over to Anatol, who will provide an update on the LNG market.
Thanks, Jack, and good morning, everyone. We hope that everyone is continuing to stay safe and healthy. Please turn to Slide 9. As usual, we'll start with a few comments about the current global environment, then discuss some of the more specific factors relating to the primary LNG markets.
The LNG industry has faced some exceptional circumstances in 2020 and has responded with flexibility and resilience. These factors continue to unfold in the third quarter, reinforcing the message and validating the ability of our industry to respond to market conditions in an orderly, systematic manner, thanks in large part to the flexibility of U.S. LNG.
As we move through this challenging period in the market and look forward, we continue to be bullish about the way the market is rebalancing, the strength of LNG demand recovery and the longer-term prospects for natural gas and LNG as key vectors in the global energy transition. Despite the impact of lockdowns in many markets in the second quarter, the industry has still delivered net positive demand growth totals year-to-date. Unlike most other commodities, LNG demand grew 3% year-to-date through September, adding more than 7 million tonnes of consumption versus last year. The U.S. was the main beneficiary of that growth as exports increased by 34% or 8.3 million tonnes to approximately 33 million tonnes year-to-date.
Global LNG supplies were highest this year in the first quarter with production falling over the course of the summer to below year ago levels by Q3. LNG production levels decreased 6% or nearly 6 million tonnes during the third quarter this year as supply was curtailed across both U.S. and non-U.S. sources in response to decreasing spot prices as the market became increasingly concerned about exceeding natural gas storage capacity in Europe. The reduction in LNG supply from curtailments helped divert a storage crunch in late summer and position the market to start responding positively to the rebound in gas and LNG demand we are now seeing in many countries as we head towards the winter season.
Now let's look at those trends in more detail in the European and Asian markets. Turning to Slide 10. The global gas market was under pressure throughout the first half of 2020 as a result of a confluence of factors; 2 consecutive unseasonably warm winters in key LNG demand centers; the coronavirus impacts, of course, on economic activity; and record high storage levels, which when combined, led to historically low gas prices worldwide.
Today, however, with our indications that point to stabilizing market conditions in terms of both supply and demand, we're optimistic for a continued recovery, both in Europe and Asia. In Europe, lower volumes of Russian pipeline gas were the biggest factor helping the region rebalance during the third quarter as pipeline exports to Europe decreased by over 2 Bcf a day year-on-year. Upstream outages and maintenance elsewhere in Europe also cut indigenous production by 1 Bcf a day. In addition, U.S. LNG cargo cancellations from June onward added support to the market and total LNG imports into Europe decreased 0.9 Bcf a day or 1.7 million tonnes year-on-year during the third quarter.
Gas demand in Europe recovered to 2019 levels in the third quarter. In addition, for the first time since January 2019, the Eurozone PMI climbed to expansion levels in July and has remained at expansion level since. Eurozone industrial production continues to gradually rise, providing a positive carryover for gas demand, and gas-fired power generation across the major European markets has stayed firm despite a decrease in total generation of about 5% year-on-year in Q3.
As a result of these factors, European gas prices have recovered from their lows earlier this year, incentivizing LNG customers to resume lifting cargoes from the U.S. Recovery indicators in Asia are also encouraging. LNG imports into the region increased 8.4% during the third quarter and were slightly higher year-on-year. Reduced nuclear generation in Japan and gas demand growth in India, Taiwan and China supported LNG use.
Year-to-date, aggregate imports into India, Taiwan and China increased by over 8 million tonnes year-on-year, offsetting part of the decreases in South Korea and other nations. India briefly overtook South Korea in July and August as the world's third largest LNG importer. Low spot LNG prices drove imports up 10% or 0.6 million tonnes year-on-year for the third quarter. Decreasing domestic gas production also supported imports and the recent markdown in regulated domestic gas prices could potentially further suppress indigenous production, which is down 10% year-to-date. LNG imports into Taiwan also increased by 9% or 0.4 million tonnes year-on-year due to summer cooling load.
China's LNG demand increased by 13% or 2 million tonnes year-on-year in the third quarter, while domestic production growth slowed and pipe imports continued to decline during the period.
The economic recovery in China continued to accelerate, with third quarter GDP expanding by about 5% year-on-year following a 3.2% increase in Q2. Of note, and despite the stresses of the pandemic, policy priorities in China continued to favor broad-based adoption of cleaner burning fuels to displace coal. For example, China's Ministry of Ecology & Environment proposed to have more than 7 million households in North China switched from dispersed coal heating to cleaner burning options by the end of October.
Assuming half of the targeted households undergo coal-to-gas switching, it's estimated to generate up to 3.5 million tonnes of LNG equivalent of demand this winter.
Finally, I'd like to turn to some longer-term observations. Please turn to Slide 11. As Jack mentioned, one of the most popular and pertinent topics we've been asked about recently is the global energy transition and the role of LNG and Cheniere in that transition. We firmly believe in natural gas and LNG as key sources of energy for decades to come, even at the most accelerated energy transition scenarios.
The value of our business model and our infrastructure remains intact and provides a source of significant stable, highly visible long-term cash flows over the next almost 2 decades, and we see tailwinds for further growth, both within and well past that time line. The chart on the right of that slide shows several recent global LNG forecasts, including our own, highlighting a wide range of potential global LNG demand scenarios out to 2040.
The variances between forecasts are largely driven by environmental policy assumptions. Clearly, there's significant expected LNG demand growth in almost all forecasts, including IEA's sustainable development scenario. Most consultants predict well over 200 million tonnes of incremental LNG needed in the market by 2040. Even under the sustainable development scenario, the IEA projects that over 100 million tonnes of incremental LNG will be needed.
We remain confident in our forecast, which is more bullish for LNG growth than the IEA scenarios as we continued to see enduring support for natural gas and LNG throughout multiple policy initiatives in countries and regions around the world that appreciate natural gas as a critical component in achieving environmental policy targets on carbon emissions.
We have listed some of these initiatives in key gas and LNG markets in the matrix on the left of the slide for reference. China and India, for example, aim to increase the share of gas in their primary energy mix from 8% and 6%, respectively, to 15% by 2030, this can add over 14 Tcf of gas demand in only a decade in those 2 countries.
Global players are following through on these commitments to environmental goals, supporting long-term increased use of natural gas and LNG in the form of major infrastructure projects. Currently, hundreds of billions of dollars are being invested across Europe and Asia in natural gas projects under construction. And if we included planned commitments, the total is well over $1 trillion. Some examples include India's commitment to invest over $60 billion to drive its gas-based economy, Europe's commitment of well over $100 billion in gas fired power, import terminals and pipelines and China's hundreds of billions of dollars all along the natural gas value chain.
We highlight regas capacity, which will not only expand existing import capacities in rapidly growing markets like China and India, but also add 9 new import markets, raising the total to over 50 by 2024 from just 15 markets as recently as 2005.
The world is facing multiple challenges in the transition to a lower carbon future. These challenges vary from region to region, and we recognize that there is no universal solution today. Countries and economies are forced to reconcile economic growth and energy security, energy affordability and energy intensity challenges while managing their carbon footprint.
At Cheniere, we seek to support our customers in helping solve their long-term energy challenges with flexible solutions and providing them the opportunity to improve quality of life and to balance their economies and environmental targets.
As a cleaner burning fuel with far lower emissions than coal or liquid fuels in power generation, natural gas and LNG will play a positive role in ensuring reliable energy supply, balancing power grids and contributing to a lower carbon energy system globally.
And now I'll hand the call over to Zach to review our financial results.
Thanks, Anatol, and good morning, everyone. Also hope everyone is doing well. I'm pleased to be here today to review our third quarter financial results, discuss our 2021, and increased run rate guidance and provide an update on our capital markets initiatives and capital allocation priorities.
Turning to Slide 13. For the third quarter, we generated a net loss of $463 million, consolidated adjusted EBITDA of $477 million and distributable cash flow of over $190 million. As Jack mentioned, our third quarter results were significantly impacted by the accelerated recognition of revenues in the second quarter, related to canceled cargoes that were scheduled to be delivered in the third quarter. As the global LNG market has begun to return to balance, the number of cancellations for fourth quarter cargoes has declined, meaning that the revenue acceleration that occurred in the second quarter did not recur in the third quarter, with fourth quarter results positioned to normalize.
For the 9 months ended September 30, we reported net income of $109 million, consolidated adjusted EBITDA of approximately $2.9 billion and distributable cash flow of over $1 billion.
Through September 30, we exported 920 TBtu of LNG from our liquefaction projects, including 193 TBtu of LNG or 55 cargoes during the third quarter. Total volumes produced and exported in the third quarter were 30% or more than 80 TBtu lower than exports in the second quarter of this year as cargo cancellations continued into and peaked during the shoulder season in the third quarter.
For the third quarter, we recognized in income 168 TBtu of LNG produced at our liquefaction projects and 31 TBtu of LNG sourced from third parties. Approximately 74% of the LNG volumes recognized in income during the third quarter was sold under either long-term SPAs or IPM agreements, a proportion materially consistent with the second quarter. For the 9 months ended September 30, we recognized in income 932 TBtu of LNG produced at our liquefaction projects and 79 TBtu of LNG sourced from third parties. Approximately 77% of the year-to-date LNG volumes recognized in income was sold under either long-term SPAs or IPM agreements.
As a reminder, during the second and third quarters, our results were materially impacted by the timing of revenue recognition related to cargo cancellations. In the second quarter, we recognized $458 million of revenues related to canceled cargoes that would have been delivered during the third quarter.
During the third quarter, we recognized $47 million of revenues related to canceled cargoes that would have been delivered during the fourth quarter. Excluding the impact of out-of-period cargo cancellations, our third quarter revenues of $1.46 billion would have been approximately $1.87 billion. The impact on consolidated adjusted EBITDA is similar to the impact on revenue.
Income from operations for the third quarter was $72 million, a decrease of over $850 million compared to the second quarter, driven primarily by the accelerated recognition of revenues in the second quarter for canceled cargoes that would have been delivered in the third quarter, partially offset by decreased costs incurred in response to COVID-19 pandemic during the third quarter.
Net loss attributable to common stockholders for the third quarter was $463 million or negative $1.84 per share, an increase of $650 million from the second quarter of 2020. This increased net loss was driven primarily by the decrease in income from operations, increased loss on modification or extinguishment of debt, primarily related to redeeming the remaining CCH HoldCo II notes and a portion of our 2021 convertible notes, an increased loss on our equity method investment, partially offset by decreased income attributable to noncontrolling interest, increased tax benefit, decreased interest expense and decreased interest rate derivative loss.
Before turning to guidance and capital allocation priorities, I'd like to briefly touch on key financing transactions during the third quarter. As we've discussed on our prior call, we redeemed the remaining outstanding CCH HoldCo II convertible notes and a significant portion of our 2021 convertible notes in July using the Cheniere term loan, in a transaction which both addressed near-term and relatively high cost maturities and prevented significant share dilution, reducing our run rate share count by over 40 million shares.
In August, Corpus Christi Holdings, or CCH, received its third and final investment-grade rating when Moody's upgraded CCH's senior debt to a rating of Baa3. The upgrade from Moody's is one of the few, if not the only upgrade from high-yield to investment-grade, in all of energy in 2020 and further reinforces the credit quality of our project level economics that are the foundation of this company.
Following the upgrade, CCH opportunistically issued $769 million of 3.52% senior secured notes due 2039 in a private placement transaction, securing the lowest yielding bond ever across the Cheniere complex. The proceeds from the issuance were used to prepay a portion of the CCH credit facility. In September, we refinanced a portion of the outstanding Cheniere term loan balance via the issuance of an inaugural bond at CEI, which Jack highlighted a few minutes ago.
This successful issuance was upsized to $2 billion and priced at a 4.625% coupon, reflecting the strength with which the debt capital markets views our business model and operational capability. Strategically, this was a very important transaction for us, as it establishes CEI as a corporate issuer with a path to future unsecured issuances, a critical step in our long-term capital strategy. We remain committed to debt migration from our operating companies to our parent level companies to improve project level resiliency, reduce structural subordination at CEI and be secure the balance sheet over time, while also targeting investment-grade ratings across the Cheniere complex.
Also during the quarter, infrastructure funds managed by Blackstone and Brookfield purchased an over 40% stake in CQP from Blackstone Energy Partners, which it had owned since 2012. Infrastructure funds at Blackstone and Brookfield are among the largest global long-term infrastructure investors and the investment made in CQP is a testament to the quality of our contracted LNG asset platform and to the long-term role of Cheniere and LNG in meeting growing energy demand worldwide.
Turn now to Slide 14. Driven by continued excellence in operations and execution, and despite a myriad of challenges this year, we are again reconfirming our 2020 full year guidance of consolidated adjusted EBITDA of $3.8 billion to $4.1 billion and distributable cash flow of $1 billion to $1.3 billion.
As we look forward to the remainder of 2020, we have hedged virtually all of our remaining expected production volumes and do not expect meaningful variability as a result of any moves in market pricing. Today, we are issuing 2021 consolidated adjusted EBITDA guidance of $3.9 billion to $4.2 billion, distributable cash flow guidance of $1.2 billion to $1.5 billion, and CQP distribution guidance of $2.60 to $2.70 per unit. The largest variable in our projected financial results for 2021 is the timing of completion of Corpus Christi Train 3, and our guidance assumes a late first quarter completion of that train. While we have presold approximately 90% of our total expected production capacity for next year, consistent with previous years, we currently forecast that a $1 change in market margin would impact EBITDA by approximately $200 million for full year 2021, with the variability disproportionately weighted to the upside. And downside limited to approximately half of that amount, given sub-$1 margins on average across the calendar year in the market today.
Today, we are also pleased to revise upward our run rate financial guidance, driven by increased run rate production guidance, as Jack described. Increasing the operating capacity of our existing infrastructure drives increased EBITDA and cash flow and increases our return on investment. As we have increased production guidance by over 0.5 mtpa per train, we have essentially received an extra train's worth of production in our 9-train platform. Today, we are raising our 9-train run rate consolidated adjusted EBITDA guidance to $5.3 billion to $5.7 billion and distributable cash flow guidance to $2.6 billion to $3 billion. Our run rate financial guidance ranges assume production of 4.9 to 5.1 mtpa per train and marketing margins of $2 to $2.50 per MMBtu. We are also increasing our run rate distributable cash flow per share guidance to $10.25 to $11.75 per share, an increase of $2 or over 20% at the midpoint from our prior DCF per share guidance, driven both by increased run rate DCF expectations and a decrease in run rate shares outstanding by over 40 million as a result of the settlement of the CCH HoldCo II and the 2021 Cheniere convertible notes in cash as opposed to equity.
Please turn now to Slide 15. In addition to expected growth in both consolidated adjusted EBITDA and distributable cash flow next year, we also forecast 2021 to be an inflection point for free cash flow. And we expect to generate significant positive free cash flow for the first time in Cheniere's history. As we continue the commissioning process and near completion of Corpus Christi Train 3, we expect a dramatic reduction in capital commitments and an increase in operational cash flow in 2021, leaving a significant amount of free cash flow, which will give us added flexibility on capital allocation.
One of our primary long-term balance sheet priorities is achieving investment-grade ratings at the Cheniere level by the early to mid-2020s in order to solidify our long-term balance sheet and provide stability to our run rate cash flow per share guidance. Due to the incremental debt we took on to address the convertible notes in the third quarter, our capital allocation priority over the short and medium-term will be debt pay down. Executing on that priority, we prepaid $100 million of the Cheniere term loan in the third quarter, and we expect to do the same during the fourth quarter, and we expect to pay down at least another $0.5 billion of debt during 2021, while still having additional free cash flow.
As we forecast our cash flow generation profile and debt reduction plans through 2021 to fortify our current CEI ratings and remain on track for investment-grade metrics in the coming years, we expect to be in a position in the second half of the year once Corpus Christi Train 3 is ramped up to resume capital returns via our existing buyback program, by potentially initiating a dividend or both. We view a dividend at LNG as an eventuality as the long-term highly contracted nature of our business model is ideally suited for it over time, and we will evaluate timing and magnitude with our Board and in consideration of market conditions, our balance sheet and the stock price. We currently forecast a significant amount of available cash over the next 5 years, approximately $12 billion. And this amount is expected to provide us flexibility to reduce our consolidated debt and achieve investment-grade ratings at the Cheniere level to return capital to shareholders via buybacks and/or dividend and be in a position to invest in cash flow and credit accretive growth projects such as Corpus Christi Stage 3, that meet our contractual and investment return parameters.
That concludes our prepared remarks. Thank you for your time and your interest in Cheniere. Operator, we are ready to open the line for questions.
[Operator Instructions] Our first question will come from Jeremy Tonet with JPMorgan.
Just want to touch base. It seems like there's some news out there with Cheniere possibly having new business with China, some agreements reached there. Just wondering if you could confirm if that's the case? And just is this indicative of the broader market kind of coming together a bit better for signing some types of term contracts at this point? Or any color you could provide there would be helpful.
Jeremy, I'll start, and then I'll turn it over to Anatol. First, thanks for the question. Look, we -- I firmly believe Cheniere has the best Chinese origination office in Beijing of any of the LNG providers. I'm very pleased with my team. We -- as you know, we were one of the only to sign the long-term -- the only to sign a long-term agreement with China early on in 2018. And our relationship there just continues to grow stronger and stronger. We've sent a significant amount of spot cargoes to China here recently. And I'll let Anatol address the...
Thanks, Jack. Jeremy, yes, as Jack said, it's a market that we have been focused on almost as soon as we became an operating company with our Beijing office opening up in 2017. The team there has done a great job. It's a sign of China's progress, right? This GDP growth, gas demand growth over 1 Bcf a day of growth in total Chinese gas demand and almost 1 Bcf of that came from LNG. Markets are opening up. China is very committed to meeting its 15% objectives. PipeChina was launched at the end of Q3. It is a mechanism to allow other companies to access the market, third-party access to LNG terminals and pipelines. And there's a tremendous amount of gas demand growth, and we are very well positioned to serve that. So very proud to be in a position to work with Foran Energy, one of the fastest-growing and up and coming second-tier players, and we'll endeavor to find multiple solutions to enable them to meet their downstream objectives of growing gas, maintaining their clean footprint and finding creative solutions for their customers. So very proud of the team and hopefully, a sign of things to come.
Got it. Sounds really exciting there. And just wanted to pivot towards kind of some of Zach's comments with regards to capital allocation. And it seems like based on your guidance, DCF could be up to $1.5 billion at the high end there. You talked about paying down $0.5 billion of debt. That leaves $1 billion of cash flow next year that you're able to do a lot with. It seems like you could start kind of immediate dividend at that point or at least in 2022, it seems maybe somewhat earlier than, I guess, what was previously described. Just wondering if you could talk us through why not start the dividend at the back half of next year? It seems like that could draw in a whole bunch of new investors having that income stream.
A few things there. But thanks, Jeremy. First off, we're in ongoing discussions every quarter with the Board about capital allocation, whether it be debt pay down, share buybacks or eventually a dividend. But when you look at what the share price is right now, and we're talking about $11 as DCF per share in a couple of years, the decision is still pretty easy that it's going to be share buybacks. But in terms of your numbers, you're right, we have around $1.2 billion to $1.5 billion of DCF next year. But keep in mind, we'll still have a couple of hundred million left at Corpus, and we have other -- a few other debottlenecking and development costs that we'll be spending on. So it's not all free cash flow. You have to strip that out first. But for the year, yes, we have around $1 billion of free cash flow next year for a company that really was just negative for 20 years previously.
[Operator Instructions] Having said that, we'll move on to Michael Lapides with Goldman Sachs.
It's actually a little bit of an operational one. Just curious, this is, what, the third or fourth time you've raised your per train guidance in terms of production capacity. Is there something that your team or Bechtel's team is doing that's enabling you to do this, while we're not seeing many of the other global LNG liquefaction owners announce similar increases and do you see potential for others to do that in the industry when you look around? In other words, could that add a lot more liquefaction supply to the industry without having -- without others having to build more trains. Just trying to think through the dynamics for you guys specifically, but also the broader market.
Thank you, Michael. So I'm going to address that directly. So first off, look, we have the best team that -- of Cheniere professionals that exist. It's a team that is very experienced from around the world, not only with ConocoPhillips optimization designs but also API and there are a whole host of other things. And we have the benefit of having the full value chain, meaning the gas procurement side and our ability to deliver gas at varying pressures and heat content, which really influenced the performance of the trains. The team has done a fantastic job with, we call it, debottlenecking, but also maintenance optimization and trying to extend the periods between defrost, extend our turbine overhauls with Baker Hughes and -- as well as hitting all the bottlenecks throughout the train.
So I feel very good that we've -- we continue to pluck what I call the low-hanging fruit. I think there's more room for us to go. I don't think we're done yet. And what it gives us a ton of flexibility with our customers to design solutions for them without having to have it CP'ed on additional infrastructure. I don't want to comment on any of the other LNG facilities because they're all a little bit different from a technological perspective. But we feel very good about what we're able to achieve.
Our next question will come from Christine Cho with Barclays.
I wanted to start off, Jack, with the comments that you made in the prepared remarks about how you plan to increase from 80% to 90% of your capacity to contract as you've increased the production capacity per train, and you have a track record. Obviously, the spending to expand that capacity is very capital efficient. So how should we think about the tolling fee that you would want to charge. I would think it doesn't have to be as high as what you would have charged in a Corpus Phase 3. But is that a fair way to think about it?
Yes, Christine, thank you. And first, let me address the first part, going from 80% to 90%. That's still my comfort with raising our contracted amount, if you will, is with my comfort in my operating and maintenance staff at the facilities.
Again, their performance has been fantastic this year. We've been thrown. Everything has been thrown at us. And we've continued to perform and outperform, I think what everyone's expectations were. So we -- as we get more and more comfortable with our stability of operations and our reliability, it allows us to feel more comfortable with terming out our production.
So as far as the cost, there's -- or the price of the fixed fee, there's a lot of different variables we can draw upon with that, and we can go out longer in term or shorter in term or if the quantity is bigger and longer, then we may give them a little more of a discount, for lack of a better word. But we have a lot of flexibility in what we're able to offer. And as we term things up, you should expect those to flow into our guidance. And be reflected in our numbers. Anatol, do you have anything to add on that?
No, Jack, just the flexibility that you hit on allows us to transition from what underpinned the 7 trains, which was a very fixed construct of 20-year deals to, as you know, Christine a lot of flexibility and a lot of creativity as we ensure that we generate the returns that we need while finding a way to support our customers and creatively adjust to market conditions.
And then, I guess, just to follow-on to that line of thinking. The run rate guidance assuming market margins of $2 to $2.50, just want to get a sense of how confident you are in these margins over the long term? And is it primarily because you have a large portion of this already locked up as PMI? Or is it also the fact that over time, over the long term, some of this capacity, excess capacity, will be contracted up and will likely be at least $2 to $2.50, which gives you the confidence to put that range out today?
The short answer is yes. Thanks, Christine. We see the, again, a growing market for LNG, and we think that it is supplied, in large part, by U.S. projects, our project. They are cost competitive in that $2 to $2.50 range on a delivered basis. That's how we evaluate both ourselves and our global competition. And we think that as we move through this period of oversupply with 4 years of record volumes coming into the market, record growth for the LNG market that ensued, the period of Q2 and Q3 that we just went through, the rate at which the market rebounded is fairly astonishing and absorbed and continued to invest in the future projects that will drive medium to long-term growth, which will need to dispatch these $2-plus margin projects.
So we're looking through the cycle between what we have in the books today, of course, as well as where we see the market playing out over the coming years and decades. We're very comfortable with this $2 to $2.50 range.
I would just add, Christine, that it's not just the reality of the market, but it really just highlights how durable our EBITDA is. And then it's also just confirmation that we see the ability to hit all of the investment parameters for a project like Stage 3 in this range, signifying how cost competitive Stage 3 really is.
And our next question will come from Michael Webber with Webber Research.
I wanted to start off with some -- the good news that got announced today and maybe Anatol, you can help with this, just getting a bit more specific around Foran or I think it used to be Foshan. In terms of that second or third tier of Chinese buyer, this is a company that, I think they bought their first cargo back in May ever. And then they got a small deal with BP and I think they're associated with CNOOC.
In terms of -- just curious in terms of their mergers in the market. Is that a symptom of the reforms we saw last year around the Chinese natural gas pipeline network. And I'm just trying to think it, to what degree do you view this as a one-off versus that second or third tier of Chinese buyer kind of finally finding the support necessary to be more aggressive in the market? It's just -- it's a really interesting counterparty to show up taking that much volume that quickly.
Thanks, Michael. Yes. So ever since we started to engage in China in '16 and then, of course, expanded our presence with the Beijing office in '17, we've been engaged in various discussions, including policy discussions to help China drive this natural gas penetration in the market, contributed a chapter here and there to the PipeChina discussions. And we think that this is a very important step that the policymakers have taken to, of course, take a very large amount of infrastructure into a vehicle that is intended to provide third-party access, transparency, drive access to gas all over the country.
And Foran has the vision to be one of the early movers along that dimension and take advantage of this TPA, as you mentioned, with some other contracts, their BP deal, which preceded our HOA, but is continuing to grow very aggressively. It is in a great market in the South China for us to access and to continue to support. We do not see it as a one-off. We think that this is a cadre of companies that we've engaged with for years and look towards continued success and continued traction there.
And Michael, I have to say that one of the issues structurally in China is that the city gate natural gas prices didn't fluctuate with actual gas prices. So when the spot prices dropped, China's demand didn't increase because the city gate price was kept artificially high. Now you're going to see some of that flow through with some of these other players in PipeChina to where they can access lower -- potentially lower prices, and you'll see the demand response increase also. So we're extremely supportive of their reforms.
Yes. That's a really interesting data point. And just as a follow-up, maybe kind of vaguely along those lines and maybe a different demand sync. Earlier this quarter, there's a bunch of relatively fuzzy news flow around a French counterparty potentially backing away from a deal in the U.S., supposedly related to sourcing gas -- sourcing frac gas. I'm just curious, to what degree does that come up with your customer base? And specifically, as you guys work to commercialize Corpus Phase 3, is that a one-off? Or is that something you think you will be contending with to access the European markets for years to come?
Well, I'll take it a couple of different ways. As you know, a lot of our foundation customers are European. We have 2 very large French companies that are long-term foundation customers, both Total and Electricité de France. And the focus on decarbonization is here, it's here to stay. It hasn't come up with us yet, but we are anticipating it.
We're moving forward with quantifying what we can do to make our product much more desirable in the event that we need to. And as you know, from my talking points, from Anatol's talking points, our initial focus is on identifying and pursuing actionable scientific near-term solutions that we can lower our carbon footprint. We do think the whole energy transition discussion is going to be a very long road and take a whole lot of everything to make work. Go ahead, Anatol.
Thanks, Jack. Yes, just to follow-on Jack's comments. As you know, we view Europe as a very attractive and important market for the coming decade and beyond. Europe is investing tremendously in natural gas infrastructure projects, in regas pipelines, reversing pipelines, power plants, et cetera, that are all driving natural gas demand. We continued to engage with the companies. We continued to engage in Brussels, as Jack said. One of our deliverables to that discussion are transparent metrics, our actual numbers that will form the discussion and continue to inform the discussion as opposed to some of the allegations that you've seen out there in the press. And we're delivering those concrete metrics and concrete improvements to that continued engagement with Brussels.
There's no universal solution, as we said. We're not going to be everything to all people, but we are confident that we are a key part of the energy transition and part of this solution going forward. And you see examples of that engagement, those infrastructure additions, greater gas and LNG penetration into Europe to meet its strategic objectives of environmental benefits and security of supply.
And moving on from UBS, the next question will come from Shneur Gershuni.
I was wondering if we can go back to the discussion you had with Christine on some of the prepared remarks that you had. If I understand sort of the discussion correctly, there's been a lack of FIDs of new capacity in '19 and 20. We're headed towards a tightening of capacity or rather a deficit in the market in a year or 2 out. Is the concept now that you want to lock up some of your CMI capacity on longer-term arrangements, 5, 7, 8 years type of thing, and that's kind of where -- and move the target from 85% to 90% and sort of create a more ratable earnings base from where you're at? I just kind of wanted to understand strategically how you're thinking about it and how you're approaching it?
So again, we're transitioning from a period in our corporate evolution where everything needed to meet the objective of supporting essentially project financing. And as we've talked about, we have this additional capacity. We have the success of the operations team. We've proved the construct of this integrated value chain and now have the flexibility of altering these commercial solutions and coming up with products that serve our customers' needs. And those products include a midterm product as well as the shorter-term solutions that we've always had and the long term. We think this market is a market, it will continue to evolve. It will continue to be cyclical. And all of those components, short, medium and long-term, will be part of the conversation of the LNG market for decades to come. So we're very happy to be in a position to offer that. And as you said, yes, secure margin and have that the stability of cash flow, which we know is important to all of our investors.
Please, Zach.
I was just going to say, putting in perspective, we're 38, 39 mtpa contracted. And we originally thought this would be a 40 million-tonne portfolio, and we got 45 million tonnes. So we have some work to do to just contract that up, give everybody even more certainty on those cash flows gives us a better sense of capital allocation at the same time. But then when it comes to Stage 3 and projects like that, yes, we're going to be looking for the same creditworthy long-term contracts to justify another multibillion-dollar buildout.
No, I think that makes sense. A midterm product that gets you over 90% would definitely make a lot of sense. And maybe pivoting a little bit to the guidance and I do appreciate a lot of the color that was presented in the prepared remarks. Can you walk us through what takes you to the high end of your guidance? And conversely, what would take you to the low end of the guidance? Is it -- we have COVID all over again, and that's the low end? And then everything else is about optionality. I was just wondering if you can talk about some of the inputs that get us to the top end versus low end?
Yes, you mean the run rate or 2021?
It's 2021. 2021.
To make it simple, it's really on that open capacity that we were speaking to, but I'd like to give you just a better sense of the year ahead. So for 2021, we'll have 8 trains for the first time, and we're going to have record production of high 30s in terms of MTPA for the year. So last year, when we went into 2020, we had about 2 million tonnes open, which translated into around 100 TBtu, and which is why we said a move of $1 was about $100 million to EBITDA. But this year, we're adding that 8th train and saying our long-term contracts and selling forward leaves us with around 200 TBtu or just less than 4 million tonnes currently open, which gets us to that 90% total contracted for 2021. So then we were closer to 95% last year to 90% this year going into 2021. And just keep in mind that we got a train coming online early next year.
But I would say we're actually pretty similar, if not in a better spot than last year, considering that asymmetric upside. So margins currently are in the sub-$1 range, meaning downside in EBITDA has really capped at around $100 million, which makes it more insulated than last year, but we still have that upside for every dollar is $200 million. So we're in a pretty good spot. And you can imagine, we just did budget for the year. And when we come up with the range it's around, budget in the midpoint.
Our next question will come from Michael Blum with Wells Fargo.
Just had one quick question. We're starting to see a second wave of COVID lockdowns in Europe and possibly spread wider. Just wanted to get your thoughts on, do you see that -- how you see that impacting LNG demand? And basically, are we in for a bit of a rollercoaster here?
Michael, this is Jack. I'll start here also. I mean, this is -- it's been an incredible year. We have put a lot of precautions into our sites and our plans around COVID with biometric screening, with isolating the workforce, et cetera. And I know that the numbers, at least here around Houston and Louisiana and Texas have increased, but we haven't seen any of the increase in cases ourselves with our workforce, which is -- it's a little bit interesting, but we are definitely on guard. As far as our customers so far, as Anatol pointed out, the recovery, especially in Asia, has been more V shaped. It continues to be stronger every day. But Anatol, maybe you want to give more color on Europe or...
Thanks, Jack. Yes. So Asia is clearly recovering, and Europe is learning how to navigate this issue. Natural gas, as you know, has been very resilient, even though overall power in the 28 main European markets is down about 5%. Natural gas is stable, taking market share away from solid fuels. And this is a very flexible product. And one of the things that we are advantaged in is the ability to respond to these different market moves, whether that is an increase in demand in Asia and a moderation in demand in Europe. That said, Europe is in an increasingly better position. We're not facing the issue of storage containment for 2 reasons. One is we're finally at levels that have been worked off and are below year ago levels in terms of inventory; and two, obviously, going into the winter is a different dynamic than going into the shoulder season of Q2 when we saw that maximum stress. And -- but we're now 9 months into figuring out how to navigate this thing all over the world, and that's improving the outlook as well. So not taking our eye off the ball by any means, but we're endowed with a flexible, responsive system that we and our customers know much better how to navigate.
Our next question will come from Alex Kania whose is with Wolfe Research.
I just had a couple, I guess, follow-ups. First is just on your thoughts on contracting. Is there any sense or greater demand for trying to have contracts that are shaped more seasonally? And I'm wondering if that's something that you consider more seriously, how that would maybe line up with the kind of increased commitment on the reported target for contracting overall in the portfolio.
And the second one is just on kind of the run rate production outlook. I mean, I did see a press release, I guess, from ConocoPhillips earlier this week about additional initiatives to really debottleneck the optimized cascade process. So I was just wondering if those kind of discussions were kind of incorporated in your outlook? Or is that -- or those things represent maybe more incremental debottlenecking as well?
Thanks, Alex. This is Anatol. I'll start, and then I'll hand it over to Jack on the second part. But we are -- clearly, the market globally has a forward structure that says winter is marginally more valuable than summer. Our efforts, our commercial efforts have grown leaps and bounds in terms of sophistication, and you can look up the original SPAs and see that they make a fairly big deal -- most of them make a fairly big deal about being ratable. We can now price things and affect that solution much more flexibly and easily, and that is a discussion that we have from time to time with our customers. So we have no issues with that. And then on top of that, as you know, we have some seasonality in terms of our production capacity, where when it's nice and cool in Louisiana, the ops guys have an easier time making more of it. So we evaluate all of these options and normalize them and factor that into our decision of how to move forward.
And in regards to Conoco, they have been a good partner with us. Ryan Lance is a good friend, and they've supported us in our debottlenecking and optimization efforts throughout this whole process. I think their announcement was on future COP trains, but having said that, every time we do better, the licensing fee goes up. So they're helping us as much as they possibly can.
And moving on, we have Sean Morgan with Evercore.
So a question just on the SPAs that are rolling off. I think there's pretty material SPAs that are sort of legacy from older markets and older plants than Cheniere's even all these trains. And so a lot of this volume is rolling off through 2025. And I'm wondering, how does Cheniere, sort of, position to compete for these new volumes coming in? And do you see there being a lot more tendering in the market? Or do you think that like existing SPAs with the long-term tenors are going to be replaced by similar, existing SPAs with long-term tenors?
Thanks, Sean. Yes. So the market continues to grow dramatically over the past decades, it conveniently doubled every decade. And historically, when this was a very bespoke sort of point-to-point market, the contractual solutions were fairly standard at that 20-year mark. And as you said, there is a very large amount of volume that reprices, if you will, over the coming years and decades, and that is one of the sources of opportunity for us to take advantage of that.
The solutions that the customers will want will vary. There will be a portfolio approach, we believe, and lots of customers will want the flexible, transparent pricing, stable pricing that our long-term contracts offer. Others will choose to recontract midterm, and that's something that we can help with as well as load following, if you will, that we can provide at the margin. So it is another very large opportunity as that volume reprices out of the legacy projects out of North Africa, Qatar, et cetera.
And I would say that the customers are demanding more energy diversity. So they don't want to buy from one supplier necessarily. They want to buy from multiple suppliers and ensure a reliable product. They're also looking at diversity from a how much do they want oil index versus Henry Hub index.
And so, I think we'll get our fair share of some of those contracts. And we just continue to try to work on our operational excellence and make sure that they consider us to be an affordable, reliable supplier of LNG.
Okay. And then we touched briefly on ESG, but I had a question sort of as it relates to the cost of implement, I mean, you went through this slide, and there's a lot of kind of, I guess, sort of cursory ideas of ways to make it lower carbon, more ESG friendly. And I think Mike touched on it, that Europe has -- the European governments are getting kind of more activist in sort of choosing contracts. But how do you look at sort of balancing your European customers who might be a little bit more environmentally sensitive to other customers that are going to be a lot more economically sensitive like India or China?
Yes. No. And that's exactly what we're doing right now, is when we say we're -- our initial focus is on identifying and pursuing, we're stacking them up. So we know directly and indirectly what the carbon footprint looks like for a cargo of LNG, at least from a calculated basis, not an actual basis, which is one of the solutions we'd like to get resolved. But we are quickly identifying, prioritizing and stacking them up on which ones we make economic sense and which we're going to have to put on the back burner for a while until the market wants to pay us for those types of solutions.
Our final question is going to come from Ben Nolan with Stifel.
So I got a couple. The -- first, congrats on the run rate, I think that's fantastic. And certainly, it's a good track record here. I was thinking maybe -- or if you could expound on this, and you were clear on sort of debt repayment from a capital allocation perspective. But obviously, it seems like a higher run rate is probably most impactful for CQP and the potential for them to -- or that vehicle to really ramp up its distributions, even more than probably it could have otherwise done. Can you maybe talk through where that might be in terms of a priority going forward?
Sure. So we really slowly and steadily increased the CQP distribution over the last few years because we're still in construction. So you'll see us -- we just increased it by $0.02 annualized, and we'll continue to do that until we finish Train 6. So you could see what range we gave for this coming year, and it's about the same type of step up as it was this previous year. And that's really related to just holding back the cash to make sure we can fund the remaining, let's say, $900 million or so of unlevered CapEx for Train 6. But clearly, on the run rate, it did go up but if you look at the numbers, it didn't go up all that much, but it is almost at $4 at this point. And the reason for that is because we have an IDR structure. So at this point, since we're in the high split, 50% of every incremental dollar actually goes to CEI. So eventually, in terms of distributable cash flow, when we get to $3 billion at CEI, a little over half of that is actually distributions going to us from not just the LP units, but from those IDRs.
Right. No, and I appreciate that, although, again, that's probably -- and it's structurally an incentive to actually increase the distribution. The -- switching gears to my follow-on a little bit. Today or, I guess, yesterday, EOG made a huge discovery out in Southwest Texas. Obviously, you guys have already done some of the IPM stuff with them. There's been a lot of slowing down there, and I can imagine that maybe those discussions are not as robust as they used to be, but that's a really big discovery. Could you maybe talk through -- we talk a lot about the Chinese or Europeans or others looking to buy. Could you maybe talk about sort of where maybe producers are? And whether or not you think that there could be a return to some of those pushed volumes?
Yes, this is Anatol. We've always said that we're optimistic on the IPM business and see a number of opportunities there, but it is not a huge sample set. EOG is a wonderful partner. Obviously, that IPM transaction started this year. It's been a challenging year for all producers. And as you can imagine, discussions, while ongoing are not top of mind like they were a year, 1.5 years ago, but we firmly see that the growth of North American production needs to be exported, and we provide the single largest access points to those markets. So we're optimistic that, that engagement will become more robust as we move forward and certainly, EOG's contribution will be front and center as well as a handful of other large creditworthy counterparties that have positions that are proximal to our facilities.
And thank you, everybody. Thanks for your support of Cheniere.
Ladies and gentlemen, that does conclude our question-and-answer session and our call for today. We do appreciate you joining us. And you may now disconnect.