Cheniere Energy Inc

NYSE:LNG

Earnings Call Transcript 2018-Q3

[Operator]

Ladies and gentlemen, good morning and welcome to the Cheniere Energy Third Quarter 2018's Earnings Call and Webcast. Today's conference is being recorded.

At this time, I'd like to turn the call over to Randy Bhatia, VP of Investor Relations.

[Randy Bhatia, Cheniere Energy, Inc.]

Thank you, operator. Good morning and welcome to Cheniere Energy's third quarter 2018 earnings conference call. A slide presentation and access to the webcast for today's call are available at cheniere.com. Joining me for today's call are Jack Fusco, Cheniere's President and Chief Executive Officer; and Michael Wortley, Executive Vice President and Chief Financial Officer.

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 risk.

In addition, we may include references to non-GAAP financial measures, such as consolidated adjusted EBITDA and distributable cash flow. A reconciliation of these measures to the most comparable GAAP financial measure can be found in the appendix of the slide presentation.

As part of our discussion of Cheniere Energy, Inc.'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 an overview of recent commercial and strategic developments, a review of third quarter results and an update on construction and operations at our liquefaction projects. Following Jack's comments, Michael will review our financial results and discuss 2018, 2019 and run rate guidance. After the prepared remarks, we will open the call for Q&A.

I'll now turn the call over to Jack Frusco, Cheniere's President and CEO.

[Jack A. Fusco, Cheniere Energy, Inc.]

Thank you, Randy and good morning, everyone. Thanks for joining us as we review Cheniere's results from the third quarter 2018, provide updated financial and operating guidance, and discuss some important developments we announced in our earnings release earlier this morning.

I'm pleased to announce exciting commercial and strategic developments today. This morning, we announced a 24-year SPA with Polish Oil and Gas Company for approximately 1.45 million tonnes per year of LNG on a delivered basis through our marketing flagship, with delivery of a portion of that quantity to begin next year. Anatol is in Poland today celebrating with our newest long-term customer. I want to personally thank Anatol, Ramzi and the entire Cheniere team for another win.

Execution of this SPA brings the total amount of contracted volume we have signed this year to over 6 million tonnes, with an average contract tenure of almost 20 years and expected aggregate notional revenue of nearly $50 billion. Our contracting success demonstrates the value buyers place on Cheniere's ability to provide reliable LNG solutions tailored to customers' needs.

This morning, Cheniere also signed an EPC contract with Bechtel for the Train 6 expansion at Sabine Pass, locking-in cost and construction schedule. We are releasing Bechtel to do some early works to get Train 6 underway prior to our final investment decision. The process of releasing Bechtel under our limited notice to proceed our Corpus Christi Train 3 worked well and we expect that to be the case for Train 6 at Sabine Pass also.

The third quarter was another great quarter for the company, as we generated $425 million in operating income and $569 million in consolidated adjusted EBITDA. Our strong quarterly performance was supported by steady and reliable operations at Sabine Pass and continued strength in LNG supply and demand fundamentals throughout the quarter, which we expect to continue as we approach the peak winter season.

Our year-to-date performance continues to outpace our expectations from earlier this year. And today, we are raising and tightening full-year 2018 guidance for both consolidated adjusted EBITDA and distributable cash flow. We now expect to generate between $2.45 billion and $2.55 billion of consolidated adjusted EBITDA, and between $500 million and $600 million of distributable cash flow. Michael will cover guidance in more detail later in the call.

Our commercial momentum, which helped enable the FID of Corpus Christi Train 3 earlier this year, has accelerated in recent months. Since our last earnings call, we have executed three additional long-term SPAs with new high-quality off-takers. These three SPAs total over 4 million tonnes of LNG and provide significant contracted stable cash flows for Cheniere's investors.

On the operational side, during the quarter, we produced and exported 65 LNG cargoes from Sabine Pass. And as of October 31, over 215 cargoes have been produced, loaded and exported from the terminal year-to-date. More than 475 cumulative cargoes have been exported since startup, reaching 29 countries and regions worldwide.

On the financial front, there are two major highlights on the quarter that I want to review. First, we closed the merger with CQH, which was originally announced in June of this year. Pursuing accretive opportunities that simplify our structure was one of the first goals identified when I joined Cheniere two-and-a-half years ago. The CQH deal not only simplifies the Cheniere complex, but does so to the benefit of the LNG shareholders.

Second, we have continued to manage our balance sheets well. Michael and his team continue to be strategic and opportunistic on this front. During the third quarter, we refinanced the remaining outstanding CQP term loans due in 2020 with CQP bonds due in 2026. This bond transaction addressed the nearest term maturity in the Cheniere complex in a very cost-effective manner.

Now, let's turn to slide 6. I'll give you a brief update on the construction and operations at Sabine Pass and Corpus Christi. Commissioning of Sabine Pass Train 5 is going very well. We introduced feed gas in September, first LNG was produced in late October, and we expect substantial completion to be achieved during the first quarter of 2019.

Commissioning is also going very well for Corpus Train 1. We introduced feed gas in August and expect substantial completion of Train 1 to be achieved also during the first quarter of 2019. Corpus Train 2 continues to progress on an accelerated schedule and we expect substantial completion in the second half of next year.

We look forward to placing these three trains into service safely, ahead of schedule, within budget in 2019. Based on current construction schedules for Train 5 and Train 1, our marketing function is expected to gain access to incremental LNG volumes aggregating between 2.5 million to 3 million tonnes in 2019, ahead of the commencement of the long-term SPAs related to those trains. There is also potential for meaningful incremental volumes related to Corpus Train 2 in late 2019.

Now, let's turn to slide 7. We've had an incredibly busy and productive 2018 at Cheniere, and our major efforts tie together to increase our expected future cash flows and strategic position and, therefore, our value proposition to our shareholders.

First, we're focused on optimizing our existing liquefaction assets. I've spoken on previous calls and in other investor forums on identifying and prioritizing debottlenecking projects and optimizing our operations to increase LNG production. We've worked over the past months to identify, evaluate and execute on these opportunities.

We have now identified significant debottlenecking opportunities at leading economics of approximately $300 a tonne as well as maintenance optimization opportunities. And today, we're raising our average adjusted run rate production guidance to 4.4 million to 4.9 million tonnes per year of LNG per train. As a result of increased expected production, we're also raising our run rate, consolidated adjusted EBITDA and distributable cash flow guidance by approximately $200 million.

Second, we are focused on progressing towards a positive final investment decision on Train 6 at Sabine Pass. We have contracted with Bechtel to construct Train 6 and supporting infrastructure in very competitive economics. And that project is now underway under limited notice to proceed.

As I mentioned earlier, we have had significant commercial success this year entering into long-term SPAs totaling more than 6 million tonnes per annum of LNG volumes, including more than 4 million tonnes per annum signed after the FID of Corpus Train 3. These SPAs are with credit-worthy counterparties and increase our visibility into an FID on Train 6. We are determining the optimal parameters to an FID on our ninth train next year and are pleased to have this project commencing now and rest assured it is our number one strategic focus.

Our third area of focus is developing additional liquefaction and strategic projects, creating a path for future cash flow growth. We received a FERC scheduling notice for Corpus Christi Stage 3 in August and are encouraged with the regulatory progress and pace on that project.

Our Midship Pipeline project received a FERC order in August and we anticipate beginning construction in the near future to meet an in-service date in the second half of 2019. Finally, we're exploring additional liquefaction capacity in Corpus Christi as we seek to leverage our infrastructure to develop new liquefaction capacity with market-leading economics.

And now I'll turn the call over to Michael, who will review our financial results and discuss 2018, 2019 and our run rate guidance in detail.

[Michael J. Wortley, Cheniere Energy, Inc.]

Thanks, Jack, and good morning, everyone. This morning, I will review some highlights from our third quarter financial results, recap recent financing activity and provide some additional detail regarding our guidance.

Turning to slide 9, for the third quarter, we generated operating income of $425 million, consolidated adjusted EBITDA of $569 million and distributable cash flow of $111 million. Our operating performance in the third quarter was in line with our expectations and our financial results were bolstered by stronger-than-expected marketing margins. As a result, we are raising our consolidated adjusted EBITDA guidance for the full year to $2.45 billion to $2.55 billion and our distributable cash flow guidance to $0.5 billion to $0.6 billion.

Year-to-date, we have generated operating income of over $1.5 billion, consolidated adjusted EBITDA of over $2.0 billion and distributable cash flow of more than $470 million. We exported 228 TBtu of LNG from Sabine Pass during the third quarter, none of which were commissioning volumes. These volumes were slightly higher than our exports during the second quarter.

During the third quarter, we had less maintenance spend during the second quarter (sic) [than during the second quarter], partially offset by some seasonality impact to production due to summer weather. Approximately 86% of the volumes exported during the quarter or 196 TBtu were lifted by our third party long-term SPA customers, and the remaining 32 TBtu were lifted by our marketing function.

Incremental production volumes were lifted by our long-term SPA customers during the third quarter, with the Train 3 tranche of the BG SPA in effect for the full quarter. And marketing volumes were consistent with the second quarter.

For the third quarter, we recognized in income 228 TBtu of LNG produced at Sabine Pass, consisting of 228 TBtu loaded during the third quarter, plus 3 TBtu or 1 cargo loaded in the prior quarter but delivered and recognized in the current quarter, last 3 TBtu or 1 cargo sold on a delivered basis that was in transit as of the end of the third quarter. We also recognized in income 23 TBtu or 6 cargoes of LNG sold by our marketing function that was sourced from third parties.

Net income attributable to common stockholders for the third quarter was $65 million or $0.26 per share, an increase of approximately $83 million compared to second quarter 2018. The increase in net income as compared to prior quarter was primarily driven by increased income from operations due to higher pricing on marketing cargoes and less maintenance at the plant. Year-to-date, we have generated over $400 million in net income.

As I mentioned earlier, based on strong operating performance and durable market pricing, we're increasing our full-year 2018 consolidated adjusted EBITDA and distributable cash flow guidance. We're also raising and tightening our CQP distribution guidance to $2.27 to $2.30 per unit for 2018.

During the third quarter, we closed our previously announced merger transaction with Cheniere Partners Holdings or CQH in a stock-for-stock transaction. The completion of this merger transaction was a key step in simplifying our corporate structure, one that took significant time to complete but during which we remained disciplined and focused on creating value for our shareholders.

Also during the quarter, Cheniere Partners issued $1.1 billion of senior notes due 2026, which priced at par to yield 5.625%. Proceeds of the offering were used to prepay all remaining term loans under the CQP credit facilities, which had a maturity date of 2020. The nearest long-term debt maturity within the Cheniere complex is now 2021.

Slide 10 summarizes our full-year 2019 and revised run rate guidance. Consolidated adjusted EBITDA for 2019 is expected to be between $2.9 billion and $3.2 billion, and distributable cash flow between $0.6 billion and $0.8 billion.

Our guidance range for next year includes the impact of higher-than-expected average maintenance at Sabine Pass. We have assumed that Sabine Train 5 and Corpus Train 1 achieve substantial completion in the first quarter and Corpus Train 2 is completed in the fourth quarter of 2019. Our actual results for 2019 would be impacted by changes to train completion timing or LNG market pricing.

For 2019, we estimate our EBITDA would change by approximately $130 million for each $1 move in LNG margin and about $200 million for a one-month change in substantial completion timing for all three trains, which are expected to enter service next year.

As Jack discussed earlier, we have identified significant debottlenecking and maintenance optimization opportunities at very attractive economics and today we're increasing our average adjusted run rate production guidance from 4.3 to 4.6 mtpa per train to 4.4 to 4.9 mtpa per train. Maximizing the potential of our existing asset base through debottlenecking projects, maintenance optimization and plant overdesign is expected to unlock additional volumes and drive an increase in EBITDA and cash flow.

Today, we are raising our 8-Train run rate consolidated adjusted EBITDA guidance to $4.4 billion to $4.9 billion and distributable cash flow to $2.1 billion to $2.6 billion, or $7.25 to $8.75 per share. We're also increasing our run rate CQP distribution guidance to $3.30 to $3.60 per unit.

Earlier this year, we showed the investment community consolidated sources and uses of projected available cash for 2018 through 2022, with expected total available discretionary cash generated in that period of approximately $5.8 billion. We now estimate that amount to be approximately 10% higher, driven primarily by increased production estimates, a slight acceleration in anticipated completion timing of Corpus Train 3 and decreased non-controlling interest after completion of the CQH merger transaction.

Before turning the call back to the operator for Q&A. I'd like to briefly address capital allocation, an increasingly hot topic among our stakeholders as we anticipate reaching stable operations with seven trains in operation in the next year or so. Development communication of our capital allocation strategy, along with an anticipated timeline for implementing that strategy, is one of our highest priorities right now. We anticipate communicating our plan to you in the first half of next year.

That concludes our prepared remarks. Thank you for your time and your interest in Cheniere.

Operator, we're ready to open the line for questions.

[Operator]

Thank you. We will now take our first question from Jeremy Tonet from JPMorgan. Please go ahead.

[Jeremy Bryan Tonet, JPMorgan Securities LLC]

Good morning. Congratulations on...

[Jack A. Fusco, Cheniere Energy, Inc.]

Good morning, Jeremy.

[Jeremy Bryan Tonet, JPMorgan Securities LLC]

Thanks. Congratulations, Jack, on expanding the size of the trains there. I was just wondering if you could dive in a little bit more as far as what you guys were able to do to accomplish that. And is this just something that is SPL or is this Corpus as well?

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah. So, Jeremy, thanks, by the way. As Michael said, the debottlenecking projects fall really into three categories. So, category one would be maintenance optimization, which is really trying to reduce our maintenance time so we can increase production, because it's all about production.

Category number two I'd say is the reliability improvement, which is a real focus on extending that planned maintenance cycle. And if you can extend it and push it out, then you can produce more. And then the third bullet is just an all-out overdesign of the facility.

So, when we add up those three brackets, if you will, and we look at the increase in production, we estimate that we could increase production by almost 4 million tonnes across the platform, which is fairly significant. It's almost a whole train at around $300 a tonne. So we're very excited about it. We're working on it now and we'll continue to work on it. And 2019 is going to be a big year for us to move this forward pretty significantly.

And Mike, would you have anything to add on that? No? Does that help, Jeremy?

[Jeremy Bryan Tonet, JPMorgan Securities LLC]

Thank is helpful. Thank you for that. And just want to turn to the guidance here. And it seems like the implied 4Q guide, if we're looking at that right, implies a slight tick down over 3Q at the top-end. Just wondering if there's any kind of headwinds in 4Q that we should be thinking about there?

And the guide for 2019, just wondering any incremental color you could share with regards to shipping rates have moved up a bit, how you think about the price deck for your CMI assumptions there, is it kind of $2.50 assumptions you're thinking or anything else that you can share on those points?

[Michael J. Wortley, Cheniere Energy, Inc.]

Sure. Jeremy, it's Michael. So, with respect to Q4, no, we don't see really any significant change in Q4. So we said ever since Q1, which Q1 was a volatile quarter given Train 4, but ever since then we've been in a highly-contracted state. And so, delivering $550 million of EBITDA roughly for Q2, Q3 and expect that to be generally the case for Q4.

And in terms of shipping, rates have moved up quite violently over the past three months. We have been really proactive on our shipping position. So we took down a lot of tonnage over the summer in anticipation of commissioning and having these three trains really in the CMI book until the FCD later this year. So I think we're a beneficiary of ship movement more than anything. So we're in a good position there.

[Jeremy Bryan Tonet, JPMorgan Securities LLC]

Great. And anything else on the CMI assumptions in 2019 that you're willing to share?

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. Generally, we want to – yeah, definitely. Generally, we want to kind of not talk a lot about our CMI position, given the competitive nature of it, but given that, it's going to be a huge piece of our business next year. And I'll say a little bit about it.

So I think the marketing function is going to deal with about a little over 8 million tonnes next year in our budget, about 8.25 million tonnes. About 2 million tonnes of that will be commissioning, so non-P&L, so we'll generate a lot of cash from that. It'll just be an offset to PP&E. So, that gets us to about 6.25 million tonnes.

And we've given you how we think EBITDA will change for a $1 move in margin. We've put away a fair amount of that 6.5 million tonnes, but still have a pretty large open position, which is a good thing given where prices are. So, yeah, that's how I would characterize CMI for next year.

[Jeremy Bryan Tonet, JPMorgan Securities LLC]

Got you. So it sounds like there's some upside if you can pull these trains forward, the new ones, as you continue to do.

[Michael J. Wortley, Cheniere Energy, Inc.]

Definitely.

[Jack A. Fusco, Cheniere Energy, Inc.]

Absolutely.

[Jeremy Bryan Tonet, JPMorgan Securities LLC]

That's all for me. Thank you.

[Operator]

We will now take our next question from Christine Cho from Barclays. Please go ahead.

[Marc Solecitto, Barclays Capital, Inc.]

Hi. Good morning. This is Marc on for Christine. In the past, you guys have voiced your preference for keeping DES contracts at the CMI level. With today's contract and I believe the CPC contract both being DES, how should we think about how the banks are going to view these contracts with respect to financing for Sabine Pass Train 6? Do you think they'll look through to see who's back in the CMI contract when thinking about the bank funding for the train?

[Michael J. Wortley, Cheniere Energy, Inc.]

I guess, on Train 6, I would say we signed the contract with Bechtel where we gave them limited notice to proceed. So we've locked-in budget and schedule at this point. So we're day-for-day on the guaranteed schedule, and we don't have to give them a full notice to proceed under that contract till the middle of next year. So your point is a good one.

Ultimately, what contracts we give to Train 6 and show to the banks is kind of TBD. You're right, we'd prefer to keep the DES business at CMI. That gives us ultimate flexibility to deal with those obligations. But it's not out of the question that we wouldn't move some of those down if we didn't have standard FOB business to attach to them.

So we'll see how that plays out over the next three or four months and then make a call ahead of next summer when we need to give it back the full NTP.

[Marc Solecitto, Barclays Capital, Inc.]

Got it. And so, just to clarify, should we think FID is predominantly a function of financing or are there other moving pieces there?

[Michael J. Wortley, Cheniere Energy, Inc.]

Sure. I mean, we'll need to put the financing in place. Like, I don't feel a ton of pressure to get that done again because we've let Bechtel go. But, again, we need to decide what we're going to do by the middle of next year and financing is certainly one milestone. We need to get sorted out kind of over in the next three or four months.

[Marc Solecitto, Barclays Capital, Inc.]

Okay. And then, just to clarify with your 2019 guidance, I think you mentioned that it assumes 2.5 million to 3 million tonnes of early cargo volumes. Just wanted to clarify, does that assume any early cargoes from Corpus Train 2? And should we assume a base margin of $2.50, as is typical in your projections?

[Michael J. Wortley, Cheniere Energy, Inc.]

So, yeah. The comment on 2.5 million, 3 million tonnes is the early cargoes associated with all three trains that are going to come on next year, with Train 5 and Train 1 in the first quarter, and then we have the Train 2 sometime in the second half. So, yeah, we're going to – and the DFCDs on all of those trains are six to nine months after the time they come on.

In terms of margin, no, I don't think $2.50 is the number. Again, for the unsold piece of the marketing book, we're assuming more like $4.5 to $5 on the unsold piece, which is a little bit higher than what the screen would show you today and that's by virtue of our in the money shipping position. So, that's what we've assumed.

[Marc Solecitto, Barclays Capital, Inc.]

Okay. Great. Thanks.

[Operator]

We will now take our next question from Jean Ann Salisbury from Bernstein. Please go ahead.

[Jean Ann Salisbury, Sanford C. Bernstein]

Thanks. Good morning. What is your kind of ideal steady-state for the percentage of your cargoes that you're getting a long-term fixed fee for versus spot market price? And does that change kind of year-by-year I guess based on your view of the LNG market or is there a steady north star?

[Michael J. Wortley, Cheniere Energy, Inc.]

I didn't hear the first part of that.

[Jack A. Fusco, Cheniere Energy, Inc.]

Excuse me, Jean. Did you say the long-term steady-state?

[Jean Ann Salisbury, Sanford C. Bernstein]

Your ideal steady-state for kind of the long-term fixed fee versus spot market, now that you have a little bit more cargoes expected in your run rate.

[Michael J. Wortley, Cheniere Energy, Inc.]

I think having open capacity at the CMI business is a strategic advantage for us. So we don't ever want to be in a state where we're sold out in that business. And we've targeted 80%, 85% contracted, which that last 10%, 15% given the size of our platform is like 4 million, 5 million tonnes, which is a pretty good book for CMI to have to really tie early cargoes to long-term business and things like that. So we like that flexibility, it's part of our business and we intend to keep some length there.

[Jack A. Fusco, Cheniere Energy, Inc.]

And I would just add to that. Strategically, having those bridging volumes available that we can start our long-term customers or new customers, like the Polish utility that we announced this morning, is very beneficial to them and to us.

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. I'd just add one more thing. I mean, our ability to sell without a condition precedent on building a facility is a competitive advantage that we have, right? So our customers don't take the risks that we have to get a project underway and we sell to them, and that differentiates us quite a bit.

[Jean Ann Salisbury, Sanford C. Bernstein]

That makes sense. Thanks. And then should we expect that most other U.S. LNG facilities would have kind of similar debottlenecking potential that you showed today, or do you view some of it as being specific to your site or design?

[Jack A. Fusco, Cheniere Energy, Inc.]

We have no idea what their design bases are or their reliability, and that's probably better to talk to them about.

[Jean Ann Salisbury, Sanford C. Bernstein]

Okay. Fair enough. Thanks a lot. That's all for me.

[Operator]

We will now take our next question from Danilo Juvane from BMO Capital Markets. Please go ahead.

[Danilo Juvane, BMO Capital Markets (United States)]

Thanks, and good morning. Michael, if you could just repeat – I mean, I apologize for missing this in your prepared remarks, but what were the upside opportunities that you mentioned with SPL 5 and Corpus Christi 1 for next year?

[Jack A. Fusco, Cheniere Energy, Inc.]

The movement of the schedule, I think, is what he's asking.

[Michael J. Wortley, Cheniere Energy, Inc.]

In terms of schedule, so we have Train 5 making LNG in a Q1 substantial completion. So we're talking there about weeks' movement, so not that significant. Corpus hasn't made LNG but is very close to doing it and, again, we have that in Q1. So, again, I think that's weeks. There's probably more opportunity on Train 2 at Corpus, but let's see how Train 1 goes first. There may be a little bit more opportunity on Train 2.

[Danilo Juvane, BMO Capital Markets (United States)]

Got it. And...

[Jack A. Fusco, Cheniere Energy, Inc.]

And did you mean the $200 million in increased EBITDA or EBITDA change for the substantial completion...

[Danilo Juvane, BMO Capital Markets (United States)]

(29:17)

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah.

[Danilo Juvane, BMO Capital Markets (United States)]

Correct.

[Michael J. Wortley, Cheniere Energy, Inc.]

That is purely a result of raising run rate production guidance.

[Danilo Juvane, BMO Capital Markets (United States)]

Got you. Got you. And I guess with the ability to sign the contracts at least in Europe, obviously this is not an Asian customer, are you seeing now more appetite from European customers to be more willing I guess to sign contracts going forward here?

[Jack A. Fusco, Cheniere Energy, Inc.]

It's a combination of everything. So our business model is different. It's different than other U.S. LNG providers that are currently in construction. So we're a full-service provider, meaning we buy the gas, we transport it, we process it, we load it up on our ships and we'll send it right to your flange. And that's where we're seeing a big increase.

So we mentioned CPC in Taiwan. We've mentioned Poland now. Those are delivered straight to their flange or straight to the utility. And in most cases, they go straight to a power plant and are used for power generation.

So, having that full-service business model, having the bridging volumes that Michael talked about in the portfolio, it's a competitive advantage for us and we're just getting started. So, yeah, we're very busy, very excited about our opportunities going forward and the opportunity to continue to grow this business.

[Danilo Juvane, BMO Capital Markets (United States)]

Thanks for that, Jack. Last question for me is on capital allocation. Obviously, you have a lot of potential upside in the guidance that you outlined for 2019. If you were just to look at 2019 guidance as you currently have it outlined, how would you think about what your capital allocation options could be next year?

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. I mean, I think we'll talk about that after we get these two trains up and running. I mean, the good news is we thought we had $5.8 billion over the next five years and, with all the things I mentioned in the prepared remarks, we think that's 10% higher, closer to $6.5 billion. We're going to spend as much as we can on building more liquefaction trains. But I think we're going to have some leftover and we're going to talk to the market in the first half of next year about what we think the best use for that is.

[Danilo Juvane, BMO Capital Markets (United States)]

Thank you. Those were my questions.

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah.

[Operator]

We will now take our next question from Matthew Phillips from Guggenheim. Please go ahead.

[Matthew Phillips, Guggenheim Securities LLC]

Good morning, guys. A follow-up on CMI's impact on 2019 guidance. I understand your reluctance to share your commercial position. But is the right way to think about it that the volumes you know you'll have from SPL would already be presold, whereas the commissioning – not the commissioning, but the pre-DFCD cargos from CCL 1 and SPL 5 would be floating with the curve (32:26)

[Michael J. Wortley, Cheniere Energy, Inc.]

Definitely. Yeah. We don't – well, I said commissioning is kind of 2 million tonnes next year on the high-end. And yeah, we don't sell those until we know we have them. So, those will be purely market-based. The balance of the portfolio, which I said is 6 million tonnes, I mean, you don't go into a year having not put any of that away. So we sold some of that earlier this year and continue to do so at present in a rising price environment. And so, I'd say a fair amount is still not sold. All of the commissioning is unsold and then a portion of the book is put away given the amount of volume for next year.

[Matthew Phillips, Guggenheim Securities LLC]

Understood. Thank you. And then, with regard to long-term contracts, I mean, what would you estimate is the range for clearing prices for new off-take and what's kind of driving that in one direction or the other?

[Jack A. Fusco, Cheniere Energy, Inc.]

Do you want to talk about prices and long-term contract? I mean, it just depends. It depends on who you're talking to and where they're located, but it's a very competitive market out there. And as you see from LNG Canada and some in the Qataris and the Russians, that everybody's got big plans to expand and grow. So I'd rather not talk about prices on the call, but you should rest assured that we're doing our part here for America and for U.S. LNG to continue to grow our business. And that's been our focus in making sure that it meets all of our financial hurdles to our shareholders.

[Michael J. Wortley, Cheniere Energy, Inc.]

Right. I mean, on that note, that's really what I'd focused on. We've said we're investing at 6 times EBITDA kind of ratio, that's what we did on Train 3 as we think Train 6 will look like and more like a 3, 4 times on an equity to cash flow basis. So we're not getting into the top – what's driving the top line, those are the investment hurdles we're trying to reach, and again, on a heavily contracted basis.

[Matthew Phillips, Guggenheim Securities LLC]

Understood. Thank you.

[Jack A. Fusco, Cheniere Energy, Inc.]

Thanks, Matt.

[Operator]

We will now take our next question from Craig Shere from Tuohy Brothers. Please go ahead.

[Craig K. Shere, Tuohy Brothers Investment Research, Inc.]

Good morning. Congratulations on the fantastic news this morning.

[Jack A. Fusco, Cheniere Energy, Inc.]

Thank you, Craig.

[Craig K. Shere, Tuohy Brothers Investment Research, Inc.]

So, for Corpus Christi Train 1 early completion, are you potentially more open on originally hedged feedstock gas cost there, such that for time you can benefit from wider basis differentials?

[Michael J. Wortley, Cheniere Energy, Inc.]

Sure. There'll be some opportunity there. Yeah.

[Craig K. Shere, Tuohy Brothers Investment Research, Inc.]

Okay. And kind of turning that line of questioning forward, obviously, Phase 3 of Corpus Christi, that is going to have full regulatory approvals in the not too distant future with 9.5 mtpa of capacity is potentially more advantaged than Sabine's location. And I'm wondering if you're talking about a formal FID by mid next year, and I guess you're doing prep work right now and I understand that, but why wouldn't we be thinking about turbo-charging Phase 3 at Corpus ahead of Sabine 6?

[Jack A. Fusco, Cheniere Energy, Inc.]

Well, first off, you all should assume that we're not slowing down. So it's been a extremely productive year in 2018 and I see that going forward in 2019. So it is our goal to continue to expand the business. And this is going to be an easy capital allocation discussion if we continue to be as successful as we have been, because tie (36:21) goes to growth and we're going to be just investing back into our core business.

So the other part of it is, while we are very pleased with the FERC schedule on the review of the permits for Stage 3 at Corpus, which is our mid-scale project, timing-wise our customers need LNG now and we've got to take advantage of that. We have a shovel-ready project. We have construction forces that are going to be rolling off the Train 5. There's a lot of synergies that Bechtel has given us in cost reductions, et cetera, by being able to roll that team right into Train 6.

So I would expect that we continue to win our fair share of these contracts and we continue to grow the business and we move right into the next round of growth and that growth is going to be back at Corpus after Train 6.

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. I don't it's an either/or proposition on either of them. And your original question on Corpus, absolutely a better place to be right now from a gas supply standpoint. Permian Highway and Gulf Coast Express are each being built directly into our existing infrastructure to feed us. So it's really a great place to be from a supply standpoint.

[Craig K. Shere, Tuohy Brothers Investment Research, Inc.]

Great. And last (37:46) question for me. Without getting into details on specific price points for long-term contracting, couldn't help but notice that some of your press release disclosures this year on new SPAs, some referenced Henry Hub plus a fixed component, and some referenced just Henry Hub plus a fee. And then CPC in Taiwan had said that there was some gross very large price point all-in, obviously, to promote the idea of trade. But the question is, does some of your contracting entail some liquefaction fees that can float for a little bit in the curve against some index?

[Michael J. Wortley, Cheniere Energy, Inc.]

We didn't mean to – we weren't trying to trick anybody on the language change. I mean they're pretty standard contracts with significant fixed fee components. There is a case or two where we share in some upside, but still the fixed fee component is still the dominant factor in the contract, not in any other contracts that you mentioned with respect to profit shares, but there are one or two.

[Craig K. Shere, Tuohy Brothers Investment Research, Inc.]

Great. Thank you.

[Operator]

We will now take our next question from Alex Kania from Wolfe Research. Please go ahead.

[Alex S. Kania, Wolfe Research LLC]

Thanks. Just a question on just the overall kind of market environment right now. I mean, in the last probably few weeks, we've seen a flurry of contracts and MOU announcements. So, just kind of curious as to how you'd characterize what you're seeing in long-term market discussions right now just from buyers and maybe kind of are you seeing maybe elevated competition from these projects right now? Just kind of curious on that.

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah. So, the good news is natural gas demand continues to increase worldwide, especially in Asia. So it goes well beyond just China. You have China, Korea, India, Pakistan, all increasing significantly year-over-year its LNG imports. And so, yeah, we've been extremely busy. The team has been trying to craft solutions for different customers around the world.

And I think in the forecast that I have seen, whether it's WoodMac or others, there's a significant shortfall in the LNG supply outlook. So, the shortfall is well over 100 million tonnes even today, even with some of the announcements worldwide of others that are trying to expand or grow.

So I do think there's a huge opportunity for us that the winds are at our back and we just need to continue to execute.

And, Michael, do you have...

[Michael J. Wortley, Cheniere Energy, Inc.]

I mean, we're coming out of a historic low in FIDs due to this last down cycle. And so I think the market is just scurrying to kind of catch up. So, even in 2025, there looks to be a 70 million, 80 million-tonne opportunity. And, of course, you've got to get going on that from a construction standpoint in the next year if you're going to hit that window. So I think that's what's driving a lot of this market activity.

[Alex S. Kania, Wolfe Research LLC]

Great. Thanks, guys.

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah.

[Operator]

We will now take our next question from Julien Dumoulin-Smith from Bank of America. Please go ahead.

[Julien Dumoulin-Smith, Bank of America Merrill Lynch]

Hey. Good morning, team.

[Jack A. Fusco, Cheniere Energy, Inc.]

Hi, Julien. How are you?

[Julien Dumoulin-Smith, Bank of America Merrill Lynch]

Good. Good. Thank you. Well, Jack, I wanted to turn the tables back to this capital allocation question. I know you mentioned on the call in the prepared remarks about turning to this in 2019. But knowing you, you have a penchant for talking about buybacks at times.

How are you thinking about this business and whether buybacks versus dividends make more sense? Obviously, you've got a very stable source of cash flow here. You've now priced or presumably have visibility on the overall cost of SP6, given the context that you provided this morning with Bechtel.

Can you at least initially give us some thought process on the merits of one versus the other particularly turning to 2019, and maybe as you think about the evolution of the business from 2019 to 2020 to 2021 kind of? Maybe what else needs to happen to get there?

[Jack A. Fusco, Cheniere Energy, Inc.]

That is a loaded question. But if the stock keeps staying exactly where it's at, I'm all for buybacks if that's what you're asking me. It's going to be a very short capital allocation discussion with the investors.

But as Michael pointed out, there's a whole lot of cash that this business is going to generate. And with the stability of our contracts, there's going to be a great opportunity for us to try to get that cash back to the investors. And we're going to figure out, Julien, what to do here, as Michael said, in this first half of next year and be able to communicate it. And we're looking at the most tax-effective, efficient way to get it back to our investors. And that's about all.

But you know my history from Calpine in the past and I'm a big advocate of making sure we get this capital allocation done right up front and be able to communicate to everybody appropriately.

[Julien Dumoulin-Smith, Bank of America Merrill Lynch]

Got it. Excellent. And actually, to that point, on SP6, just to make sure we hit it here, I mean, what is the pricing on a per-tonne basis and what kind of advantage did you get given that the efficiencies you alluded to and getting ahead of it before FID here, if you can talk to it more precisely?

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. I mean, it's going to look a lot like Train 3, and Train 3 had a lot of synergies associated with the work we did on Trains 1 and 2, and we did a lot of work on Train 5 in anticipation of Train 6. So, all the utilities are all in for Train 6. So it's going to be really competitive. The EPC contract in the $500 kind of or lower range and all-in high-$500, $600-a-tonne type number.

[Julien Dumoulin-Smith, Bank of America Merrill Lynch]

Got it. And Jack, just to clarify your comment, that means execution in 2019 when you say talking about capital allocation?

[Jack A. Fusco, Cheniere Energy, Inc.]

Well, I mean, we're already doing it, Julien. If you look at the amount of cash that we need to put back into our business for our existing growth on these trains, so if we FID Train 6, you should expect that there is a significant amount of cash in 2019 that's going to go plowed back into our business for growth. So, yeah, I mean, we're doing it now.

[Julien Dumoulin-Smith, Bank of America Merrill Lynch]

All right. Fair enough. Thank you.

[Jack A. Fusco, Cheniere Energy, Inc.]

Okay.

[Operator]

We will now take our next question from Hillary Cacanando from Wells Fargo. Please go ahead.

[Michael Webber, Wells Fargo Securities LLC]

Hey, guys. It's actually Mike Webber on for Hillary. Hi, guys. How are you doing? So, logistic of (45:17) dialing in from the road. I wanted to look back I think maybe the first question that dealt with freight. Obviously, rates have kind of gone parabolic here you guys got ahead of that in June. But I'm just curious with the expanded production and capacity you guys are talking about, was that factored in to the budgeting and the cargo program you guys went out and kind of captured in June? And to what extent are you fully covered for 2019?

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. I mean, again, I guess we'll break our rule on our position. But, yeah, we took down all the tonnage we need for the three trains that are going to be early. So we're in the low-20s in terms of vessels right now, will rapidly be in the low-30s, and all of that was contracted this summer.

[Michael Webber, Wells Fargo Securities LLC]

Right. Okay. So the expanded production and the early trains, you guys are covered for 2019.

[Michael J. Wortley, Cheniere Energy, Inc.]

Yes.

[Jack A. Fusco, Cheniere Energy, Inc.]

Yes.

[Michael Webber, Wells Fargo Securities LLC]

All right. I appreciate that. And then just more broadly on commercial progress. Jack, I think you mentioned some of the progress you guys are seeing, from the sense of competition you guys are seeing around Stage 3 in Sabine 6. The last couple FTAs and lots of FIDs really, you guys have kind of had a little niche, kind of little air pocket here, where I mean you're probably consistently competing with Qatar but some of your big larger global projects are still kind of getting their legs under them.

Do you think the competitive subset for Corpus Phase 3 ends up being materially different than Sabine 6, or maybe you have the market a little bit more to yourself? Or do you think – are you bumping into...

[Jack A. Fusco, Cheniere Energy, Inc.]

(47:19)

[Michael Webber, Wells Fargo Securities LLC]

...Mozambique, Canada LNG, (47:24)? Is that happening now or is it just Asian process or something with (47:26) FTAs so long that you're not really going to bump into them and earn (47:32) until initially you start going after Corpus Phase 3?

[Jack A. Fusco, Cheniere Energy, Inc.]

No. No. You should assume we're going after Corpus Phase 3 now. We're not waiting. It's not a binary marketing strategy. But it's extremely competitive worldwide. And so, yeah, I mean we're seeing everybody out there. I'd expect we're going to continue to see people out there as they're trying to get to FID themselves, so.

[Michael Webber, Wells Fargo Securities LLC]

Yeah. I guess my question is some of those are more high profile global projects, are you competing with them now or are they still yet to come to the table?

[Jack A. Fusco, Cheniere Energy, Inc.]

No. I mean, we're competing with them now. I mean, look at like – the people want diversity in their portfolio, so keep that in mind. I mean, look at the Taiwanese, I mean, they're going to have some Mozambique off-take, they want some Gulf Coast off-take, and we want that part of the business.

The Polish, another perfect example, they have a big deal with the Qataris already. They want to buy from the U.S. in addition to that. So, in that case, we don't really compete with the Qataris because they've already bought from them. So, people want to buy – big buyers want diversity in their book and when they look to the U.S., they're looking to us right now.

[Michael Webber, Wells Fargo Securities LLC]

Okay. Thank you. And just one follow up on that. Polish FTA, did they actually sign another FTA earlier this year with a greenfield competitor, to use it in liberal terms, a liberal sense? And when we look in terms of volumes that have been coming out of Sabine, it seems like there's a bit of a shift towards Europe, which would make sense from a global dynamic perspective. Are you seeing that? If you look at your backlog of conversations around new business, without getting too granular, are you seeing any kind of moderate shift towards a bit more of a European focus?

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah. I would say – and unfortunately, Mike, Anatol is not here with us and he's much more eloquent at the markets. But I would say that we are very excited about the fundamentals that we're seeing going on in Europe right now, whether it's carbon pricing or just the opportunities in Europe all the way around, so.

[Michael Webber, Wells Fargo Securities LLC]

Okay. Fair enough. Thanks.

[Jack A. Fusco, Cheniere Energy, Inc.]

(50:04)

[Operator]

We will now take our next question from Fotis Giannakoulis from Morgan Stanley. Please go ahead.

[Fotis Giannakoulis, Morgan Stanley & Co. LLC]

Yes. Good morning, gentlemen, and congratulations for your announcements today. Jack, I want to ask you about the competitive landscape. You mentioned earlier about LNG Canada and Qatar. These two projects and producers, they took FID without having specific off-takes. If you see this becoming a trend in the future, if you would consider potentially expanding further on new trains without specific off-takes? And whether this mean the LNG Canada FID for North American producers, especially for the greenfield projects?

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah. So, Fotis, if you're asking would we make a shift in our business strategy to go from a contracted portfolio to a merchant portfolio, I have to tell you, I spent my first 40 years in the merchant power business and it didn't feel good. And so, that's not high on my list right now. Right now, we are totally focused 100% on customers and new customers and what their needs are and how we can meet their needs.

And as you know, in the utility business, right, our customers are making long-term bets. So, whether it's China where they've got 10 million tonnes of additional regas got built year-over-year and they've got 25 million tonnes of regas that's under construction right now, they're spending real money to build real infrastructure, or Taiwan with the 5,000-megawatt combined cycle power plant that needs fuel. And they need us, they need affordable reliable energy, and that's really what our focus is. It's not to build for build sake. And in Cheniere line, we don't talk about scale or being big, we talk about adding value for our customers and for our shareholders.

[Fotis Giannakoulis, Morgan Stanley & Co. LLC]

Thank you, Jack. And what I was trying to get is whether you would consider of building first and contracting later in an effort to go ahead of the competition, similar to what it seems that the oil major or some of the Qataris are doing and if that makes it harder for smaller players or greenfield players as they are trying to enter the market right now.

[Michael J. Wortley, Cheniere Energy, Inc.]

No. I mean, I think it's the opposite. We contract now and build later. I mean, given our lengths, we sell off our length and refill it with new construction. So I think we just keep doing that.

[Fotis Giannakoulis, Morgan Stanley & Co. LLC]

Okay. Thank you. I appreciate it.

[Jack A. Fusco, Cheniere Energy, Inc.]

And, Fotis, you'll have to ask the other greenfield LNG folks if it makes it harder for them or not.

[Fotis Giannakoulis, Morgan Stanley & Co. LLC]

Thank you, Jack.

[Operator]

We will now take our next question from Michael Lapides from Goldman Sachs. Please go ahead.

[Michael Lapides, Goldman Sachs & Co. LLC]

Hey, guys. One quick one. Just curious now that you've gotten CQH squared away and closed, how are you thinking about future changes to the corporate structure, including anything if possible at all with CQP?

[Jack A. Fusco, Cheniere Energy, Inc.]

Do you want to...

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. I mean, it remains an opportunity for us. We don't really feel like there's much to do right now. You see all these rollups happening in the market and most of those have real issues with their MLP, right? And we don't feel like we have that issue and we haven't made distribution promises that we can't keep. We don't have a funding problem down there and we have cash flows to reinvest. And so, really it'll come down to a value decision for us. We don't think it makes sense to have two boxes with the same businesses basically in it. But the rollup is purely a value proposition for us.

[Michael Lapides, Goldman Sachs & Co. LLC]

Got it. And then another longer-term question. You obviously raised the export capacity potential for the trains you have now and the ones you're bringing on line in the next couple of years. Just curious, when you think about the Corpus site, how do you think about what the total potential size in tonnes per year could be coming out of Corpus now? And I know this is really long-term, so I'm thinking about all of the acreage you control there and the infrastructure you control there. I'm just trying to get my arms around how big this could be in kind of a blue sky scenario.

[Jack A. Fusco, Cheniere Energy, Inc.]

I think we can double the size of the company, quite honestly, at that site.

[Michael Lapides, Goldman Sachs & Co. LLC]

Double from today's run rate or double from your 2021, 2022 run rate?

[Jack A. Fusco, Cheniere Energy, Inc.]

The way I think about it from today, from the trains that we're currently building or that are operating. So, I think there's probably another 30 million tonnes at Corpus that can be built in addition to Train 3.

[Michael Lapides, Goldman Sachs & Co. LLC]

Got it. Thank you, Jack. Much appreciate it.

[Jack A. Fusco, Cheniere Energy, Inc.]

All right, Michael. Thank you.

[Operator]

We will now take our next question from Spiro Dounis from Credit Suisse. Please go ahead.

[Spiro Dounis, Credit Suisse Securities (USA) LLC]

Hey. Good morning. Sorry if this was covered. I hopped on a bit late. But, first one just on potential indexation, maybe hard for you to answer just from your side of the aisle, but do you have a sense for how close you guys are to being included in the S&P and maybe what you think it would take to get there from here?

[Randy Bhatia, Cheniere Energy, Inc.]

Spiro, hey. It's Randy. I've had those conversations with them. It's really not anything that we can just go and do. Some of the issues that were keeping us out, namely their requirements for certain financial metrics, those we're correcting as we speak. So I think we're a reasonable candidate for inclusion. But in terms of us getting in, it's really difficult to know.

[Spiro Dounis, Credit Suisse Securities (USA) LLC]

Okay.

[Randy Bhatia, Cheniere Energy, Inc.]

They just took out – they made a change last night. Obviously, we want a part of it. But they removed EQT and brought in a non-energy company in its place. So, there's some probably index construction things that they are trying to accomplish as well. But we think we're a reasonable candidate and we do what we've laid out here I think we'll be in at some point in the future.

[Spiro Dounis, Credit Suisse Securities (USA) LLC]

Okay. And then maybe continuing along that context there, just how you guys view yourselves relative to large cap energy peers and tying that to the dividend yields, and I realize you can't give specifics, but is it fair to look at other large cap energy peers and their yields that are in the index and say you guys at least want to comp to that?

[Jack A. Fusco, Cheniere Energy, Inc.]

(57:18)

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. A lot goes into that answer I guess. I mean, that's one way of looking at it. But I think we'll hold off until next year and clarify all that.

[Spiro Dounis, Credit Suisse Securities (USA) LLC]

Yeah. I totally understand. Appreciate the time.

[Operator]

We will now take our next question from Ryan Levine from Citi. Please go ahead.

[Ryan Levine, Citigroup Global Markets, Inc.]

Hi. Can you comment on the contract duration negotiating environment, given the recent 24-year contract that Cheniere signed with Poland?

[Jack A. Fusco, Cheniere Energy, Inc.]

Yeah. So, Ryan, as you could tell, we've been very successful at continuing to negotiate long-term contracts with our counterparties. Again, it's because they're building infrastructure and they need to have an affordable, dependable supply of fuel for that infrastructure. And since we're full service and we're delivering straight to the utility's doorstep, they are willing to sign up with us and, quite honestly, pay a premium for those services.

So we haven't found a need to change our business model at all in regards to our pricing structure or term or tenure of those contracts.

[Ryan Levine, Citigroup Global Markets, Inc.]

Okay. And then one follow-up. How would you look at contracting the new volumes that the operational improvements are enabling? Is there any seasonality to that average increase in volume per train across your portfolio?

[Jack A. Fusco, Cheniere Energy, Inc.]

It should actually smooth out some of the seasonality when we are complete with some of the debottlenecking initiatives for us. But we look at our output or production as a portfolio. So it's not by individual train or it's not even by site. We try to manage the business as a portfolio.

So, as we get more production available, we'll look to term that up and get some stable cash flows from it. And we think that's what the biggest reward will be from our investor base.

[Ryan Levine, Citigroup Global Markets, Inc.]

Thank you.

[Operator]

We will now take our next question from Jason Gabelman from Cowen. Please go ahead.

[Jason Gabelman, Cowen & Co. LLC]

Yeah. Hey, guys. How is it going? Two questions for me.

[Jack A. Fusco, Cheniere Energy, Inc.]

Hey.

[Jason Gabelman, Cowen & Co. LLC]

First of all, on the unsold marketing component for next year, you had mentioned the marketing margin you're planning for is $4.5 to $5 per M, which is as someone said a bit higher than the $2.5 you've historically used. Is that a number that you use in your run rate guidance as well and what is driving that higher margin realization?

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. We've always assumed at least for the past couple years, several years, $2.50 in our run rate number. So we're not using current market conditions to say that's what we're going to make in two, three, four years. We have never used $2.50 in our current plans, right? We do mark that to market and that's what we've done here for 2019.

[Jason Gabelman, Cowen & Co. LLC]

Got it. And then just on your CapEx spend. It looked like it jumped up this quarter from about $700 million to $1.2 billion. It looks like there wasn't as high of a corresponding increase for the terminal and construction bucket on your balance sheet. So is there a CapEx being spent on, I don't know, something outside the business or is it just an accounting issue for the quarter?

[Michael J. Wortley, Cheniere Energy, Inc.]

Yeah. I hope it's not an accounting issue. And I'm not aware of spending anything else than our terminals. So I don't know. Randy, I have to get back to you on that discrepancy. But Corpus Train 3 has ramped up for the quarter. So, that probably is why we're spending more. The difference, we have to get back to you on.

[Jason Gabelman, Cowen & Co. LLC]

All right. Great. Thanks a lot.

[Operator]

We will now take our final question from Ben Nolan from Stifel. Please go ahead.

[Benjamin Joel Nolan, Stifel, Nicolaus & Co., Inc.]

Yeah. I made it in. Great. And I really only have one question left. I know you guys talked some about the bridging volumes and obviously that probably increases through some of the debottlenecking work that you've done. I was curious if you can kind of put a number of how much you sort of view as available as bridging volumes to try to increase your competitive advantage in winning new SPAs? From where you sit right now, how much would you call in that category of leverage volumes?

[Michael J. Wortley, Cheniere Energy, Inc.]

It's typically been 3 million to 5 million tonnes. And right now, it's lower than that because of all the DES business we've done. But as we said, likely, reload the portfolio as we build Train 6.

[Benjamin Joel Nolan, Stifel, Nicolaus & Co., Inc.]

Okay. So, I guess this debottlenecking, it didn't materially add, I guess, or it was offset by the recent SPAs, I guess is how to think about it.

[Michael J. Wortley, Cheniere Energy, Inc.]

Let me clarify. When the DES business starts in earnest, which is still three, four years out, the 4 million tonnes that our marketing business has, that's what will be utilized.

Between now and then, they still have a lot of length to offer to customers in the bridging market. The debottlenecking will absolutely supplement that and has with this latest announcement.

[Benjamin Joel Nolan, Stifel, Nicolaus & Co., Inc.]

Okay. All right. That'll do it. Thank you.

[Jack A. Fusco, Cheniere Energy, Inc.]

Thank you, all, and thanks for your support of Cheniere. We really appreciate it.

[Operator]

Ladies and gentlemen, this concludes today's call. You may now disconnect.