Prepared remarks
Thank you for standing by. Good day and welcome to the First Quarter 2026 Cheniere Energy Earnings Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Randy Bhatia, Vice President of Investor Relations and Communications. Please go ahead.
Thank you, Operator. Good morning, everyone, and welcome to Cheniere's first quarter 2026 Earnings Conference Call. The slide presentation and access to the webcast for today's call are available at cheniere.com. 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, a reconciliation of non-GAAP measures to the most comparable GAAP measure can be found in the presentation appendix. The call agenda is shown on slide three. After prepared remarks from Jack, Anatol, and Zach, 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. Thanks for joining us today as we review our results from the first quarter of 2026 and our improved outlook for the full year. Certainly, a lot has changed since our last earnings call, which took place just before the start of the war in Iran. What has unfolded in the wake of that operation is another major shock in the global energy system, the second such shock in just over four years. The closure of the Strait of Hormuz and the weaponization of energy, including the damage to a portion of QatarEnergy's LNG facility at Ras Laffan, are tragic consequences the effects of which are being felt all over the world. The sudden cessation of reliable supply of Middle Eastern oil, natural gas, and the many other products that normally transit the strait every day on their way to dependent markets around the globe shine a bright light on the criticality of supply security and a diversified portfolio. What we sell at Cheniere is access to a secure, reliable, and affordable product that provides the energy to power homes, businesses, and economies. Prior to the war, the LNG market already demanded more production than the market could supply, as evidenced by the elevated spot market margin we had in the first two months of the year. The disruption of Middle Eastern volumes only exacerbates that supply shortage, increasing prices and restricting availability of supply to the wealthiest buyers at the expense of fast-growing, energy-hungry emerging markets. At Cheniere, we look forward to the resolution of this conflict that will enable the renormalization of commerce to one of the world's most important trade gateways, so that prosperity through energy affordability and availability can benefit all. Please turn to slide five where I'll highlight our key results and accomplishments for the first quarter of 2026 and introduce our upwardly revised guidance for the year. Our performance in the first quarter has gotten off to an excellent start to 2026. We generated consolidated adjusted EBITDA of over $2.3 billion and distributable cash flow of approximately $1.7 billion. On the production side, we picked up where we left off at the end of 2025 and produced and exported a record amount of LNG in the first quarter. The 187 cargos we exported through March topped the previous record set in the fourth quarter of last year. I'm extremely proud of our operations team, whose tireless efforts to engineer and deploy solutions to address the feed gas composition-related challenges we experienced last year continue to bear fruit and drove enhanced operational reliability during the quarter. Today, we're increasing our full year 2026 financial guidance to $7.25 to $7.75 billion of consolidated adjusted EBITDA and $4.75 to $5.25 billion of DCF. This is a significantly improved outlook. The previous high end of the EBITDA guidance is now the low end. It's driven primarily by an improvement in our production forecast of approximately one million tons, higher marketing margins, as well as higher contributions from optimization activities achieved year-to-date, both upstream and downstream of our facilities. Zach will cover guidance in more detail in a few minutes, but we look forward to delivering financial results within these upwardly revised ranges for the year. During the first quarter, we continued to execute on our comprehensive capital allocation plan. We repurchased approximately 2.7 million shares for approximately $535 million, funded approximately $1 billion worth of growth CapEx with equity and debt. We paid down over $0.25 billion in debt, and we declared a dividend of $0.555. Moving to our growth projects, we continue to make excellent and safe progress on our growth and expansion during the first quarter. Our CCL Stage 3 project now stands at approximately 97% complete. Substantial completion was achieved on Train Five in March and Trains Six and Seven remain on track for substantial completion in the summer and fall, respectively, with each now tracking a few weeks ahead of the schedule that had informed our initial 2026 production forecast in October of last year. First LNG at Train Six is expected within a few days. On our mid-scale Trains Eight, Nine, and the D bottlenecking project, we have safely progressed to approximately 37% complete, and while it's still early, are tracking ahead of schedule on a number of execution fronts. Piling is nearly complete with approximately 8,000 piles having been driven. The first structural steel has been erected, and the next major construction milestone is the first above-ground piping, which is scheduled to be installed this month. With regard to our future growth, our line of sight on the Phase 1 expansions at both Sabine Pass and Corpus Christi continues to improve. As we disclosed in our last earnings call, we are budgeting for limited notices to proceed this year on the first phase of the Sabine Pass expansion, Train Seven. We are working closely with Bechtel to finalize the EPC contract and would expect to begin issuing LNTPs shortly thereafter, which should be seen by the market as a clear signal that we are on track to reach FID. At Corpus Christi, we're making excellent progress in our development of the CCL expansion project. We were pleased to receive our scheduling notice from FERC last week, supporting our expectation of FERC approval on that project in the first half of next year. We are extremely excited about these Phase 1 projects, which we believe represent the most compelling risk-adjusted infrastructure investment opportunities on the Gulf Coast, or maybe all of North America, and are expected to credibly grow the Cheniere production platform by approximately 10% each. Turn now to slide six, where I'll discuss my key strategic priorities for 2026. My priorities for 2026 are simple: execution, growth, and capital allocation. And I'll drill down briefly into each. First, on execution. My priority is to maintain our track record of delivering top-tier safety metrics while furthering our operational excellence program and being a trusted and reliable supplier to our customers. In dealing with some operational challenges last year, the team has responded with determination and resolve, and its efforts are paying significant dividends. The team has increased the utilization across both sites by identifying root causes and innovating solutions to address the issues impacting reliability, not just the symptoms. In addition, the team has increased production through identifying and executing on deep bottlenecking opportunities while seamlessly executing on our planned maintenance activities. And we are focused on managing our platform in a market with elevated volatility. Despite the volatility, our coordinated teams across the globe have done an excellent job in our positions and assets, ensuring we deliver on our obligations to our customers while optimizing the portfolio through volatile domestic gas markets like we saw during the winter storm and very volatile international gas and shipping markets that have prevailed since early March. Next on growth, with Trains One through Five of Stage Three substantially complete our immediate priority is a safe completion of Train Six and Seven. As I just mentioned, these trains have accelerated since last year, benefiting from lessons learned on the first trains, and our partnership with Bechtel has not only resulted in early operations of the trains but also shorter timelines on both commissioning and ramp-up to full production. I expect those learnings to continue in order to benefit mid-scale Trains Eight and Nine, as those trains move deeper into construction later this year. On our SPL expansion and CCL expansion, we are aggressively executing project development work streams across regulatory, financing, commercial, and EPC contracting as FIDs on those projects come into focus. Last week, we received our scheduling notice from FERC on the CCL expansion project, a critical step in the FERC process, and it is aligned with our expected timeline of FERC approval in the first half of 2027. And finally on capital allocation, we had a major update on the last call with the achievement of the original 2020 vision plan, the new $9 billion authorization the board approved during the quarter for share buyback, and our new share count and run rate DCF targets. We're in an enviable capital allocation position enabled by our incredible long-term contract portfolio that provides decades of cash flow visibility, our brownfield growth opportunities, investment grade balance sheet, and opportunistic repurchase plan. In February, we celebrated the 10th anniversary of our first cargo, and next week will mark my 10th anniversary at Cheniere. I'm extremely proud of the many incredible milestones we've accomplished together in that time. While these anniversaries offer the opportunity to look back, I prefer to look forward. And what we have in front of us are incredible opportunities: an opportunity to creatively grow Cheniere in the near term and secure the next phase of growth beyond that; an opportunity to grow our platform by another 20%, benefit our stakeholders while providing the world with more of the secure and reliable energy it needs to improve lives, grow businesses, and help emerging markets emerge. I'm incredibly excited about these opportunities, and we are laser-focused on turning them into achievements in the coming years. With that, I'll now hand it over to Anatol to discuss the LNG market. Thank you again for your continued support of Cheniere.
Thanks, Jack, and good morning, everyone. Please turn to slide eight. The past quarter has been defined by geopolitical disruption, most notably the escalation in the Middle East and the resulting closure of the Strait of Hormuz, which has put significant strain on global energy markets, including, of course, LNG. While the situation remains fluid, our commercial focus is twofold. First, supporting our customers through near-term volatility, and second, understanding what these disruptions mean for longer-term LNG market structure and contracting. We continue to hope for a safe and timely resolution including the return of Qatari and Emirati LNG volumes to global markets. Coming into the year, the industry was expecting roughly 40 million tons of LNG supply growth. This expected supply growth continues to be offset by the halt of Middle East LNG flows through the Strait, which removes approximately seven million tons of supply each month. Additionally, U.S. exports were temporarily reduced during winter storm Fern to help balance the domestic gas market, and in late March, Australia's approximately 9 million ton per annum Wheatstone facility and other gas processing plants experienced a multi-week outage following Cyclone Narelle. In aggregate, these disruptions displaced nearly eight million tons of supply in the first quarter alone. With tanker and LNG vessel traffic through the strait remaining constrained with limited visibility on timing of normalization, approximately seven million tons of LNG supply per month, or approximately 100 cargoes, continues to be disrupted. The immediate effect of the crisis was a sharp repricing across regional gas markets. Given most Qatari volume is sold into Asia, we saw the JKM-TTF spread flip in a way not seen since the third quarter of 2023, creating a strong pull for LNG into Asia. Destination-flexible U.S. cargos responded as expected, with flows re-optimizing toward Asia to capture higher netbacks. This is exactly the flexibility the market relies on in periods of imbalances or distress, underscoring a key advantage of U.S. LNG in the global gas market. While today our customers are squarely focused on replacing near-term lost volumes, the flexibility and security of U.S. LNG through long-term contracts is being highlighted in our commercial conversations and negotiations today. On the demand side, impacts have been more gradual. Middle East cargoes that were already on the water continued to arrive through March, which delayed the full physical effect of the supply disruption. Asia's LNG imports were 5% higher year-on-year for January and February, but started decreasing in March, dropping by 1.5 million tons, or 7% year-on-year, with import declines in price-sensitive markets expected to continue in April. Now, several months into the disruption, we're seeing clear differentiation across markets in Asia to cope with the supply shock. China has again demonstrated system flexibility, halting spot purchases and redirecting cargos to markets of higher need. Price-sensitive, Qatari-dependent markets such as Pakistan, India, and Bangladesh have taken measures to reduce demand and seek alternate fuel sources. Higher-affordability markets, including Taiwan, Singapore, and Thailand, have stepped in to procure replacement cargos, and we have been actively supporting our customers navigating this volatility. In Europe, the situation is increasingly tight, as storage levels exiting the winter are near five-year lows, with a deficit of 13.2 billion cubic meters, about 10 million tons or approximately 150 cargos of LNG equivalent versus the five-year average. While the region is relatively less exposed to disrupted Middle East LNG flows compared to Asia, the absence of Russian pipeline flows and the impending ban on Russian gas and LNG add further pressure. To reach adequate storage levels ahead of next winter, Europe will require almost 10 million tons more LNG than last year to reach minimum storage levels of 80% and approximately 15 million tons more year-on-year to reach historical levels of 90%. This highlights Europe's dependence on LNG and intensifies the competition for marginal LNG supplies with other basins, especially as we look ahead to winter. Europe's imports grew 12% to approximately 40 million tons in the first quarter, despite a month-on-month drop in March, which remained flat year-on-year as more cargoes started heading east. Across global markets, pricing dynamics evolved in two distinct phases in the first quarter. At the start of the year, benchmark gas prices were moderating, reflecting expectations of that forecast 40 million tons of incremental supply to enter the market. First quarter JKM averaged $10.40/MMBtu and TTF $11.60/MMBtu, down by roughly 30% and 20% year-on-year respectively. Following the disruption in the Middle East, we've seen a clear repricing, with prompt pricing and forward curves moving higher by $3 to $4/MMBtu. However, despite the disruption of comparable magnitude, these prices still reflect much lower levels than the roughly $22/MMBtu seen following the onset of the Russia-Ukraine war, which we believe stems from the market's expectation that the disruption will prove temporary and potentially quick to resolve. The Henry Hub curve, by contrast, has remained relatively flat, reinforcing its position as a stable pricing anchor. Let's turn to the next page to expand on what this means longer term. Uncertainty around the disruption in the Middle East remains high, and we continue to hope for a swift resolution with limited lasting structural impact. However, even under that assumption, the supply outlook over the next few years has shifted. The industry has effectively lost two liquefaction trains in Qatar, representing approximately 12.8 million tons per annum of capacity, which could be offline for up to five years. We're also likely to see delays to major expansion projects in the region in both North Field in Qatar and Ruwais in the Emirates. As shown in the chart on the left, even if flows normalize into the summer, most, if not all, of the previously expected growth in 2026 will be absorbed. Directionally, 2026 is much tighter than previously forecast and now 2027 has become a more structural constraint, especially considering the record low storage position and supply dynamics across Europe heading into the 2026 winter I just discussed, likely creating a similar scenario ahead of winter 2027, before eventually net supply growth resumes as new projects in the U.S. and smaller ones elsewhere commence operations and ramp up production the rest of this decade. We expect the market to return to a more well-supplied position as new supplies start fully offsetting volume losses and Qatari projects get back on track after that. So timing matters, but in most scenarios, the near-term buffer has been greatly reduced while the broader trajectory after the next year or two remains relatively unchanged. The LNG market is still expected to grow to approximately 600 million tons by around 2030. As new supply comes online, we would expect that growth to help moderate prices. This would be particularly welcomed by price-sensitive markets that have been constrained in recent years by sustained higher prices. Importantly, demand growth continues to be driven by a diverse set of markets, from established importers in Asia to emerging consumers in South and Southeast Asia who need to supplement rapidly depleting domestic fields, to continued demand support in Europe, where the complete ban on Russian molecules has and continues to create a structural demand anchor for the LNG market. At Cheniere, our focus remains consistent: providing reliable, flexible, long-term LNG supply to a broad and growing set of global markets, and doing so through a mix of direct relationships that expand access while maintaining the credit profile in our customer portfolio required to support long-term investment. It is these strategic relationships that underpin not only our current business and infrastructure investments, but also our expansions. With over 35 long-term creditworthy counterparties, we remain resolute in our commitment to them and our differentiated track record of performance, which is recognized and appreciated by our customers, particularly in volatile market conditions like these. That differentiation on reliability is a significant commercial asset, and we're leveraging this as we engage with customers today with a focus on commercializing the balance of CCL Train Four, now that SPL Train Seven is sufficiently commercialized. So while the disruption we're seeing today is significant and it's difficult to fully assess in real time, over the long term events like these tend to become relatively small inflections in a much broader, longer-term growth trajectory. From that perspective, the underlying need for reliable, long-term LNG supply and the agreements that enable it is only being reinforced. With that, I'll turn the call over to Zach to review our financial results and guidance.
Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to discuss our financial results and improved outlook for the full year. Turn to slide 11. For the first quarter 2026, we generated consolidated adjusted EBITDA of over $2.3 billion and distributable cash flow of approximately $1.7 billion. Compared to the first quarter of 2025, our first quarter 2026 results reflect higher volumes of LNG delivered thanks to the substantial completion of Trains One through Four last year of Stage Three, higher contributions from optimization upstream and downstream of our facilities and a one-time alternative fuel tax credit during the quarter. We recognized in the quarter 64.6 TBtu of LNG produced from our facilities in the first quarter. While meaningfully higher than 1Q 2025, first quarter 2026 volumes were impacted by in-transit timing dynamics that favored 4Q 2025 and 2Q 2026. Looking to the balance of 2026, it's likely 1Q will be our lowest quarter of volume recognized this year. As asset production, the remainder of the year is expected to benefit from the rest of Stage Three coming online, including mid-scale Train Five at the end of Q1 and Train Six expected to produce first LNG imminently. In addition, there are no major turnarounds planned this summer and lower ambient temperatures should benefit Q4, making the last quarter of the year likely our highest quarter of LNG produced and recognized in income. Additionally, for the first quarter, we generated a net loss of approximately $3.5 billion, which is primarily the result of the unrealized non-cash derivative impact predominantly related to our long-term IPM agreements and the mismatch of accounting methodology for the purchase of natural gas and the corresponding sale of energy. The derivative accounting treatment coupled with the long-term duration and international price basis of our IPM agreements result in fluctuations in fair market value from period to period as LNG curves move, which you may remember similarly impacting our GAAP net income results in 2021 and 2022. The surge in international gas prices and increased volatility during the quarter drove the unrealized non-cash losses and our overall net loss for the quarter. Adjusting for these non-cash unrealized derivative losses and the associated impacts to income tax and non-controlling interests, we generated positive adjusted net income of approximately $1 billion for the quarter. This adjusted net income figure is aligned with our EBITDA and DCF and more representative of our financial performance in the quarter. To be clear, as we deliver on our IPM agreements that are accounted for as derivatives or economic hedges that mitigate future cashflow volatility, we expect these non-cash unrealized mark-to-market losses to unwind over time and generate mark-to-market gains as we realize the intended and corresponding fixed liquefaction fees from these contracts that pass through the LNG market price exposure to our IPM counterparties. While IPM agreements may contribute to variability in our reported GAAP net income, those agreements most importantly provide stable, long-term cash flows similar to our SBAs that help support our contracted infrastructure platform and cashflow visibility for decades to come. As Jack and Anatol noted, our business model is built to thrive regardless of market environment, and the same goes for our capital allocation plan. During the quarter, we deployed approximately $1.2 billion towards our capital allocation pillars of accretive growth funded with equity and debt, shareholder returns in the form of buybacks and dividends, and balance sheet management. In the first quarter, we repurchased approximately 2.7 million shares for over $500 million, highlighting the opportunistic nature of the program, considering the movement of our share price over the quarter. Given the volatility in the shares year to date, our disciplined value-based repurchase plan is working as designed, and we continue to opportunistically deploy the remaining over $9 billion under our current authorization, according to the framework which guides repurchase activity, working towards our current target of 175 million shares outstanding around the end of the decade. For the first quarter, we declared a dividend of $0.555 per common share, representing a payout of over $116 million for common shareholders. We remain committed to growing our dividend by approximately 10% annually through the end of this decade. Share returns achieved through the completion of our dividend and opportunistic share repurchase plan are a key value proposition for our investors, providing them with a stable and growing dividend and increased ownership in Sabine Pass and Corpus Christi over time, while maintaining the financial flexibility essential to our long-term capital allocation plan. Moving to the balance sheet, we repaid over $250 million of our indebtedness with cash on hand during the quarter, fully redeeming the remaining SBL 2026 notes and amortizing a portion of the SBL 2037 notes. Additionally, in March, we issued $1 billion of 2036 notes and $750 million of 2056 notes at CEI, making our inaugural 30-year issuance and extending our maturity stack into the second half of this century, alongside a growing list of our long-term LNG contracts. With a portion of the proceeds, we prepaid the $550 million drawn on our Corpus Christi term loan, while also canceling an additional $600 million of unused commitments. We continue to maintain substantial liquidity with approximately $1.8 billion in consolidated cash and billions of dollars of undrawn revolver and term loan capacity throughout the Cheniere complex. Also in the quarter, we continue to receive recognition from the credit rating agencies as Moody's upgraded its ratings of our unsecured notes at CEI and CCH to Baa2 and Baa1 respectively, each with a stable outlook. We are now high triple-B at both projects and mid triple-B or better at the unsecured corporate levels by all three credit rating agencies. During the quarter, we funded approximately $1 billion of growth capital across our business. As we continue to progress the construction of Stage Three and Midscale Eight and Nine, development of the SPL and CCL as well as our Gregory Power Plant to support incremental power needs at Corpus over time as the Midscale trains are completed. Of the $1 billion of growth CapEx in the quarter, approximately $300 million was equity funded and approximately $700 million was efficiently debt funded as planned via our delayed draw Corpus Christi term loan, as well as from a portion of the proceeds from the recent CEI bond raises. We do expect to increase our spending on Train Seven at Sabine Pass later this year, as we have budgeted for potential limited notices to proceed to Bechtel ahead of our expected FID early next year, which is why we are retaining cash at CQP by flexing the variable component of the CQP distribution this quarter. Looking ahead, we remain well positioned to fund our disciplined growth objectives comfortably within our cashflow forecast, while retaining our strong investment grade credit metrics and our significant financial flexibility for shareholder returns through cycles. Turn now to slide 12, where I will discuss our upwardly revised 2026 financial guidance and outlook for the year. Today, we are increasing the midpoint of our guidance ranges for full year 2026 consolidated adjusted EBITDA and distributable cashflow by $500 million and $400 million respectively, bringing expected consolidated adjusted EBITDA to $7.25 to $7.75 billion and distributable cash flow to $4.75 to $5.25 billion. We are maintaining our CQP distribution guidance for the year of $3.10 to $3.40 per common unit. These increases are attributed to a few key drivers, including an increased production forecast for the year, an improved margin outlook, and contributions from optimization activities already locked in year-to-date, both upstream and downstream of our facilities. As Jack mentioned, thanks to increased utilization of our existing trains as a result of continued debottlenecking and resiliency efforts related to feed gas composition variability, as well as accelerated timelines on the remaining trains at Stage Three, we are increasing our 2026 production forecast by approximately one million tons to approximately 52 to 54 million tons for the year, unlocking incremental volumes available for CMI this year. With this increase and continued forward selling by our team over the quarter, we still forecast less than one million tons, or less than 50 TBtu, of unsold open volumes remaining in 2026. Therefore, we currently forecast that a $1 change in market margins would impact EBITDA by less than $50 million for the full year. Despite having very little open exposure for the balance of the year, we are maintaining the $500 million guidance range as results could still be impacted by a number of factors, particularly given the sustained volatility in the global energy markets, but also variability in our production forecast. The ramp up and specific timing of substantial completion of Trains Six and Seven at Stage Three, the timing of certain cargos around the year end, contributions from further optimization activities during the balance of the year, and the impact Henry Hub volatility can have on lifting margin. As we progress through the year and lock in some of these variables, we will look to tighten these ranges as we have done in years past. Our first quarter result, coupled with our revised guidance ranges, once again underscore Cheniere's ability to leverage our platform, respond to market signals, and unlock optimization opportunities throughout our business, while still maintaining our highly contracted business model built upon a foundation of long-duration fixed fee cash flows from credit-worthy counterparties, our conviction in which has only been reinforced as we look forward to funding additional accretive brownfield growth at both Sabine and Corpus, while concurrently growing shareholder returns in the form of buybacks and dividends that can be relied on year after year. These dependable cash flows are essential to the over $50 billion natural gas infrastructure platform we have developed over the last decade plus, as well as our disciplined all-of-the-above capital allocation framework. The durable through-cycle value of this approach has only been enhanced in the wake of the current market environment. Looking ahead, we remain focused on maintaining safe and reliable operations to ensure we can continue reliably delivering flexible, secure LNG, as well as meaningful long-term value to our stakeholders around the world for decades to come. That concludes our prepared remarks. Thank you for your time and your interest in Cheniere.
Questions and answers
Operator, we are ready to open the line for questions. Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to one question and one follow-up before rejoining the queue. Again, you may press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. We'll take our first question from Jeremy Tonet with JPMorgan.
Thanks for all the color today. I just wanted to expand a bit on some of the remarks. Anatol, I was wondering, in the customer conversations at this point, given the disruptions in the Middle East, how you would describe the tone or appetite for U.S. LNG given the reliability and Cheniere's track record. And then at the same time, contrasting that to somewhat higher prices and how that impacts demand for LNG overall. How have those two factors flowed through conversations?
We were in a very enviable position as the plants run better and as you see we have some additional volume and we only have these three dozen critical long-term counterparties, we're able to really focus on supporting these key relationships, and that's what we've been doing over the last couple of months. The initial reaction by a number of these players is to ensure that there is ample supply as this seven million tons a month is replaced to keep the lights on in the short run. Our ability to support them has helped to broaden and deepen relationships, and is certainly a tailwind to a number of those engagements. In terms of the longer term, we'll see. I think even among market participants there is some disagreement. Looking in the rearview mirror at COVID, the 2020 disruption proved to be a small blip; it delayed expected growth by somewhere between 12 and 18 months but the overall trajectory remained the same. We expect this issue to be similar, but again, we're in a great position. We need to support our growth ambitions with relatively modest incremental commercial agreements, and clearly, we've proven that our product is affordable and reliable. Cheniere is a preferred counterparty to help support those long-term ambitions of our customers.
I wanted to turn to operations and execution. Could you expand a bit more on Corpus? It seems to be tracking ahead of expectations for timeline and at the same time you are able to extract a bit more capacity. What bottlenecks were you able to address there, and what more could be possible?
As I said in my prepared remarks, I'm extremely pleased with what we've been able to do in operations and production engineering. At Corpus, not only have the trains been coming in significantly ahead of the guaranteed schedule from Bechtel on ramp, but on our ramp up it's been higher and steadier. The team has really learned how to make those smaller mid-scale trains hum, and that's producing very good quantities for us. I would expect those learnings to continue to work their way through Trains Six, Seven, Eight, and Nine at a minimum. We've also figured out a couple of different operational modes to handle variability of feed gas at both Sabine Pass and Corpus Christi. We've worked with some suppliers on solvents to come up with creative ways to mitigate the need for defrost. All of those things—there's a hundred different actions in our toolkit that we use every single day—and they all seem to be adding up to meaningful amounts of additional production, and that's what you're seeing in our revised guidance.
And then, Jeremy, on growth and expansion, just to put into perspective: right now, on the whiteboard is Sabine Seven. You could tell from the CQP DPU guidance and where we ended up with Q1, we're reserving cash as we're in good shape to start LNTPs later this year and be in a position with the permit to FID that project early next year. In terms of the Corpus expansion, that's a bit behind just because we didn't file for the permit until after we officially announced FID and NTP on Trains Eight and Nine. But that's in good shape and tracking to receive a permit mid to late next year. In the context of the previous question to Anatol, we can be very disciplined on the SBAs considering we have approximately 10 million tons of SBAs today that haven't been used yet to underpin or underwrite an FID project. That's more than enough to cover Sabine Seven plus the bottlenecking. We're obviously in good shape on even the first train of the first phase of a Corpus expansion. So we can stay quite disciplined, not just on how we grow and the parameters that we hold ourselves to, which are far more stringent than many others in the industry, but also disciplined on the SBAs and eventually move forward to create long-term value for the company.
We'll take our next question from Spiro Dounis with Citi.
Maybe picking up on some of those comments as we think about the contracting outlook: there does seem to be some expectation that we're now going to see perhaps a wave of contracting for U.S.-sourced LNG. I understand your point that a lot of the focus so far has been filling near-term supply, but is the market wrong in expecting some sort of contracting wave? Based on your discussions, would you be surprised if Corpus Four Phase One is not underwritten with SBAs by year-end?
Your overall thesis is correct. There aren't that many options for buyers looking for long-term supply, and we keep demonstrating that this is a strong place to source volumes. Customers lifting from us FOB at today's NYMEX economics are effectively buying at roughly $6/MMBtu with the reliability and flexibility we've demonstrated over a decade. If not now and not us, then whom and when? That said, the market is competitive. There are projects moving toward FID and projects with spare capacity that have yet to be placed into the market. We're fortunate in that we do not need to participate in a commoditized race; as Zach alluded to, we will pick and choose with whom we partner. Crystal ball-wise, I think you'll continue to see from us the same approach as the last several years, which is additional volumes with existing customers. We've made a significant dent into Corpus Train Four, and whether it's year-end or by the time we're ready to FID, we think we'll be in a very good commercial position to support that.
Don't put the crystal ball away just yet. On LNG prices: Europe needs to refill storage aggressively and your comments suggest a big ramp in cargoes needed to do that extending into 2027. Are you surprised prices have not been stronger? When might you start to see that play out on the curve? Looking beyond 2027–2028, do you think current prices appropriately reflect these lingering supply issues?
We are somewhat astounded that prices are where they are. Prices in Europe and Asia are backward dated into the winter. U.S. prices are up into the mid-$4s in the winter, but the world gas market is strangely backward dated. Europe is in a difficult position with record low storage, the ban on Russian gas, and price-sensitive markets in the Indian subcontinent already turned off. We expect aggressive competition globally for cargos in Q3 and Q4. China has used storage and domestic production as a relief valve again. The current situation is masked by the shoulder period; the physical disruption of deliveries from the Strait being constrained only started to be felt a month ago. We are constructive on where prices will go into the second half of the year, and that likely reverberates into 2027. This highlights how attractive long-term SBAs from Cheniere are to purchasers that can meet Zach's credit requirements.
Our next question comes from Jean Ann Salisbury with Bank of America.
I think you've suggested in the past that after Sabine Pass Seven and Corpus IV in a blue-sky growth case, future trains beyond 75 MTA would be more likely to be at Corpus. Can you talk about the trade-offs between your two sites for expansion both for the potential next two trains at Sabine Pass Seven and Corpus Four and then beyond that?
Corpus has been blessed with another 500 acres of largely untouched land we acquired from the old Sherwin-Williams site. We've been working on that property to make sure it's environmentally ready to go. It has excellent access to the water and a power plant right next to it, our Gregory Power Plant, which we own and control. It's also close to the Permian, with a 40-mile straw to our Sinton Station for gas supply to Agua Dulce. Those are significant benefits that make it attractive for continued growth. At Sabine, while we still have property, much of it includes wetlands that we'd have to mitigate appropriately, which adds cost and complexity. On the positive side, we already have three berths at Sabine, so it's not out of the question, but my view is additional growth after the first phases will probably happen at Corpus prior to Sabine. That is, however, well down the road from where we are today.
We'll take our next question from Jason Gabelman with TD Cowen.
First on the 2026 EBITDA guidance: you typically are a bit more conservative early in the year ahead of summer maintenance. Given that it seems you're guiding to lower maintenance this year, is there a bit less conservatism baked into the plan at this point? And as a follow-up, what are you seeing from governments in response to higher global gas prices — especially in Asia — with respect to policy pivots toward coal or renewables over gas?
On EBITDA, we don't over-promise. Our budgets and targets are consistent with our initial guidance. The reason we were able to raise it this time is a combination of factors: production has come through with mid-scale trains coming online quicker and ramping up faster thanks to teamwork with Bechtel; resiliency work since last year has boosted the production guide for the year; margins in the $9 to $10 range added approximately $400 million; continued forward selling added roughly $100 million; and some optimization already locked in added another $100 million. Henry Hub has come down since February for the rest of the year, which offset some effects and was part of why we raised the guidance by $500 million. Do we feel good about that range? Very much so. But there are still moving parts: Henry Hub volatility, slight timing differences on Train Six and Seven substantial completion, cargo timing around year-end, and additional optimization all create variability. That's why we keep a $500 million range — we prefer to underpromise and overdeliver. On the policy question, Anatol will provide more color, but from a financial perspective, we remain cautious and disciplined in our planning assumptions.
On the question of governments pivoting away from gas: we haven't seen a broad pivot yet. It's early in this disruption. After the Ukraine war, some governments shifted away from gas, but we are not seeing that dynamic widely repeat today. Entities capable of transacting on a long-term basis are seeing gas prices from us that are within or below their planning ranges, so there's little reason for them to reconsider long-term gas procurement. Importantly, LNG is only about 3% of primary energy; it's an elegant complement to reliability and emissions goals, not a sole solution. We remain optimistic the disruption will be resolved and that the long-term demand trajectory for LNG remains intact toward the volumes we expect over the coming decades.
Our next question comes from Alexander Bidwell with Webber Research & Advisory.
Wanted to look at future expansions at Corpus. We've been seeing ramp labor competition across various projects in the U.S. Gulf. Do you expect that to have a knock-on impact in terms of costs for future Sabine and Corpus expansions?
No, I think the timing of our FID will work very well with current schedule and growth projections. We haven't seen an issue with our mid-scale projects or the workforce there, so I don't see a problem, Alexander.
There is a nice cadence with mid-scale completing Stage Three this year and then Eight and Nine, and then eventually the ramp-up starting next year into '28 and '29 with Sabine Seven. That cadence works in our favor and is slightly offset from projects that have recently FID or are attempting to FID now.
Just to follow up on the mid-scale train performance: can you give a sense of the natural differences in terms of OpEx and maintenance thus far versus your traditional large-scale trains?
It's a little too soon to fully quantify. So far, they've been roughly comparable, perhaps a bit higher on the mid-scale as we continue to debottleneck. It's hard to segment sustainable operations and maintenance versus incremental debottlenecking activities that have increased output on individual trains. Give us more time with operations under our belt and we'll provide more transparency.
One note: mid-scale trains will require more power, so you'll see that incrementally in cost of goods sold related to those units. As we scale beyond five trains, the costs become more consistent with the broader Corpus platform. You'll see differences by bucket, but the overall economics are favorable as we scale.
We'll take our next question from Manav Gupta with UBS.
You are one of the few midstream companies that, besides dividends, also reward shareholders with buybacks. Given the current environment and the amount of free cash you are generating, how are you thinking about stock buybacks here?
Today, we very much like the buyback program. The buyback is opportunistic and disciplined. Our stock ranged between roughly $200 and $300 in Q1 and we bought over $500 million at about $202, which shows the opportunistic nature. We bought over $1 billion in Q3 and Q4 last year in part because we had rolled over allocations from earlier in the year. The allocation for buybacks is steady and why we were able to commit to a $10 billion buyback program through the rest of this decade. In terms of payout ratio, when you combine dividend and buyback versus DCF, we've been around 50%–60% annually, which is high relative to midstream peers. As DCF grows, there will be more cash available for buybacks. Expect more of the same: opportunistic, disciplined repurchases that are lumpy quarter-to-quarter but consistent over time.
We'll take our last question from Burke Sansiviero with Wolfe Research.
I understand you aren't taking in any optimization that hasn't been locked in with the updated guide. Could you provide additional color on what potential upside optimization could look like for the balance of the year, all else equal?
Optimization can come from across the integrated platform. Our pipeline network, two facilities, CMI handling open capacity, DES contracts, and IPM contracts together provide scale and flexibility. In the past quarter, including winter storm Fern, we provided gas back into the U.S. market when needed, and after the escalation in late February, we were able to provide ships and LNG to customers in urgent need. Those are events that can't always be forecasted. We also bought cheaper gas upstream and sourced third-party cargos—over 30 TBtu was third-party sourced in the quarter—which freed up shipping and allowed optimization. We expect more optimization through the year. We do not bake in additional optimization in the current guidance; any realized upside would be incremental to the guidance.
Have you been able to opportunistically hedge some of your open exposure into 2027 earlier than normal as margins moved higher?
We use financial hedging for the prompt year and sometimes the following year, but we generally avoid hedging too far out due to volatility. That said, since the last call, we've sold over a million tons of open capacity in 2027. Margins were under $4 at the February call and are now closer to $6–$7, and when we see willing buyers we lock it in. We've already made a dent on 2027 open capacity, which strengthens cashflow visibility and cash in the coffers for buybacks.
That concludes our question-and-answer session. I'd like to turn the conference back over for any additional or closing remarks.
Hi. This is Jack. I just want to thank you all again for your support of Cheniere. This concludes today's call. Thank you again for your participation.
You may now disconnect and have a great day.