May. 19 at 5:03 PM
Market misinterpreting
$LNG GAAP loss of $(3.5B) despite beating top & bottom in 1Q26
The GAAP loss came almost entirely from non-cash mark-to-market losses (
$4.8B) on derivatives - these are NOT hedges
Cheniere does not use derivatives to place directional bets on global energy markets. Instead, these "hedges" are actually the physical, long-term IPM supply contracts themselves
Under US GAAP accounting rules, these physical purchase agreements are legally categorized as derivative instruments (dumb IMHO!!!)
When the forward curve spiked b/c Iran War, the forward-looking accounting value of Cheniere's commitments to purchase this gas moved sharply against them. This triggered an immediate, automatic
$4.8B non-cash, mark-to-market paper loss on the balance sheet.
The Purchase Side: The IPM agreements to buy gas are marked-to-market instantly every quarter based on current forward price curves.
The Sale Side: The corresponding long-term commercial contracts to sell that exact same liquefied gas to global buyers CANNOT be marked-to-market under GAAP rules
Note: The artificial paper loss during price spikes completely UNWINDS to zero as the contracts deliver over time
Note: Adj'd EBITDA was up +25% y/y & Revs was up +8% y/y & distribuable cash was up +31% y/y
LNG raised FY26 adj'd EBITDA to
$7.25-
$7.75 from
$6.75-
$7.25 & raised its projection for distributable cash flow to
$4.75-
$5.25 from a
$4.35 -
$4.85
LNG buyback in 1Q26:
$537M or 2.3M shares
Remaining Auth:
$8.4B
Shipped a record 187 cargoes (688 TBtu) [up +13% y/y]
Corpus Christi Stage 3 expansion is 96.5% complete
Total Cash:
$1.8B
Moodys upgrade to Baa2 w/ stable outlook in Feb
JKM & TTF spread remains elevated & trending up again
