Executive Summary / Key Takeaways

• Cheniere Energy Partners, L.P. (CQP) stands as a critical player in global LNG supply, leveraging its Sabine Pass and Corpus Christi facilities to meet surging international demand, particularly from Asia and Europe.
• The company's highly contracted business model, with approximately 90% of anticipated production secured through the mid-2030s, provides robust and stable cash flows, insulating it from short-term market volatility.
• CQP is executing a significant growth strategy, including the Corpus Christi Stage 3 project (targeting first LNG from Train 1 by end-2024, first three trains online by end-2025) and the Sabine Pass Expansion Project (up to 20 mtpa capacity, targeting FID 2026-2027).
• Strong financial performance in Q3 2025, with revenues of $2.404 billion and net income of $506 million, underscores operational efficiency and disciplined capital allocation, including debt reduction and credit rating upgrades.
• CQP's technological approach, including mid-scale electric compression and strategic power generation, enhances cost control and operational flexibility, reinforcing its competitive moat against industry inflationary pressures.

Powering Global Energy: CQP's Strategic Foundation and Growth Trajectory

Cheniere Energy Partners, L.P. (CQP) is a foundational entity in the global liquefied natural gas (LNG) market, operating extensive liquefaction and export facilities at its Sabine Pass LNG Terminal in Louisiana and Corpus Christi. The company's core business revolves around providing clean, secure, and affordable LNG to a diverse international clientele, including integrated energy companies, utilities, and energy trading firms. This is underpinned by a strategic model built on long-term Sale and Purchase Agreements (SPAs) and Integrated Production Marketing (IPM) agreements, which typically feature fixed liquefaction fees and variable components indexed to Henry Hub prices. This structure effectively mitigates exposure to fluctuating U.S. natural gas prices, providing significant, stable, and long-term cash flows. As of September 30, 2025, approximately 90% of the Liquefaction Project's anticipated production is contracted through the mid-2030s, boasting a weighted average remaining life of approximately 14 years for these agreements.

CQP's journey began in 2003, with early years marked by substantial capital investment and initial net losses, before achieving positive net income of $490 million on revenues of $4.30 billion in 2017. The period between 2018 and 2020 was pivotal for CQP's maturation and expansion. In May 2018, the company reached a positive Final Investment Decision (FID) on Train 3 at Corpus Christi, supported by long-term contracts. By the first quarter of 2020, CQP had exported its 100th cargo from Corpus Christi and its 1,000th cumulative cargo, delivering over 75 million tonnes of LNG to 35 countries. The company demonstrated remarkable resilience during the "historic volatility and uncertainty" of the COVID-19 pandemic in early 2020, maintaining financial guidance through its highly contracted nature, proactive risk management, and operational excellence. This resilience was further evidenced in 2022, when CQP's "destination flexible LNG" allowed it to redirect 70% of its third-quarter volumes to Europe amidst global energy shortages, a significant increase from less than 30% in the prior year.

Technological Edge and Operational Prowess

CQP's operational backbone is its advanced natural gas liquefaction technology, which converts natural gas into LNG for global export. A key technological differentiator is the strategic adoption of mid-scale electric compression for projects like Corpus Christi Stage 3. This approach helps control inflationary pressures associated with large trains, which are typically more exposed to the costs of nickel and other precious metals. The company's Corpus Christi Stage 3 project, for instance, utilizes electric compression, leading to a dramatic increase in electricity demand. To manage this, CQP strategically acquired an existing power plant adjacent to the Corpus Christi site and partnered with Calpine (CPN) to develop it into a reliable combined-cycle power plant. This initiative serves as a financial hedge against power exposure at Corpus Christi, demonstrating an integrated approach to operational efficiency and risk management.

The company's commitment to operational excellence is further highlighted by its continuous debottlenecking and optimization projects, which have increased available liquefaction capacity at its facilities. These efforts, coupled with rigorous maintenance programs, are crucial for maintaining CQP's reputation for safe and reliable operations. For example, in Q2 2024, CQP successfully completed major maintenance programs at both Sabine Pass and Corpus Christi on or ahead of schedule, on budget, and with zero reportable environmental incidents or lost-time injuries. The company also boasts impressive safety milestones, with Corpus Christi surpassing 6 million man-hours and Sabine Pass exceeding 10 million man-hours worked without a lost-time incident. These operational and technological advantages are fundamental to CQP's competitive moat, contributing to lower operating costs, enhanced reliability, and ultimately, stronger financial performance and market positioning.

Financial Performance and Disciplined Capital Allocation

CQP's financial performance reflects the strength of its contracted business model and operational execution. For the three months ended September 30, 2025, CQP reported revenues of $2.404 billion, an increase from $2.055 billion in the same period of 2024. For the nine months ended September 30, 2025, total revenues reached $7.848 billion, up from $6.244 billion year-over-year. Net income for the three months ended September 30, 2025, was $506 million, and $1.700 billion for the nine-month period. The company's profitability metrics remain robust, with a trailing twelve-month (TTM) Gross Profit Margin of 32.21%, Operating Profit Margin of 29.58%, Net Profit Margin of 22.54%, and an EBITDA Margin of 36.61%.

While net income for Q3 2025 saw a decline compared to the prior year, primarily due to unfavorable changes in the fair value of derivative instruments, this was partially offset by increased LNG revenues driven by higher Henry Hub pricing and reduced interest expense. The company's operating costs and expenses increased due to higher natural gas feedstock costs and planned large-scale maintenance activities. However, the fixed-fee nature of its contracts, which include annual CPI escalators, effectively covers inflation on operating and administrative expenses, ensuring the stability of its run-rate cash flow.

CQP maintains a strong liquidity position, with management expecting to meet short-term cash requirements through operating cash flows and available liquidity, and long-term needs via operating cash flows and potential future debt or equity offerings.

The company's commitment to a disciplined capital allocation plan is evident in its deleveraging efforts. The daily average debt balance decreased from $15.90 billion in the nine months ended September 30, 2024, to $15.10 billion in the same period of 2025. In July 2025, CQP issued $1 billion of 5.55% Senior Notes due 2035, using the proceeds to redeem existing debt. These actions have been recognized by rating agencies, with Fitch upgrading CQP's issuer credit rating to BBB from BBB- in February 2025, and S&P Global Ratings assigning a BBB rating to CQP's 2035 Senior Notes and upgrading other unsecured notes to BBB. CQP targets long-term leverage under 4x run rate EBITDA and BBB corporate credit ratings.

Strategic Growth and Market Outlook

CQP is actively pursuing an ambitious growth strategy to capitalize on the robust global demand for LNG. The company is developing the Sabine Pass Expansion Project (SPL Expansion Project) adjacent to its existing facilities, with an expected total peak production capacity of up to approximately 20 mtpa of LNG. The target Final Investment Decision (FID) for this project is 2026-2027. Further, the Corpus Christi Stage 3 project is progressing rapidly, reaching over 62% completion by June 2024. CQP aims for first LNG from Train 1 by the end of 2024, with the first three trains expected online by the end of 2025. The company also received a positive environmental assessment from FERC for Corpus Christi Trains 8 and 9, solidifying the timeline for reaching FID on these trains in 2025.

Management's outlook for the LNG market remains highly constructive. Market analysts anticipate Asian demand for LNG to nearly double by 2040, provided supply is available. Europe is also expected to require significant LNG volumes long-term due to declining domestic production, creating a competitive dynamic with Asia for cargoes. CQP's 2024 guidance reflects this strength, with consolidated adjusted EBITDA projected between $5.7 billion and $6.1 billion, and distributable cash flow between $3.1 billion and $3.5 billion. The company expects to produce approximately 45 million tonnes of LNG in 2024, with 2025 anticipated to be a "step-up" year as new trains come online.

Competitive Landscape and Risk Assessment

CQP operates in a highly capital-intensive and regulated industry, facing competition from other major energy infrastructure companies such as Sempra Energy (SRE), Kinder Morgan (KMI), Enterprise Products Partners (EPD), and Dominion Energy (D). CQP's specialized focus on LNG liquefaction and export provides a distinct advantage in operational efficiency and execution for its core business, potentially allowing for better throughput and delivery speed compared to more diversified peers. Its established infrastructure, brownfield expansion opportunities, and strong regulatory relationships (as demonstrated by successful navigation of FERC processes and resolution of LDEQ matters) further solidify its competitive position. While diversified competitors like SRE and KMI may offer broader revenue streams, CQP's integrated asset base and long-term contracts provide a resilient business model.

However, CQP is not without risks. The fair value of its derivative instruments, particularly those linked to North American natural gas prices, can introduce volatility into its results. The company is also exposed to natural events, such as hurricanes, though it has demonstrated robust preparedness and operational continuity, as seen during Hurricane Beryl in 2024. Changes in the tax code, specifically regarding the corporate alternative minimum tax (CAMT) and the taxing of unrealized derivatives, could impact the timing and amount of cash tax payments. While CQP's permits for existing and expansion projects are robust, the broader regulatory environment for new LNG projects can be challenging, as evidenced by competitor delays. CQP's contracts, however, explicitly exclude market factors or economic conditions as valid grounds for force majeure claims, providing a strong contractual defense against market downturns.

Conclusion

Cheniere Energy Partners, L.P. is a compelling investment proposition, firmly anchored in the growing global demand for LNG. Its robust, highly contracted business model, coupled with a relentless focus on operational excellence and technological innovation, provides a stable financial foundation and a clear path for accretive growth. The company's strategic expansion projects, disciplined capital allocation, and strong competitive positioning underscore its ability to deliver long-term value to shareholders while playing a critical role in global energy security.

As CQP continues to expand its liquefaction capacity and optimize its operations, its leadership in the U.S. LNG market is set to strengthen. The company's ability to navigate complex market dynamics and regulatory landscapes, combined with its commitment to a flexible and reliable supply chain, positions it favorably to capitalize on the sustained demand for natural gas in both established and emerging markets for decades to come.