US LNG firm Cheniere has declared its first-ever quarterly cash dividend in the company’s 25-year history, as it revealed a new long-term capital allocation plan.
The Houston-based LNG exporter declared an inaugural quarterly dividend of $0.33, or $1.32 annualized, per share.
Cheniere also revealed a plan to grow the dividend at mid-single digit growth rate, “positioning the inaugural dividend approximately in line with the S&P 500 average yield and growth rate.”
The move is a part of a comprehensive, long-term capital allocation plan designed to “achieve an investment grade balance sheet, return significant capital to shareholders over time, and continue to invest in accretive organic growth,” the firm said.
Sixth Sabine Pass train in Q1 2022
Cheniere said it now expects its financial results for 2021 at the high end of the guidance ranges, while it also sees the substantial completion of the sixth train at its Sabine Pass LNG terminal in the first quarter of 2022.
With this, Cheniere has reached a cash flow inflection point and would generate $10 billion of cumulative distributable cash flow through 2024 with annual run-rate DCF of $2.6 – $3 billion, enabling execution on the balance sheet, capital returns, and accretive growth priorities, it said.
The plan is designed to achieve a run-rate DCF of $15 – $17 per share on a long-term basis, inclusive of the Corpus Christi Stage 3 project, according to Cheniere.
“Over the past five years, we have successfully executed on our operating, commercial and financial goals, which now serve as the foundation for this comprehensive capital allocation plan for Cheniere’s stakeholders,” Jack Fusco, Cheniere’s CEO, said.
Further liquefaction growth
Cheniere’s 25 mtpa Sabine Pass plant has five operational trains and is currently the largest such facility in the US. The sixth train will add 5 mtpa to the capacity.
Also, its Corpus Christi liquefaction plant now consists of three operational trains with each having a capacity of about 5 mtpa.
Cheniere is looking to progress Corpus Christi Stage 3, a 10 mtpa brownfield expansion project, towards a financial investment decision in 2022.
The firm also said it aims to “develop further liquefaction growth opportunities at both Sabine Pass and Corpus Christi with a continued commitment to Cheniere’s disciplined investment parameters.”
“This plan not only helps reinforce the long-term sustainability of the business we have built at Cheniere thus far, but significantly enhances our competitive position as we expect to FID Corpus Christi Stage 3 next year and develop further growth for years to come,” said Zach Davis, Cheniere’s chief financial officer.