Cheniere Energy Partners: War In Eastern Europe Changes The Equation

Summary

• Cheniere Energy Partners saw a strong start to 2022 with their operating cash flow increasing significantly year-on-year, which if continued will easily set a new record.
• They have rolled out a new unitholder returns policy that sees significantly higher distributions.
• Unless their financial performance deteriorates, they are tracking to produce ample excess free cash flow after distribution payments, thereby pointing towards even higher distributions.
• When looking ahead, the Russian invasion of Ukraine creates a very bullish outlook for LNG demand that they are well-positioned to meet.
• Since this stronger financial performance also resolves their very high leverage, I now believe that upgrading to a buy rating is appropriate.

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Introduction

Even though Cheniere Energy Partners (NYSE:CQP) provided a series of small distribution increases during 2021, in my eyes, their units were not appealing given their very high leverage that burdened their financial position and left their

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.