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(Reuters) – Cheniere Energy swung to a loss in the first quarter from year-ago profit on Thursday, hurt by billions of dollars in losses tied to LNG-linked derivative contracts as geopolitical tensions and volatile global gas prices rattled energy markets.
The company said results were mainly hurt by a $4.8 billion unfavorable change in the value of derivative agreements linked to its long-term LNG contracts.
Volatility in global liquefied natural gas markets following the U.S.-Israeli war on Iran is affecting energy companies, even as demand for U.S. LNG exports remains strong.
The company said global gas price swings were driven by tight supply conditions, shipping disruptions and geopolitical tensions in the Middle East, which widened the gap between U.S. and global gas prices.
Cheniere warned that global LNG prices would remain volatile if the disruptions continue, which could affect future earnings and cash flow.
CEO Jack Fusco had said in March that shocks to the LNG market are harmful to demand growth because higher prices push some countries out of the market, adding that the latest Middle East conflict has underscored the need for supply diversity.
Cheniere’s Train 5, part of a seven-train development expected to add 10 million metric tons per year of export capacity at its Corpus Christi LNG plant in Texas, began operating at full capacity in late March.
Its Corpus Christi Stage 3 project, an export facility in South Texas, was 96.5% complete as of March 31, the company said on Thursday.
The company’s LNG revenue was $5.72 billion in the quarter, compared with $5.31 billion a year earlier, while regasification revenue remained flat year-over-year.
The Houston, Texas-based company posted a quarterly net loss of $3.5 billion, or $16.65 per share, compared with a profit of $353 million, or $1.57 per share, last year.
Reporting by Pooja Menon in Bengaluru; Editing by Leroy Leo
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