Good morning. My name is Scott, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cheniere Fourth Quarter and Full Year 2016 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instruction] Thank you. Randy Bhatia, Vice President of Investor Relations, you may begin your conference.

Good morning, everyone, and welcome to Cheniere Energy’s fourth quarter and full year 2016 earnings conference call. The slide presentation and access to the webcast for today’s call can be found on our website, located at cheniere.com. Participating on today’s call are Jack Fusco, Cheniere’s President and Chief Executive Officer; Anatol Feygin, Executive Vice President and Chief Commercial Officer; and Michael Wortley, Executive Vice President and Chief Financial Officer. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements. Actual results could differ materially from what is described in these statements. Slide 2 of our presentation contains a discussion of those forward-looking statements and associated risk. In addition, we may include references to non-GAAP financial measures, such as adjusted EBITDA, net loss as adjusted and net loss per share as adjusted. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure can be found in the appendix of the slide deck. As part of our discussion on Cheniere Energy, Inc.’s results, today’s call may also include selected financial information and results for Cheniere Energy Partners, L.P., or CQP, and Cheniere Energy Partners LP Holdings, or CQH. On this call, we do not intend to cover CQP or CQH’s results separately from those of Cheniere Energy, Inc. After prepared remarks from each of the participating executives, we will open the call for Q&A. As shown on the agenda on Slide 3, Jack will begin with an overview of the quarter and year and then give an update on construction and operating progress at our liquefaction projects. Following Jack’s comments, we will hear from Anatol on our commercial activities, and then from Michael, who will review financial results. I will now turn the call over to Jack.

Thank you, Randy, and good morning to everyone. I’m pleased to be here today for Cheniere’s fourth quarter and full year 2016 earnings call. 2016 was an incredibly important year for Cheniere with transition being the overarching theme across the entire company, including construction, operations, financing and executive leadership. This transition took place against the backdrop of the start of LNG production at our liquefaction project at Sabine Pass. As I reflect on 2016, we have many accomplishments to be extremely proud of at Cheniere. And I personally want to thank the Cheniere professionals, who have supported me throughout this endeavor. As 2016 will go down as the year of transition, 2017 will go down as the year of opportunity. As you will hear from Anatol, Michael and myself, we have only just begun. We have big plans and as we look forward to 2017, it is setting up to be a pivotal one for Cheniere and our stakeholders. Turn now to Slide 5 for an overview of some key operational and financial highlights of the fourth quarter and full year 2016. I am pleased to report consolidated revenue at Cheniere was approximately 1.3 billion for 2016, with over 500 million in LNG revenues in the fourth quarter alone. Net income attributable to common stockholders for the fourth quarter was approximately 110 million and net loss attributable to common stockholders for 2016 was 610 million. We generated over 150 million in adjusted EBITDA for the year, with approximately 134 million coming in the fourth quarter. Growth in revenue and adjusted EBITDA is driven by our continued transition into operations at our Sabine Pass Liquefaction project. The fourth quarter reflects almost a full quarter of operations of both Trains 1 and 2. During the quarter, we continued to execute on our…

Thanks, Jack, and good morning, everyone. Turning to Slide 10, I’d like to provide an update on some global LNG fundamentals that Jack referred to earlier through the end of ‘16 and look back at what was an encouraging year for LNG demand overall. An increase in demand during 2016 was to be expected, because of the ramp up of supply from projects entering service in Australia and of course our Sabine Pass. What was largely unexpected was the size and speed of the demand response to the new LNG supply. Global demand last year was up 6% year-on-year at 15 million ton net increase, but more than 28 million tons of demand growth outweighed the 13 million ton decline which came mostly from a slowdown in Latin America and Japan. China and India underscored their potential to quickly increase LNG demand and tighten global markets. China in particular imported more than 7 million more tons versus 2015. That’s equivalent to production from nearly two conventional size liquefaction trains. Demand from India was up more than 4 million tons year-on-year with a bulk of its incremental increase coming in Q3. Strength also came from new market entrants, Egypt and Pakistan, as well as increases from longtime importers in Spain and France. LNG supply grew more in ‘16 than it has on an annual basis since 2011. In addition to our own plant starting up, four projects in Australia were either beginning operations or ramping up during the year, adding the majority of the 17.5 million tons of incremental supply. Declines at legacy producers helps to keep the year-over-year increase from being even bigger. Despite the increase in Pacific Basin supply, the region still had to draw on LNG produced in the Atlantic Basin, especially during the second half of the…

Thanks, Anatol. Good morning, everyone. I’m pleased to announce our financial results for the fourth quarter and full year 2016, the summary of which begins on Slide 15. Trains 1 and 2 at Sabine Pass were in commercial operations for most of the full fourth quarter. The previously announced flare work was completed during October and the outcome was a significant improvement in our financial results again this quarter. We continue to be pleased with the positive transition in our financial results as trains at Sabine Pass enter into commercial service. We’re also moving the company closer to articulating our long-term financial strategy and providing financial guidance. As Jack mentioned earlier, we anticipate releasing strategy and guidance at our Analyst Day in April of this year. Our long-term goal remains value creation through disciplined capital allocation. As a reminder, as we go through these results, Cheniere Energy consolidates the results of CQP and CQH. For the fourth quarter of 2016, we reported consolidated revenue of 572 million compared to 68 million in the corresponding 2015 period. For the full year 2016, we reported consolidated revenue of 1.3 billion compared to 271 million in 2015. Revenue recognized from LNG sales was approximately 500 million in the fourth quarter and more than 1 billion for the full year 2016. During the fourth quarter, we loaded 24 cargoes, none of which were commissioning cargoes. Therefore, these cargoes either have been or will be reflected on the income statement. Note, that for cargoes that are sold delivered ex-ship or DES, revenues are not recognized until the volumes are offloaded at the point of destination. For the full year, we loaded and exported 56 cargoes, of which 13 were classified as commissioning cargoes, which are recorded as an offset to construction and process on the…

[Operator Instruction] Your first question comes from the line of Jeremy Tonet with JPMorgan. Your line is open.

I was wondering, if you might be able to touch on some of the marketing deals that were signed prior to 2015. Would you be able to provide any color on what possibly you’re shipping in 2017 or any thoughts on pricing, just trying to figure out what our expectation should be there?

Yes, go ahead.

Thanks, Jeremy. So, we’ve released those numbers to you guys in the aggregate in the past. Those are transactions that we’re entered into substantially in 2014 and will flow through the income statement – or started flowing through in 2016, but will substantially come through by the first half of 2018. So, we’ve given you numbers on what that looks like in the aggregate. Over time, I will say, you will be able to triangulate some of that by looking at both the export numbers on our side and the import numbers in terms of the countries of destination, but at this point, they’re pretty commercially sensitive and other than the kind of lump sum and the term of those deals, we’re not going to provide much more color.

Okay. Fair enough. And then maybe just turning to the LNG market in the fourth quarter, as noted, there was some really good strength that emerged there as demand really picked up. Some of that has faded into the first quarter here. Just wondering if you could provide any more color in addition to what you said on the call as far as the potential for demand to pick up again, any more strength – pockets of strength in 2017, anything forward looking you could provide there.

Yes. I guess the overarching message is we continue to be pleasantly surprised by the speed and magnitude of the demand response. The world when it sees attractive prices and the ability to bring these volumes with destination flexibility and timely and reliable deliveries, puts solutions in place that allow underutilized infrastructure to be more utilized, right? That’s the issue in a lot of the Asian markets and as we’ve talked about in the past, the FSRUs continue to help us and other LNG providers place these attractive Btus into the market. There is historically during these periods of supply additions, the market tends to overestimate the LNG that’s going to come to market, and underestimate how quickly the demand will materialize. We saw that in 2010/2011 when the Qatari volumes ramped up and we’re seeing that today, right? The projects, we’re on time, ahead of schedule, on budget, et cetera, but lots of other projects as you know have had some teething problems. We’ve mentioned in a number of occasions, a lot of the legacy projects that don’t have the nameplate capacities that the market has gotten used to, and at the same time, this somewhat stealth demand that is harder to handicap because these projects are not nearly as visible as a multi-million ton train that everyone sees and knows chapter and verse about. So, we’re optimistic that there is a very substantial structural components to this demand response and you will see some seasonality. As you pointed out, we’re clearly seeing that today. But a year ago, nobody had dialed in the kind of strength that we saw in Q4 and continued into Q1.

And Jeremy, I would just add this is Jack, that nat gas at 276 today, we’re going to be extremely competitive and you should expect us to be competitive and aggressive in the market to get our product to market.

That makes sense. And maybe one last one if I could, and I don’t know if you’re going to save this for Analyst Day, but just wondering as far as we think about CQP in lifting the distribution higher, would you look for a DCFD to be fully online for Trains 1, 2, 3 before you’d look to do that or any other broad strokes that you could provide around how you’re thinking about when is the right time to raise the distribution?

Yes, sure. This is Michael. So, the first thing that will happen right is the B units will convert from a picking instrument to a common, so that’s kind of a stealth distribution increase. They’ll start getting MQD $0.425 here probably in the third quarter. And so that will take our distributions from $25 million a quarter to well north of 100 million. So that will be the first thing that happens. And then the question will be when do we start actually paying on the subunits, and we’ll talk more about how we think that cadence looks in April, but certainly with co-gas coming on, we’ll be in a position to start paying on those I’d say in the near future, but talk more specifically about that in April.

[Operator Instructions] Your next question comes from the line of Ted Durbin with Goldman Sachs. Your line is open.

Thanks. Good morning. It looks like Train 3 is coming in service a little earlier than expected, can you just walk us through the cash flow impact of that?

The cash flow impact.

On Train 3, right, so DFCD on co-gas if the train comes on in March as we expect will be...

June 1.

June 1. So, you can assume that in between when it comes on in March as we expect and June 1, that our marketing affiliate will have to put those volumes away at market prices, whatever those are and they’ll be in a position to do that.

Okay. That’s great. That’s helpful. And then, maybe just coming back to the market itself, the big move-up in the spot price this winter, has that changed the conversations with some of the offtakers? Are you talking about longer-term contracts, maybe the size there and then the types of buyers that might be out there, whether a portfolio or utility like buyers?

Thanks Ted, this is Anatol again. Yes, I would say that the mood of the community overall changed pretty dramatically in the fall of ‘16. If you comp it on a year-on-year basis certainly, much different swagger in the step-up of the LNG community. I wouldn’t say that our discussions have changed materially. We are talking to largely the same cadre of customers, we don’t discriminate, we will transact with creditworthy counterparties, be they portfolio players, load serving entities, et cetera and we continue those conversations. There are a number of them that are in advanced stages. I will say that I could have said exactly the same thing six months ago and 12 months ago. So yes, the attitudes and the mood is much better. Everybody agrees that this dearth of FIDs that we’ve experienced over the last really 18 months is going to be an issue next decade. Everyone agrees that there is no fairy dust to bring liquefaction online dramatically faster than this kind of four-year period. So, as time moves on, the sense of urgency is increasing as well. So, we are in very healthy advanced discussions with a large cadre of counterparties and it’s our number one priority to deliver term off-take to underwrite more liquefaction.

Your next question comes from the line of Faisel Khan with Citigroup. Your line is open.

Thanks. Good morning. Just one question. Jack, I think and, Michael, I think you mentioned in your prepared comments about sort of the -- try to simplify the structure and make it more streamlined. Is it your guys’ opinion that the structure itself right now is sort of is holding valuation back or is there something that’s sort of more difficult to manage a structure the way it is that impacts sort of your guys’ ability to run the organization?

Yeah, Faisel. This is Michael. So, I think, on holding valuation back. I mean, it’s possible right, I mean you go to some of these more traditional long-only holders and you put an org chart in front of them that’s got seven or eight boxes on it and that to explain that money moves from the MLP to a CQH type entity, and then it makes the distribution decision. Yeah, I think that gets a little tedious and I mean, it’s not that complicated, but for some of these larger investors who don’t have the time to spend their whole day figuring out our structure, I think they throw it in the too hard pile. So it’s possible, it’s possible. And I think to the extent some of those boxes aren’t useful from a financing standpoint going forward, it’s our duty to kind of clean them up if it makes sense from a shareholder value perspective, so that remains a priority for us, I’ll just say.

Your next question comes from the line of Craig Shere with Tuohy Brothers. Your line is open.

Good morning. You’ve got a lot of results already complete, I mean, you’ve refinanced pretty much all the SPL debt, you’ve accelerated Train 3 in terms of timing and have a lot of commissioning cargoes under your belt. With all that known, do you have any feedback about this original guidance of $2 billion to $2.5 billion of backend equity funding needed for completion of Train 4 and Train 5?

Not yet, not yet. That will be a function of the ultimate cost of the five train project and you’ve asked this before, Craig, and it’s a fair question, but Train 5 is 13% complete as of today, so I think releasing, we have substantial contingency in releasing all that today and saying, well, now, the backended equity is $2 billion, I just still think it’s too early but a fair question. We got to get into Train 5 a little bit further before we’re ready to start making those pronouncements.

Fair enough. And just a quick follow-up. Train 4 has been described for a long time in your monthly FERC filings as an August target subject to month. But you kind of have described in your recent releases as second half 2017. In terms of falling one way or the other from that August time table, are you able to give us some probability that it would be more likely to be earlier than later or vice versa?

Yeah. I think it’s little too early for us to tell. But as you can see from Train 3, our relationship with Bechtel continues to get stronger and we continue to learn and conduct our work more safely and more efficiently. So we’re guardedly optimistic, but we’re expecting big things in 2017.

Your next question comes from the line of Alex Kania with Wolfe Research. Your line is open.

First on marketing; I saw this in the 10-K and I think, Michael, you noted this as well. You took a decent amount of marketing based on third-party derived LNG. I was just kind of curious how do you see remarketing cargoes going forward as a piece of the marketing business versus selling cargoes that are originated at Sabine or Corpus?

Yeah. I think the ultimate goal is to sell volumes from SPL, but there is a lot of uncertainty on production and particularly when in the commissioning period. And so from time-to-time, our marketing guys will have placed the cargo out three months or four months. And then the delivery window from the plant shifts or we had to take the plant down for maintenance or something, and then we end up having to go cover that position in the market. And so, it’s not really – it’s flexibility and a key competency of our marketing guys that we can have that flexibility and manage that, but I don’t think it’s not something we want to do with regularity, right. The goal is just to sell SPL volumes. Would you add anything?

Alex, it’s Anatol. I would just say that as you look at even in the deck, we kind of try to highlight the pull into the Pacific basin that we saw from Atlantic, and clearly we have a tremendous team on the optimization side that can take advantage of these dynamics and optimize our portfolio. To Michael’s point, no question that job one is getting the volumes sold out of SPL as profitably as possible. But then there is a large and very effective optimization function that the team performs on a daily basis.

Got it. Okay. And then just a question on the commercialization, just of expansion trains, and obviously it’s a little sensitive right now on progress there, but do you expect that Chilean project delay to have any direct impact on, let’s say being able to move forward with the Corpus 3? Or would it be kind of independent, something that marketing could handle either way?

Yeah. More the latter right. So the way that project was set up, finance structured, it’s an attractive project as we said in the prepared remarks. We’re committed to getting it across the finish line. It’s in very good shape, other than this one major setback, but it was not a meaningful contributor to our decision on Corpus Train 3.

Your next question comes from the line of Jean Ann Salisbury with Bernstein. Your line is open.

Is Cheniere marketing still paying a $3 fixed fee to CQP for cargoes or is that being renegotiated?

There is an informal, I guess, agreement in place that to the extent a trade doesn’t clear $3 that we have a committee of CQP that really set up a profit-sharing mechanism and you can assume that the terminal gets the lion’s share of the profit for volumes below $3. But I’ll tell you, this winter we didn’t have to use that committee much because the trades were clearing $3, so we don’t have a document in place, but we have committee in place to deal with them on a one-off basis and that’s been working fine.

Okay. Thanks. And then as a follow-up, I know that a border adjustment tax system is somewhat speculative, but probably is something that you have discussed. Just what are your thoughts on how it could impact Cheniere?

Yeah. Just as you say, to the extent exports are favored we’re in a pretty good spot, I guess we’d leave it at that. I mean we’re in communication with the ways and means guys and trying to get our business treated favorably if they want to treat exports favorably.

Your next question comes from the line of Michael Webber with Wells Fargo. Your line is open.

First one is just on the recent refi activity and you put some color on Slide 21, which is helpful. But just curious, when we think about obstacles towards re-visiting distribution growth guidance of CQP, is it fair to say that with the removal of the maturity streams before 2019 that any remaining hurdles are effectively blocking and tackling around delivery of Trains 3 and Trains 4 at this point? Or do you think you need to actually address those maturities and the maturity stacks in 2020 and 2022 as well?

No. The key was getting the bank facility out of the way, and that is not out of the way yet, but we’re in the market on a transaction now that if it’s successful would get that credit facility out of the way. And it has more restrictive distribution covenants in it than our bonds. So the distribution growth pathway has really always been dependent on getting that bank facility out of the way and so that’s the key milestone that we hope to achieve here pretty soon. The bond maturities are less important out in 2020, 2021 and I think Train 3 and Train 4 in getting those up and running are really what matter.

Got you. Okay, that’s helpful. And then Anatol, you mentioned the kind of the diversity of cargo destinations, I think 17 countries and 60 different shipments, but the midstream aspect of this trade is proven to be a bit more, I guess, inefficient than we would’ve thought on paper. And we’ve actually seen transportation costs rise a bit over the winter, just from the back of the fact that the trading of those assets and the merchant reaction has been a bit slower than we would have expected and then kind of leading days has been much wider than we would have expected given the destinations. I’m just curious, how do you think about managing your transportation portfolio against that kind of a backdrop, do you get longer on tonnage than you would have initially thought, just given out the inefficiencies that have kind of popped up here?

So on the shipping side, as we touched on, we are as close to being a 800-pound gorilla there as anybody and have a tremendous team that has been very effective at managing that fleet, but that is one of the places where as we touched on optimization comes into play and we’ve had a lot of opportunities to take advantage of that and take advantage of the very inefficiencies that I guess you speak to. In terms of our portfolio, I’ve actually been very pleasantly surprised by the utilization rate on those chartered vessels and as you know, we have three on a five-year charter and augment that with medium and short-term positions to service the volumes that we see coming out of SPL and I would say, from our vantage point, that’s been very effectively done at pretty attractive economics and has allowed us to capture some, some meaningful incremental optimization margin.

And I would say Michael, as you know, most of our, all of our foundation customers and contracts are FOB Louisiana, so we are not taking any of that shipping risk or cost.

Right, I guess, the idea that the, the market is tightened up for transportation a bit more quickly than everyone would have thought just given the, how young that kind of merchant trade is, so I’m just curious on a forward basis, has it changed the way you think about your transportation needs, just given the fact that it’s tightened up a bit more quickly?

Marginally, yes, we evaluate that, obviously, on a regular basis, we have our own view and analysis of how the shipping markets will play out. To your point, the, one of the side effects of this stealth or surprisingly strong demand is that, it did absorb some incremental shipping capacity, but the other side of that is true as well, as we’ve seen prices come off here and as we move into the shoulder season, the shipping rates have come off as well. So, we’re actively managing that on a real-time basis and our views do moderate from time-to-time as we reassess.

Got you. Yeah, that’s a good problem to have. All right. I’ll stop there and turn it over, thanks, guys.

Your next question comes from the line of Fotis Giannakoulis with Morgan Stanley. Your line is open.

Yes, hello, gentlemen. I would like to ask your, a few about and give us, give me an overview about the off-take market we haven’t seen the last 18 months, lot of activity in terms of off-take agreements. What need to happen in order to see more long-term contracts that will lead to additional liquefaction trains for Corpus Christi and Sabine Pass?

Yes, thanks, Fotis. Again, it’s something that I don’t think there is a silver bullet, I do think if you go back to the two kind of big surges in activity for contracting for U.S. LNG, they happened in fall of 2011, which to some extent was catalyzed by the tragedy of Fukushima and in spring of 2014, which was somewhat affected by Russia’s activity in Crimea and Ukraine. So, we have a very attractive offering, we have, we are on the low-end of the cost curve from a liquefaction standpoint. The world has been, I think very pleasantly surprised by what this Henry Hub thing is and how attractively priced it is. So we think that, that as potential off-takers move through time, see this gap opening up early next decade with a lack of FIDs and look at our portfolio that continues to deliver, the team continues to perform exceptionally through the value chain and we offer a very attractive, attractively priced LNG molecule, that’s our sale for sure and it certainly resonates the question of timing, I can’t give you a very specific date on obviously, but we have very productive, advanced discussions and the world of LNG is getting more and more comfortable with what Henry Hub is and how Cheniere can perform and delivering that.

Thank you. And one last follow-up. There are some discussions about projects reaching FID in North America, for example Golden Pass and there are a number of other projects that they are seeking financing or taking FIDs. How do these projects compare to your expansion plans and in terms of cost and what is the advantage that Cheniere offers?

Well, I guess all we would say is that Corpus Train 3 is very attractive, as a Brownfield expansion, it’s fully permitted, as you know partially commercialized and it is a very attractive offering both in terms of costs, as well as in terms of time to market. So you would have to ask the other guys how their cost structure compares to that. We’ve been pretty transparent about ours and don’t see – really don’t see any reason why Corpus Train 3 isn’t the next project that reaches FID.

Yeah, I would say Fotis, you’re going to hear a lot more about our strategy and our opportunities in April. But we believe that with our investment, not only in our people, but in our sites, in our bus, in our tanks, in our pipeline infrastructure that we’re going to be extremely competitive for many-many years to come.

Your last question comes from the line of Pavel Molchanov with Raymond James. Your line is open.

I haven’t heard anybody ask about Corpus, let me try this one. As you’ve been operating Sabine for the past year, are there any operational learnings that are going to be relevant as you start up Corpus about two years from now bearing in mind of course one’s greenfield, one’s not?

Yeah. So Pavel, the interesting thing, Doug Shanda and his team have done a fantastic job at recruiting and hiring operators and maintenance folks and in having them report to Sabine Pass to go through not only our simulator training, but also hands on training with the existing Trains at Sabine. And we’re in the process now of re-locating those folks to Corpus, so they will be on the ground early and be very comfortable and familiar with that site.

Okay. And then, at the beginning you guys mentioned that at the Analyst Day in April, you will be offering some guidance. Historically, of course you’ve kind of held away from giving any specific targets on cargoes in particular, are you going to be getting that granular and actually guiding to specific cargoes as part of the guidance?

I mean we broke out today CMI listings versus third-party off-taker listings, we don’t see any problem pointing that out in the future. I mean I think the ultimate number we’re going to be showing is the free cash flow generative ability of the company and how much EBITDA we can generate both this year and on a run rate basis. I mean if cargo count is important to people, we could probably provide that?

Yeah. And in some sense, we will be providing that through the DOE disclosure.

Yes.

On a monthly basis.

Okay, understood. I appreciate it.

Thanks, everybody. We appreciate your interest in Cheniere and all of your support.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.