Good day, everyone and thank you for standing by. Welcome to today's Cheniere Energy, Inc. Third Quarter 2020 Earnings Call and Webcast. A quick reminder that today's program is being recorded. And at this time, I'd like to turn the floor over to Randy Bhatia, Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and welcome to Cheniere's third quarter 2020 earnings conference call. The slide presentation and access to the webcast for today's call are available at cheniere.com. Joining me this morning are Jack Fusco, Cheniere's President and CEO; Anatol Feygin, Executive Vice President and Chief Commercial Officer; and Zach Davis, Senior Vice President and CFO. Before we begin, I would like to remind all listeners that our remarks, including answers to your questions, may contain forward-looking statements, and 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 risks. In addition, we may include references to certain non-GAAP financial measures, such as consolidated adjusted EBITDA and distributable cash flow. A reconciliation of these measures to the most comparable GAAP financial measure can be found in the appendix to the slide presentation. As part of our discussion of Cheniere's results, today's call may also include selected financial information and results for Cheniere Energy Partners LP, or CQP. We do not intend to cover CQP's results separately from those of Cheniere Energy, Inc. The call agenda is shown on Slide 3. Jack will begin with operating and financial highlights, Anatol will then provide an update on the LNG market, and Zach will review our financial results and guidance. After the prepared remarks, we will open the call for Q&A. I'll now turn the call over to Jack Fusco, Cheniere's President and CEO.

Thank you, Randy, and good morning, everyone, and thank you for your continued support to Cheniere. We have a lot to cover this morning. I'd like to start by thanking the Cheniere professionals that make my job look so easy. As you will see from our results and guidance, it has been a challenging and rewarding quarter during an unimaginable year. This year continues to present us with surprising challenges, and we at Cheniere continue to rise to those challenges, maintain our focus, and execute. I'm extremely proud of the results we’re reporting today. You often hear me speak about the resiliency of our people, our assets, and our business model that has certainly been reinforced today as not only have we navigated the continued direct and indirect challenges of COVID-19 and a difficult global LNG market, but also the added challenges of two major hurricanes recently making landfall near Sabine Pass. While Sabine Pass suffered no significant damage from either Hurricane Laura or Hurricane Delta, many of our co-workers, friends, neighbors, and other members of the Cheniere family were impacted with lost or damaged homes. We are proud to have responded to those natural disasters quickly and impactfully in support of our employees with shelter and clothing in the communities where we live and work in Southwest Louisiana with $1 million donation, and a supply drive with the Astros where we delivered two semi-tractor trailers full of goods. We also managed volatility in the LNG market over the quarter. When the third quarter commenced, we're in a period of relatively high cargo cancellations and low facility utilization. By the time we exited the quarter, LNG market conditions had materially strengthened, which allowed us to ramp up production and capture additional margin. Throughout this year’s volatility, our visibility to achieving…

Thanks, Jack, and good morning, everyone. We hope that everyone is continuing to stay safe and healthy. Please turn to Slide 9. As usual, we'll start with a few comments about the current global environment, then discuss some of the more specific factors relating to the primary LNG markets. The LNG industry has faced some exceptional circumstances in 2020 and has responded with flexibility and resilience. These factors continued to unfold in the third quarter, reinforcing the message and validating the ability of our industry to respond to market conditions in an orderly systematic manner, thanks in large part to the flexibility of U.S. LNG. As we move through this challenging period in the market and look forward, we continue to be bullish about the way the market is rebalancing the strength of LNG demand recovery and the longer-term prospects for natural gas and LNG as key vectors in the global energy transition. Despite the impact of lockdowns in many markets in the second quarter, the industry has still delivered net positive demand growth totals year-to-date. Unlike most other commodities, LNG demand grew 3% year-to-date through September, adding more than 7 million tons of consumption versus last year. The U.S. was the main beneficiary of that growth as exports increased by 34% or 8.3 million tons to approximately 33 million tons year-to-date. Global LNG supplies were highest this year in the first quarter with production falling over the course of the summer to below year ago levels by Q3. LNG production levels decreased 6% or nearly 6 million tons during the third quarter of this year, as supply was curtailed across both U.S. and non-U.S. sources in response to decreasing spot prices as the market became increasingly concerned about exceeding natural gas storage capacity in Europe. The reduction in LNG…

Thanks, Anatol, and good morning, everyone. Also hope everyone is doing well. I'm pleased to be here today to review our third quarter financial results, discuss our 2021 increased run rate guidance, and provide an update on our capital markets initiatives and capital allocation priorities. Turning to Slide 13. For the third quarter, we generated a net loss of $463 million, consolidated adjusted EBITDA of $477 million and distributable cash flow of over $190 million. As Jack mentioned, our third quarter results were significantly impacted by the accelerated recognition of revenues in the second quarter, related to canceled cargoes that were scheduled to be delivered in the third quarter. As the global LNG market has begun to return to balance, the number of cancellations for fourth quarter cargoes has declined, meaning that the revenue acceleration that occur in the second quarter did not recur in the third quarter with fourth quarter results positioned to normalize. For the nine months ended September 30, we reported net income of $109 million, consolidated adjusted EBITDA of approximately $2.9 billion and distributable cash flow of over $1 billion. Through September 30, we exported 920 TBtu of LNG from our liquefaction projects, including the 193 TBtu of LNG or 55 cargos during the third quarter. Total volumes produced and exported in the third quarter were 30%, more than 80 TBtu, lower than exports in the second quarter of this year, as cargo cancellations continued into and peaked during the shoulder season in the third quarter. For the third quarter, we recognized an income 168 TBtu of LNG produced at our liquefaction projects and 31 TBtu of LNG sourced from third-parties. Approximately 74% of the LNG volumes recognized in income during the third quarter was sold under either long-term SBAs or IPM agreements, a proportion materially…

Thank you, sir. [Operator Instructions] All right. Our first question will come from Jeremy Tonet with JPMorgan.

Hi, good morning.

Hi Jeremy, how are you?

Good, good. Thank you. Just want to touch base, it seems like there’s some news out there with Cheniere possibly having new business with China, some agreements reached there. Just wondering if you could confirm if that’s the case and just is this indicative of the broader market kind of coming together a bit better for signing some types of term contracts at this point or any color you could provide there would be helpful.

Jeremy, I’ll start, and then I’ll turn it over to Anatol. First, thanks for the question. Look, we – I firmly believe Cheniere has the best Chinese origination office in Beijing of any of the LNG providers. I’m very pleased with my team. We – as you know, we were one and only to sign a long-term – the only to sign a long-term agreement with China early on in 2018, and our relationship there just continues to grow stronger and stronger. We’ve sent a significant amount of spot cargoes to China here recently. I’ll let Anatol address the…

Thanks, Jack. Hi, Jeremy. Yes, as Jack said, it’s a market that we have been focused on almost as soon as we became an operating company with our Beijing office opening up in 2017. The team there has done a great job. It’s a sign of China’s progress, right, this GDP growth, gas demand growth over a Bcf a day of growth in total Chinese gas demand, and almost a Bcf of that came from LNG. Markets are opening up. China is very committed to meeting its 15% objective, type [ph] China was launched at the end of Q3. It is a mechanism to allow other companies to access the market, third-party access to LNG terminals and pipelines, and there’s a tremendous amount of gas demand growth. And we are very well-positioned to serve that. So very proud to be in a position to work with foreign energy, one of the fastest growing and up and coming second tier players, and we’ll endeavor to find multiple solutions to enable them to meet their downstream objectives of growing gas, maintaining their clean footprint, and finding creative solutions for their customers. So, I’m very proud of the team and hopefully a sign of things to come.

Got it, sounds really exciting there, and just wanted to pivot towards kind of some of Jak’s comments with regards to capital allocation, and it seems like based on your guidance, DCF could be up to $1.5 billion at the high end there, you talked about paying down $0.5 billion of debt, at least $1 billion of cash flow next year that you’re able to do a lot with, it seems like you could start kind of [indiscernible] dividends at that point in or at least in 2022 seems maybe somewhat earlier than I guess what was previously described. Just wondering if you could talk us through why not start the dividend at the back half next year. It seems like that could draw in a whole bunch of new investors having that income stream.

A few things there, but thanks, Jeremy. First off, we’re in ongoing discussions every quarter with the Board about capital allocation, whether it be debt paydown, share buybacks, or eventually a dividend, but when you look at what the share price is right now, and we’re talking about $11 DCF per share in a couple of years, the decision is still pretty easy that it’s going to be share buybacks. But in terms of your numbers, you’re right. We have around $1.2 billion to $1.5 billion of DCF next year, but keep in mind, we’ll still have a couple hundred million left at Corpus, and we have other – a few other debottlenecking and development costs that we’ll be spending on. So, it’s not all free cash flow. You have to strip that out first. But for the year, yes, we have around $1 billion of free cash flow next year for a company that really was just negative for 20 years previously.

That’s very helpful. Thank you.

All right. [Operator Instructions] Having said that we’ll move on to Michael Lapides with Goldman Sachs.

Hey guys, thanks for taking my question. It’s actually a little bit of an operational one. Just curious this is what the third or fourth time you’ve raised, you’re portraying guidance in terms of production capacity. Is there something that your team or Bechtel’s team is doing that’s enabling you to do this while we’re not seeing many of the other global LNG liquefaction owners announce similar increases? And do see potential for others to do that in the industry when you look around, in other words, could that add a lot more liquefaction supply to the industry without having – without others having to build more trains? Just trying to think through the dynamics for you guys specifically, but also the broader market.

Thank you, Michael. So, I’m going to address that directly. So first off, look, we have the best team of Cheniere professionals that, that exist. It is a – it’s a team that is very experienced from around the world not only with ConocoPhillips optimization, designs, but also ATI and a whole host of other things, and we have the benefit of having the full value chain, meaning the gas procurement side and our ability to deliver gas at varying pressures and heat content, which really influenced the performance of the trains. The team has done a fantastic job with what we call it debottlenecking, but also maintenance optimization and trying to extend the periods between defrost, extend our turbine, overhauls with Baker Hughes, and as well as hitting all the bottlenecks throughout the train. So, I feel very good that we continue to pluck what I call the low-hanging fruit. I think there’s more room for us to go. I don’t think we’re done yet, and what it gives us a ton of flexibility with our customers to design solutions for them without having to have CPC on additional infrastructure. I don’t want to comment on any of the other LNG facilities, because they’re all a little bit different from a technological perspective, but we feel very good about where we’re able to achieve.

Got it. Thank you, Jack. Much appreciate it.

All right. Moving on, next question will come from Christine Cho with Barclays.

Good morning. Thanks for all the color today. I wanted to start off Jack with the comments that you made in the prepared remarks, about how you plan to increase from 80% to 90% of your capacity to contract, as you’ve increased the production capacity for train and you have a track record. Obviously the spending to expand that capacity is very capital efficient. So how should we think about the tolling fee that you would want to charge? I would think it doesn’t have to be as high as what you would have charged in a Corpus Phase 3. But is that a fair way to think about it?

Yes. Hi Christine, thank you. And first let me address the first part going from 80% to 90%, that’s still the – my comfort with raising our contracted amount, if you will, is with my comfort in my operating and maintenance staff at the facilities. Again, their performance has been fantastic this year. We've been thrown everything. Everything has been thrown at us and we've continued to perform and outperform, I think what everyone's expectations were. So as we get more and more comfortable with our stability of operations and our reliability, it allows us to fill more comfortable with terming out our production. So as far as the cost, there's – or the price of the fixed fee, there's a lot of different variables we can draw upon with that. And we can go out longer in term or shorter in term or if the quantity is bigger and longer than we may give them a little more of a discount for lack of a better word, but we have a lot of flexibility in what we're able to offer. And as we turn things up, you should expect those to flow into our guidance and be reflected in our numbers. Anatol, do you have anything to add on that?

No, Jack. Just the flexibility that you hit on allows us to transition from what underpins the seven Trains, which was a very fixed construct of 20 year deals to, as you know, Christine, a lot of flexibility and a lot of creativity as we ensure that we generate the returns that we need, while finding a way to support our customers and creatively adjust to market conditions.

Thanks for that. And then, I guess, just to follow on to that line of thinking, the run rate guidance has been the marking margins of 2 to 2.50. Just wanted to get a sense of how confident you are in these margins over the long-term. And is it primarily because you have a large portion of this already locked up at DMI or is it also the fact that over time – over the long-term, some of this capacity – excess capacity will be contracted up and will likely be at least 2 to 2.50, which gives you the confidence to put that range up today?

The short answer is, yes. Thanks, Christine. We see the, again, a growing market for LNG and we think that it is supplied in large part by U.S. projects, our project. They are cost competitive in that 2 to 2.50 range on a delivered basis. That's how we evaluate both ourselves and our global competition. And we think that as we move through this period of oversupply with four years of record volumes coming into the market, record growth for the LNG market that ensued, the period of Q2 and Q3 that we just went through the rate at which the market rebounded is fairly astonishing and absorbed and continued to invest in this future project that will drive medium to long-term growth, which we'll need to dispatch these $2 plus margin projects. So we were looking through the cycle between what we have in the books today, of course, as well as where we see the market playing out over the coming years and decades. We're very comfortable with this 2 to 2.50 range.

I would just add Christine that it's not just the reality of the market, but it really just highlights how durable our EBITDA is. And then it's also just confirmation that we see the ability to hit all of the investment parameters for a project like Stage 3 in this range, signifying how cost competitive Stage 3 really is.

Got it. Thank you, everyone.

And our next question will come from Michael Webber with Webber Research.

Hey, good morning guys. How are you?

Good, Michael. How are you?

Good. Wanted to start off with some the news that got announced today and maybe Anatol, you can have a just as getting a bit more specific around [indiscernible] in terms of that second or third tier of Chinese buyer, right, this is a company that I think they bought their first cargo back in May ever. And then I’ve got a small deal with BP. Having their associate with CNO, in terms of – just curious in terms of their emerges in the market. Is that a symptom of the reforms we saw last year around the Chinese natural gas pipeline network? And I'm just trying to think of it to what degree do you view this as a one-off versus that second or third tier of Chinese buyer kind of finally finding the support necessary to be more aggressive in the market? It's a really interesting counterparty to show up taking that much volume that quickly.

Thanks, Michael. Yes. So ever since we started to engage in China in 2016, and then of course, expanded our presence with the Beijing office in 2017. We've been engaged in various discussions, including policy discussions to help China, drive this natural gas penetration in the market, contributed a chapter here and there to the pipe China discussions. And we think that this is a very important step that the policy makers have taken to of course, take a very large amount of infrastructure into a vehicle that is intended to provide third-party access, transparency, drive access to gas, all over the country. And foreign has division to be one of the early movers along that dimension and take advantage of this TPA, as you mentioned with some other contracts that, that BP deal, which proceeded RHOA but it's continuing to grow very aggressively. It isn't a great market in the South China for us to access and to continue to support. We do not see it as a one-off, we think that this is a cadre of companies that we've engaged with for years and looking towards continued success and continued traction there.

And Michael, I have to say that, one of the issues structurally in China is that the Citygate natural gas prices didn't fluctuate with actual gas prices. So when the spot prices dropped, China's demand didn't increase because the Citygate price was kept artificially high. Now you're going to see some of that flow through with some of these other players and pipe China, to where they can access lower – potentially lower prices and you'll see the demand response increase also. So we're extremely supportive of the reforms.

Yeah, that's a really exciting data point. And just as a follow-up maybe kind of vaguely along those lines and maybe different demand sync, earlier this quarter, there's a bunch of relatively fuzzy news flow around a French counterparty, potentially backing away from the only U.S. supposedly related to sourcing gas and especially frat gas. I'm just curious to what the greed is that come up with your customer base, and specifically as you guys work to commercialize for this phase three. Is that a one off or is that something you think you will be contending with to access the European markets for years to come?

Well, I'll take it a couple of different ways. As you know, a lot of our foundation customers are European. We have two very large French companies that are long-term foundation customers, both total and electricity to fonts and the focus on decarbonisation is here. It's here to stay. It hasn't come up with us yet, but we are anticipating it. We're moving forward with quantifying what we can do to make our product much more desirable in the event that need to as you know, from my talking points from manifests talking points, our initial focus is on identifying and pursuing actionable scientific near-term solutions that we can lower our carbon footprint. We do think the whole energy transition discussion is going to be a very long road and take a whole lot of everything to make work. But go ahead, Anatol.

Thanks, Jack. Just to follow on Jack's comments, as you know, we view Europe as a very attractive and important market for the coming decade and beyond. Europe is investing tremendously in natural gas infrastructure projects in regas pipelines, reversing pipelines, power plants, et cetera, that are all driving natural gas demand. We continue to engage with companies with continue to engage in Brussels, as Jack said, one of our deliverables to that discussion, our transparent metrics are actual numbers that will form the discussion and continue to inform the discussion as opposed to some of the allegations that you've seen out there in the press. And we're delivering those concrete metrics and concrete improvements to that continued engagement with Brussels. There's no universal solution, as we said, we're not going to be everything to all people, but we are confident that we are a key part of the energy transition and part of this solution going forward. And you see examples of that engagement, those infrastructure additions, greater gas and LNG penetration into Europe to meet its strategic objectives of environmental benefits and security of supply.

Got you. Okay. Thanks for the time, guys. Appreciate it.

And moving on from UBS, the next question will come from Shneur Gershuni.

Hi, good morning, everyone, or afternoon, I guess at this point. I was wondering if we can go back to the discussion you had with Christine and some of the prepared marks that you had. If I understand sort of the discussion correctly, there's been a lack of FIDs of new capacity in 2019 and 2020. We're headed towards a tightening of capacity and rather a deficit in the market, in a year or two out. Is the concept nail that you want to lock up some of your CMI capacity on longer term arrangements five, seven, eight years type of thing. And that's kind of where, and move the target from 85% to 90%. And sort of create a more readable earnings base from where you're at. I just kind of want to understand strategically how you're thinking about it and how you’re approaching it.

Sure. So again, we're transitioning from a period in our corporate evolution where everything needed to meet the objective of supporting essentially project financing. And as we've talked about, we have this additional capacity. We have the success of the operations team. We've proved the construct of this integrated value chain. And now have the flexibility of altering these commercial solutions and coming up with products that serve our customer's needs. And those products include a midterm product, as well as the shorter term solutions that we've always had and the long-term. We think this market is a market it'll continue to evolve, it will continue to be cyclical. And all of those components short, medium and long-term will be part of the conversation in the LNG market for decades to come. So we're very happy to be in a position to offer that. And as you said, yes, secure margin and have that stability of cash flow, which we know is important to all of our investors.

I was just going to say, putting in perspective, we're 38, 39 mtpa contracted and we originally thought this would be a 40 million ton portfolio and we've got 45 million tons. So we have some work to do to just contract that up, give everybody even more, certainty on those cash flows gives us a better sense of capital allocation at the same time. But then when it comes to Stage 3 and projects like that, yeah, we're going to be looking for the same creditworthy long-term contracts to justify another multi-billion dollar build-out.

I think that makes sense a midterm product that gets you over 90% would definitely make a lot of sense. Maybe pivoting a little bit to the government and do appreciate a lot of the color that was presented in the prepared remarks. Can you walk us through what takes you to the high-end of your guidance and conversely, what would take you to the low end of the guidance? Is it – we have COVID all over again and that's the low end and then everything else is about optionality. It's just wondering if you can talk about some of the inputs that get us to the top end versus low end.

Are you mean they made run rate or 2021?

2021. 2021.

To make it simple, it's really on that open capacity that we were speaking to, but I'd like to give you just a better sense of the year ahead. So for 2021, we'll have eight Trains for the first time. And we're going to have record production of high-30s in terms of mtpa for the year. So last year, when we went into 2020, we had about 2 million tons open, which translated into around a 100 TBtu, in which is why we said a move of $1 was about a $100 million to EBITDA. But this year, we're adding that eighth Train and saying our long-term contracts and selling forward leaves us with around 200 TBtu or just less than 4 million tons currently open, which gets us to that 90% total contract for 2021. So that we were closer to 95% last year to 90% this year going into 2021, and just keep in mind that we've got a train coming online early next year. But I’d say we're actually pretty similar, if not in a better spot than last year, considering that asymmetric upside. So margins currently are in the sub $1 range, meaning downside in EBITDA is really capped at around $100 million, which makes it more insulated than last year. But we still have that upside for every dollar is $200 million. So we're in a pretty good spot and you can imagine we just did budget for the year and when we come up with a range, it's around budget in the midpoint.

Perfect. Got it. Really appreciate the color today and have a great weekend.

Thank you.

Our next question will come from Michael Blum with Wells Fargo.

Great. good morning, everyone. Just had a one quick question. We're starting to see a second wave in COVID lockdowns and at Europe and possibly spread wider. Just want to get your thoughts on – do you see that – how you see that impacting LNG demand and basically, are we in for a bit of a rollercoaster here? Thanks.

Hey, Michael, this is Jack, I’ll start here also. I mean, this is – it's been an incredible year. We have put a lot of precautions into our besides and our plans around COVID with biometrics screening, with isolating the workforce, et cetera. And I know that the numbers at least here around Houston and Louisiana and Texas have increased, but we haven't seen any of the increase in cases ourselves with our workforce, which is it's little bit interesting, but we are definitely on guard, as far as our customers so far, as Anatol pointed out, the recovery, especially in Asia has been more v-shaped, it continues to be stronger every day, but Anatol, maybe you want to give more color on Europe or…

With Asia, yes. So Asia is clearly recovering and Europe is learning how to navigate this issue. Natural gas as you know has been very resilient, even though overall power in the 28 main European markets is down about 5%, natural gas is stable, taking market share away from solid fuels, and this is a very flexible product. And one of the things that we are advantaged in is the ability to respond to these different market moves, whether that is an increase in demand in Asia and a moderation and demand in Europe. That said Europe is in an increasingly better position, we're not facing the issue of storage containment for two reasons. One is, we're finally at levels that have been worked off and are below year ago levels in terms of inventory. And two, obviously going into the winter is a different dynamic than going into the shoulder season of Q2 when we saw that maximum stress and look, we're now nine months into figuring out how to navigate this thing all over the world, and that's improving the outlook as well. So not taking our eye off the ball by any means, but we're endowed with a flexible responsive system that we and our customers know much better how to navigate.

Great. Thank you so much.

The next question will come from Alex Kania who is with Wolfe Research.

Thanks. I just had a couple, I guess, follow-up first is just on your thoughts on contracting. Is there any sense or greater demand for trying to have the contracts that are shaped more seasonally? And I'm wondering if that's something that you consider more seriously, how that would maybe line up with the kind of increased commitment on the report target for contracting overall in the portfolio. And the second one is just on kind of the run rate, production outlook. I mean, I did see a press release, I guess, from ConocoPhillips earlier this week about additional initiatives that really debottlenecked by the optimized cascade process. So just wondering if those kind of discussions were kind of incorporated in your outlook or is that – are those things represent maybe more incremental debottlenecking as well?

Thanks Alex, this is Anatol. I'll start, then I'll hand it over to Jack on the second part. But we are – clearly the market globally has a forward structure that, says, winter is marginally more valuable than summer. Our efforts – our commercial efforts have grown leaps and bounds in terms of sophistication and you can look up the original SPAs and see that they make a fairly big deal, most of them make a fairly big deal about being ratable. We could now price things, and affect that solution much more flexibly and easily. And that is a discussion that we have from time-to-time with our customers. So we have no issues with that, and then on top of that, as you know, we have some seasonality in terms of our production capacity, when it's nice and cool in Louisiana, the ops guys have an easier time making more of it. So we evaluate all of these options and normalize them and factor that into our decision of how to move forward.

And, in regards to the Conoco, they've been a good partner with us, Ryan Lance is a good friend and they've supported us in our debottlenecking and optimization efforts, throughout this whole process. I think their announcement was on future COP trains, but having said that, every time we do better, the licensing fee goes up, so they're helping us as much as they possibly can.

Thanks very much.

And moving on, we have Sean Morgan with Evercore.

Hey guys. So a question just on the SPAs that are rolling off, I think there's pretty material SPAs that are sort of legacy and from older markets and older plants than Cheniere’s even boldest trains, and so a lot of bonds rolling off through 2025. And I'm wondering, how Cheniere sort of position to compete with these new volumes coming on? And do you see there being a lot more tendering in the market, or do you think that like existing SPAs with long-term tenants are going to be replaced by similar existing SPAs with long-term timer tenors?

Thanks, Sean. Yes, so the markets continued to grow dramatically over the past decades, conveniently doubled every decade. And historically when this was a very bespoke sort of point-to-point market, the contractual solutions were fairly standard at that 20 year mark. And as you said, there was a very large amount of volume that reprices, if you will, over the coming years and decades. And that is one of the sources of opportunity for us to take advantage of that. The solutions that the customers will want will vary, there will be a portfolio approach we believe and lots of customers will want the flexible transparent pricing, stable pricing that our long-term contracts offer, others will choose to recontract mid-term, and that's something that we can help with as well as load following if you will, that we can provide at the margin. So, it is another very large opportunity as that volume reprices out of the legacy projects out of North Africa, Qatar, et cetera.

And I would say that the customers are demanding more energy diversity, so they don't want to buy from one supplier necessarily. They want to buy from multiple suppliers and ensure a reliable product. They're also looking at diversity from a – how much do they want oil index versus Henry hub index. And so, I think we'll get our fair share of some of those contracts. And we just continue to try to work on our operational excellence and make sure that they consider us to be an affordable, reliable supplier of LNG.

Okay. Thanks. And then we touched briefly on ESG, but I had a question sort of, as it relates to the cost of implementing. We went through the slide and there is a lot of, kind of, I guess, sort of cursory ideas of ways to make it lower carbon, more ESG friendly. And I think Mike touched on that the Europe has – the European governments are getting kind of more activist in sort of choosing contracts. But how do you look at it sort of balancing your European customers might be a little bit more environmentally sensitive to other customers that are going to be a lot more economically sensitive like India or China.

Yes, and that's exactly what we're doing right now is when we say we're – our initial focus is on identifying and pursuing we're stacking them up. So we know directly and indirectly what the carbon footprint looks like for a cargo of LNG at least from a calculated basis, not an actual basis, which is one of the solutions we'd like to get resolved. But we are quickly identifying, prioritizing and stacking them up on which ones we make economic sense and which we're going to have to put on the back burner for a while until the market wants to pay us for those types of solutions.

Okay. Thanks Jack. Thanks, Anatol.

All right folks. Moving on our final question is going to come from Ben Nolan with Stifel.

All right, I made it. So I got a couple, the first, congrats on the run rate, I think that's fantastic and certainly it's a good track record here. I was thinking maybe or if you could expand on this, and you were clear on sort of debt repayment from a capital allocation perspective. But obviously, it seems like higher run rate is probably most impactful for CQP and potential for them to – or that vehicle to really ramp up its distributions even more than probably it could have otherwise done. Can you maybe talk through where that might be in terms of a priority going forward?

Sure. So we’ve really slowly and steadily increased the CQP distribution over the last few years because we're still in construction. So you'll see us – we just have increased it by $0.02 annualized, and we'll continue to do that until we finished Train 6. So you could see what range we gave for this coming year and it's about the same type of step up as it was this previous year. And that's really related to just holding back the cash to make sure we can fund the remaining, let's say $900 million or so of unlevered CapEx for Train 6. But clearly on the run rate, it did go up. But if you look at the numbers, it didn't go up all that much, but it is almost at $4 at this point. And the reason for that is because we have an IDR structure. So at this point, since we're in the high split, 50% of every incremental dollar actually goes to CEI. So eventually in terms of distributed cash flow, when we get to $3 billion at CEI, a little over half of that is actually distributions going to us from not just the LP units, but from those IDRs.

Right. And I appreciate that, although again, that's probably – and it's structurally an incentive to actually increase the distribution. The – switching gears to my follow-on a little bit today or just yesterday, EOG made a huge discovery out in South West Texas. Obviously you guys have already done some of the IPM stuff with them. There is been a lot of slowing down there, and I can imagine that maybe those discussions are not as robust as they used to be, but that's a really big discovery. Could you maybe talk through, – we talk a lot about the Chinese or Europeans or others looking to buy. Could you maybe talk about sort of where maybe producers are and whether or not you think that, there could be a return to some of those pushed volumes?

Thanks, Ben. Yes, this is Anatol. We've always said that we're optimistic on the IPM business and see a number of opportunities there, but it is not a huge sample sets. EOG is a wonderful partner, obviously that IPM transaction started this year, it's been a challenging year for all producers. And as you can imagine, discussions while ongoing are not top of mind, like they were a year or year and a half ago. But we firmly see that the growth of North American production needs to be exported. And we provide the single largest access points to those markets. So we're optimistic that engagement will become more robust as we move forward. And certainly EOG’s contribution will be front and center as well as a handful of other large credit worthy counterparties that have positions that are proximal to our facilities.

Okay. That's helpful. Thanks guys.

Thanks, Ben.

And thank you everybody, thanks for your support of Cheniere.

Ladies and gentlemen, that does conclude our question-and-answer session and our call for today. We do appreciate you joining us. You may now disconnect.