Good day, and welcome to the Cheniere Energy Inc. Third Quarter 2021 Earnings Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Randy Bhatia, VP of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to Cheniere's third quarter 2021 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 two 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 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 three. 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 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. Thanks for joining us today, and thank you for your continued support at Cheniere. I'm pleased to be here this morning to review our third quarter results, and our increased financial guidance for 2021, as well as introduce our financial guidance for 2022. We are in the midst of an exciting and pivotal time in the global LNG market as the world continues its transition to a cleaner energy mix. I'm excited about Cheniere's prospects and advantaged position to compete and win in this market for years to come. Before we begin, I'd like to spend a minute discussing Hurricane Ida, a deadly Category 4 hurricane which impacted Louisiana during the third quarter. While the center of the storm made landfall well to the east of our facilities at Sabine Pass, many of our coworkers, neighbors, and other members of the Cheniere family were impacted with lost or damaged homes and property. Once again, I am pleased with Cheniere's response, and I am proud of how quickly and impactfully we supported those in need in the communities where we live and work, in Southwest Louisiana. In addition to providing direct financial assistance to disaster relief organizations, we once again partnered with the Astros Foundation to lead a three-day supply drive, in Houston, led by Cheniere's employee volunteers. We collected, sorted, and loaded six semi trucks with emergency supplies for our neighbors in need in Southwest Louisiana, while many employees from Sabine Pass traveled to the affected communities to help with the cleanup efforts. Fortunately, the Sabine Pass facility was spared by the storm, and we maintain continuous and stable operations throughout the weather event. I'd like to recognize our teams from production, operations, planning, marine operations, gas supply, meteorology, and many others for…

Thanks, Jack, and good morning, everyone. Please turn to Slide 8. As Jack just mentioned, we maintain an increasingly constructive view of the global LNG markets for the balance of this year and well into 2022. Higher demand for our product driven by the need to replenish gas and LNG storage inventories after the cold winter last year, coupled with higher year-on-year demand due to improved economic activity around the world resulted in a significant run-up in prices through the summer. Because of this imbalanced market, we've witnessed unprecedented price spikes across all gas and LNG benchmarks. Global natural gas and LNG prices remain above seasonal norms starting concerns about sustained tightness in LNG supplies ahead of a potentially colder than normal winter once again. TTF settled September at over $15/MMBtu and touched an all-time high of $55/MMBtu in early October. JKM settled October at over $19/MMBtu and hit a new intraday all-time high of over $56/MMBtu in October after averaging around $4/MMBtu in 2020. While our long-term customers are largely insulated from these dramatic price swings and our CMI business can capitalize on these dislocations in the short term. Sustain market volatility could be disruptive for industry as it potentially incentivizes end use customers to utilize cheaper, higher polluting fuels in the short-term. The rapid economic recovery in key LNG markets paired with some of the structural factors impacting Europe and Latin America helped the LNG market achieve higher growth levels this year. LNG consumption increased 7% in the third quarter and made intense competition for supplies between the Atlantic and Pacific basins. This tug of war has certainly exposed the supply constraints facing the industry in the wake of the pandemic. Global LNG supplies grew 8.7 million tons year-over-year in the third quarter, while exports from the U.S.…

Thanks, Anatol and good morning, everyone. I'm pleased to be here today to review our third quarter financial results and our increased full-year 2021 EBITDA guidance, as well as provide you with some more detail regarding our full-year 2022 guidance. Turning to slide 12, for the third quarter, we generated revenue of approximately $3 billion, consolidated adjusted EBITDA of approximately $1.1 billion, distributable cash flow of approximately $390 million, and a net loss of approximately a billion dollars. Our net income results for the quarter were negatively impacted by the accounting treatment for our realized and unrealized gains and losses from derivative instruments, which includes our long-term IPM agreements. As we have discussed in prior quarters, our IPM agreements, certain gas supply agreements and certain forward sales of LNG qualify as derivatives and require mark-to-market accounting, meaning that from period to period, we will experience gains and losses as movements occur in the underlying forward commodity curves. This accounting treatment coupled with the significant volumes, long-term duration and volatility and price basis for certain contracts, and most notably, our IPM agreements will result in fluctuations in fair market value from period to period. By operationally we seek to eliminate commodity risk by matching our natural gas purchases and LNG sales on the same pricing index, our long-term LNG SBAs do not currently qualify for mark-to-market accounting, meaning that the fair market value impact of only one side of the transaction is often recognized on our financial statements until the sale of LNG occurs. The unfavorable pretax impact from changes in the fair value and settlements of our commodity and FX derivatives during third quarter 2021 was approximately $3.5 billion, $3.1 billion of which was non-cash, including approximately $2.5 billion directly related to our IPM deals, which were the primary driver…

Thank you. [Operator Instructions] Our first question comes from Christine Cho with Barclays. Please go ahead.

Good morning, everyone. I thought maybe we could start with '22 guide. The range is pretty strong out of the gate. But your open capacity would indicate that you guys have put away a decent amount of cargos in the last several months, for next year. Can you just provide a little more color on what's assumed in the low and high end of the guide, other than what you already told us, Zach, about timing of the year-end cargos? The 150 TBtu that's open, what does that assume for Train 6 start? Is there anything in there for 1Q? And are you using these forward curves for the open capacity in your assumptions?

Thank you, Christine. And we'll have Zach answer the question.

Hey, Christine. So, we're pretty excited about 2022, will be our first year with nine trains operational. And we should have record production of around 43 million tons for the year or over 2,200 TBtu. So, when you think about 150 TBtu open, that's less than 7% of our total P&L production next year. And then I would say that that open volume is going to contribute, give or take, around $1 billion. And that's after accounting for the fact that though the curve next year is around, let's say, $10.00 or so, we reserved a portion of the cargos of this open capacity for some additional long-term origination deals with bridging volumes similar to how we structured the ENN or Glencore deals. So, that's basically how it's set up. We assume Train 6 is coming online at the end of Q1. And there's some flexibility in there in terms of some of those high-priced LNG cargos. We literally have a couple cargos that are close to almost $100 million of value to us, either being delivered late this year, early next. So, with some flexibility on exactly when substantial completion can occur, and some of that timing, that that just forced us to think about a $500 million range when margins are around that $10.00 versus last year, when we came into the year they were around $0.50, even though we had even more capacity open at the time.

Okay, great. That is helpful. And then, can you guys give a little more color on the contracts that you signed in the recent months around the short-term and medium-term deals. It looks like the long-term, 10-year-plus deal terms have not really changed. But I would imagine the terms for the one to three-year deals have gone up, especially after the reset in the supply cycle that Anatol discussed. What are the market rates for something like that? And if the long-term deal, the terms do not change, and customers are maybe realizing that they can't rely on the spot market for their firm needs, what would you say is the biggest sticking point in negotiations for long-term contracts right now?

Anatol?

My turn? All right, thanks, Jack. Good morning, Christine. The -- so, as Zach mentioned, we -- the market for those midterm transactions is the market. So, we reserve them as volumes for the origination efforts we think having the right solutions, the flexibility to start volumes without a condition precedent start them before additional capacity comes on is all very important, and has been a key differentiator for us. So, those volumes are blended into the contract either commercially or the way we account for them, either way. But in the font for the liquid part of the curve, we include those economics in that long-term transaction on an [MPV] [Ph] neutral basis to us. So, that's very important to us. And as you've seen with ENN, Glencore, and others that maybe you haven't seen explicitly, that that's a key differentiator. And we will earn that curve over the life of the deal.

Okay.

And I'll just -- sorry, I was just going to add that it was like literally a year ago we were around 85% contracted as a company, and Jack said the goal was, in the next few years to be 90% contracted. And we're now 90% contracted on the nine-train program through the early 2030s, with all the work that's been done. And with all the deals that we've signed, midterm deals, long-term deals, that Anatol and the commercial team have signed this year, it's over $6 billion of fixed fees, just to give you a sense of how much de-risking has occurred.

Great, thank you.

And, Christine, it's --

Yes.

Christine, it's -- [technical difficulty]. So, there are some DES deals, there's IPM, there's FOB. It's all of the above, because we participate on the whole value chain.

Right.

Thank you. Our next question comes from Jeremy Tonet with JPMorgan. Please go ahead.

Hi, good morning.

Morning, Jeremy.

Thanks for all the color on the LNG market here. Just wanted to pick up with that a bit more, particularly as it relates to the medium-term, as you laid out, there's really few other plants that are under construction in the near-term, and there's others facing delays, such as Mozambique and LNG Canada. Also we have the European Union carbon prices have doubled year-to-date. Just wondering if you think this sets us up for kind of a stronger for longer LNG pricing into the kind of more of a medium-term timeframe there? And how CMI could benefit from that?

Yes. Like we said, this was supposed to be, to us, a transition year that was difficult to call. And everything that we've talked about has created a much more rapid transition. And as you said, that the volumes that are coming into the market '22 through '25, delays on upstream FIDs, delays on liquefaction FIDs, some of both actually being cancelled, as you've seen in recent history, gets us well through the mid 20s. And on the demand side, we just see a continued commitment to natural gas. I mean you see these numbers out of China which is, through tree quarters, is the leading market. It's surpassed Japan, it's about two million tons higher now on the year, most likely will be the largest market. And we don't see that market slowing down. And its commitment to natural gas is unwavering as is India as is Vietnam, as is Taiwan. So, we're quite sanguine about the mid-term as well as the long-term, right. We think if we do our job correctly and have the rights environmental bonafides and the right economic value proposition it is decades and decades and decades of runway.

And Jeremy, I have to say from an operational excellence perspective, I'm so proud of the two sites both Sabine Pass and Corpus Christi. They have performed well above my expectations and that team continues to impress me. So, I -- it's more than just market prices. It's you have to make the product and deliver the product.

Got it. That makes sense. That's helpful there. And then maybe just pivoting towards CCL Stage 3 here, just wondering if you could refresh us with the recent term deals that you've signed up here, as far as where I guess contracting stands relative to FID moving forward and just kind of updated thoughts on how you think that could progress over the course of this year.

Sure. So, we mentioned in the prepared remarks that we think it's around a 3 million tons, but in terms of how these new contracts that we've signed, helped us build Stage 3. I think you have to just realize at this point. The company's commercial and financing strategy is no longer just on an isolated or separate project finance basis, because at this point we're a 45 million ton operating company in the next few months. So, it's all one portfolio and everything helps us from up, not just the existing nine trains, but this next 10-plus million tons in Stage 3. And keep in mind, at this point with the work that the Anatol and the team have done, we have seven at least publicly announced long-term contracts are over 7 million tons and that's TPC, ENN, Glencore, and the three IPM deals with the Apache, EOG and Tourmaline. So, we're getting close but at this point, some of those contracts maybe a couple we'll end up at Sabine, the rest will be perfectly able to underpin the financing, the economics thresholds that we required FID Stage 3 next year.

Got it. That's a helpful. I'll leave it there. Thanks.

Next, we will go to Spiro Dounis with Credit Suisse. Please go ahead.

Thanks, operator. Good morning, team. I wanted to start off with the MLP actually, if we could and just revisit your thinking there, the valuation spread is really kind of move closer in favor of maybe combining the entities. And I know that was discussed maybe a year or two ago, and it seems like we're gravitating closer that level. So, just want to get your latest views on whether or not we're getting close. I know cash flow accretion was a big point that you wanted to sort of make there. And what your appetite is on that front to simplify the structure?

Hey, this is Zach again. And I'll just say it -- we've been very consistent in our openness and simplifying the structure over the years. And at the same time, we're pretty happy being patient and waiting for the right ratio of the stocks. But at this point, we don't see any need to do anything to an extent, two-week, two months ago, we came out with capital allocation instead, we had about $10 billion of available cash just with the curves and the momentum we have, that's maybe $2 billion higher. So, there's nothing holding us back from achieving all of our goals, regardless of the structure and definitely not interested in using any leverage to solve any of the accretion dilution issues with such an exchange or an IDR simplification of that sort. But what we're mainly focused on for the LNG shareholders is at least the $11 of run rate cash flow for nine trains growing to $16 on a sustainable basis. And if there's a way to simplify the structure and maintain that yes, we'd be open to it, but at this point we're pretty content with how things are going.

Yes, makes a lot of sense. Thanks for the update there, Zach. Second question a few weeks ago, you all got approval from the FERC to expand some of the nameplate capacity at Sabine and Corpus. And I just wanted to dig in there a little bit and find out exactly what that relates to. I think some of my math suggested that gets you sort of beyond the optimized 5 million ton per annum run rate for each of those trains. But I realized there might be some nuance there. So, I just want to get some color there and understand if there's anything incremental in that, that approval.

Yes. That approval was in the making for a while and went through all of the necessary regulatory processes, but I'll tell you. I am more and more pleased with our debottlenecking and optimization that we program that we've been able to do at the two sites. And if you're asking -- if I think there's more room to go, I do and we'll be sure to under promise and over-deliver on that aspect of it.

Perfect. That's all I had. Thanks for the time guys.

Our next question comes from Brian Reynolds with UBS. Please go ahead.

Hi, good morning, everyone. Just given the 2022 guidance range and comments in the previous capital allocation announcement of $1 billion to $2 billion in additional cash available, I know you just said that could be $1 billion to $2 billion higher on Spiro's response. I'm just wondering how we should think about capital allocation as we head into 2022, any of that excess cash will be deployed in 2022, or if that will be more of a 2023 and 2024 of them. Thanks

Sure. So, yes, when we speak to around $2 billion more of available cash through 2024, that don't really come over the span of the entire period of time, because just in this 2022 to 2024 timeframe, let's say margins have moved up over $3. So, just take that into account with a company that's 90% contracted that's how you almost get there in terms of overall cash. What you'll see us do with this momentum though is to an extent, we'll probably pay down more than $1 billion of debt just this year in our first year of capital allocation, but then you can see meaningful increases next year and not just that paydown, but allocations to the buyback program. And obviously some flexibility to not only FID Stage 3 at some point in the middle of next year or later, but even do some LNTP to start locking in prices and some of the schedule earlier in the year. So there's a ton of flexibility there. The main tailwind from this extra cash flow, I see as we came out saying that we hope to get to IG by 2024, it's looking like we'll be able to pay down that $4 billion of debt by 2023. And with that, obviously we can ramp down the amount of debt pay down. We'll be doing posts getting to IG, and that means we can ramp up some of those capital returns while still funding Stage 3. So, you could see us being even more aggressive on the buybacks eventually. And then obviously reconsider what the right payout ratio is for the dividend over time.

Appreciate the color. To pivot back just to the 150 TBtu of open capacity, just want to clarify, does that include all of Train 6 capacity at this time. I'm assuming late 1Q start date. And then also you talked about the debottlenecking initiatives. I think one to two mtpa on the capital allocation day. Is that also included the guidance or is that kind of vetted through the three years just continued optimization?

Yes, when we give guidance today for next year, that's literally the budget that we just went through and the forecasted plan. So, there's no debottlenecking work that needs to get done to achieve our plan for next year, which is over 2200 TBtu, and that's not including any commissioning cargo. So, the production related to Train 6 that should gear up later this year and obviously in Q1 next year. And just to give you some perspective on that commissioning, because it's turning on at pretty good time with where market prices are. We could have over 10 commissioning cargoes over the winter, and that alone could be over a half a billion dollars of extra cash, not baked into any of our forecasts for EBITDA or DCF. And to put in perspective what that number means to finish Train 6 and the third berth at Sabine that's around $300 million. So, we actually are more than covered for the best of our CapEx for the nine train program.

Great. I'll leave it there. Have a great day, everyone.

Thank you. Our next question comes from Michael Lapides with Goldman Sachs. Please go ahead.

Hey, guys, thank you for taking my questions. Congrats on a strong year. I want to think longer term, and I think the first thing is when you're talking to customers and many of your customers are the utility customers in Asia own very diverse power generation fleets. We've seen a ramp in [indiscernible] this year, probably early next year, although pricing could move things around. What are folks saying to you when you talk to them about whether there is a potential coal power plant retirement cycle ahead? Probably not in the next year or two given what's happened, but thinking 5, 10, 15 years down the road in Asia and how material that could be -- if I kind of want to think and compare it to the U.S. and European once?

Yes. Thank you, Michael. So, I'll start and then I'll turn it over to Anatol. As you know, just in China alone, there's over a 1,000 gigawatts of coal fire generation currently in operation. And I always relate that back to Calpine and when I ran that company, it was around 25,000 or 25 gigawatts and China's got over a 1,000 gigawatts of coal, so just a dramatic number that is multiples of Cheniere's, if they really need reliable supply of natural gas, like we believe they do. I actually think the demand for NatGas and for LNG has been constrained because of the lack of availability of the product. Had we had more product, the demand would've just been in double digits, significantly higher. So, I worry at these high prices, there's a lot of substitution going on and that tends to be a lot more coal and oil being used for power generation. So, we need to get back in balance, longer-term. And then I think folks will actually appreciate that NatGas is here to stay. And part of the solution for cleaner energy mix around the world.

Yes, Michael. Just to add a little bit to Zach's comments, China is committed to peak coal. It is still adding coal capacity, but it is retiring older plants and that will -- we expect only accelerate the numbers you're seeing now are really just the start of a power conversion to natural gas. It's still only 4% of total power, capacity in China is natural gas, but we're seeing, especially in the coastal provinces, more and more commitment to that with thousands of gigawatts being added. And it's not just coal, it's commitment to phase out nuclear in Taiwan, in Korea going forward. It is probably peak nuclear in Japan, in the coming years. So, we're seeing natural gas still an unwavering commitment to natural gas. Jack mentioned the high prices and the volatility that could cause a recalibration of those commitments. We haven't seen that yet. And as long as again, we do our job of providing stable, affordable, and reliable supplies with almost perfect reliability to our customers. Their economics are of course well within these prompt prices. So, that's clearly helpful in the equation over the longer term.

So if I wanted to think about a really long term outlook for Cheniere, can you remind us how much real estate or how many incremental tons you could potentially add after Stage 3, meaning how much real estate at Corpus is still available and are you even thinking about the Stage 4 at this point?

Yes, and yes, so we just finished our acquisition of the old Sherwin Alumina facility. That's contiguous to Corpus Christi. So, it's a little over 500 acres and it contains a berth. We believe we could probably add another four large trains, which would be about 20 million tons of additional liquifaction after Stage 3. And then as you know, Michael, we're just completing, we will complete next year berth 3 at Sabine Pass. So, again, we -- I guess it Sabine, it's a long term lease a 99 year land lease. But it's another 500 acres and plenty of room to grow at Sabine, especially with the third berth being completed. It eliminates one of the bottlenecks for us.

Got it. Thank you, guys, much appreciated.

Our next question comes from Craig Shere with Tuohy Brothers. Please go ahead.

Good morning. Thanks for fitting me in. It seems like there's really a lot of unrestricted cash at the MLP, I believe CQPs operating cash flow less distributions and even CapEx was positive in 3Q. And to Jack's point, commissioning cargos alone should be more than the cost of all remaining [SPL T-plus] [Ph] CapEx. Any thoughts about applying excess MLP liquidity towards a further train upsizing and or carbon sequestration and would FID on Sabine Train 7, make sense at all before you reconcile simplification and cost of capital issues?

Yes. So, Craig, first -- this is Jack, first in our guidance, we fund all the capital projects that we need at Sabine. And in that funding is a continued effort to do the necessary engineer and design work for CCS for Sabine Pass. Additionally as Zach said, we don't feel constrained with the MLP structure to not continue to expand and grow that facility. So, you should expect us to continue to want to leverage all of the infrastructure that we have there, which could include building a Train 7.

And Craig, I'll just add. Though you see about a $1.7 billion of cash on the balance sheet at CQP about $500 million of that was just the bond proceeds from the CQP bond we did in September that actually paid off the previous debt on October 1. So, there was an incremental $500 million on the books, an incremental $500 million of debt that went away October 1. And on top of that with this excess cash, we're already going to pay over $400 million down of the SBO bond. That's coming due in '22 through our capital allocation. So, we're taking advantage of it there. And then we're increasing into over $3 on the DPU making that commitment today for next year. So, the money is putting, is being put to use for sure, and again, we bake in quite a bit of development capital to ensure that we're progressing Sabine, maintaining Sabine, and setting ourselves up for some opportunities for expansion or for CQP.

Thanks. And for my last question, I'm just a little confused about '22 hedges, in that, they could arguably be thought to be weighted more towards first quarter, given proximity and desire to have recent very high pricing, or could be more weighted towards the remainder of the year, given uncertainties around actual T6 timing. Could you kind of walk us through how that kind of ratably moves through the year in terms of hedging?

You probably know the answer that we're not going to walk you through that in much detail. And I think we actually give quite a bit of detail here today, that we have 150 TBtu open. But, and then you can bake that into how the fact that we are already 90% or so contracted going into this year with all of our long term contracts. But to get to this almost 95%, that is a little bit of hedging. That's just forward sales that we normally do. And there's a bridging volumes for some of the long term deals that are in place as well, like ENN. So, it's a little a mixture of everything. I will say more of the open capacity over time is in the last three quarters of the year versus the first quarter. And that's just because we'll be ramping up Train 6 during that period of time.

Great. Thank you.

Our next question comes from Ben Nolan with Stifel. Please go ahead.

Hey, thanks. I wanted to go back to Corpus Christi a little bit sounds like things are very, very close to Stage 3 going FID, and Jack appreciate the color that you gave the four more large trains and 20 million tons, but not wanting to put the cart before the horse here, but just in terms of the, the timing of the process from where we sit now, what is at least realistic or practical in terms of thinking about okay, well, when do we move on to the next thing past Stage 3? And when does that actually could become operational?

Ben, right now, we are 100% focused on Stage 3. So, I don't want to divert our attention onto any further growth until I get Stage 3 up and built or at least commercialized. So, the thought that we would sit on our haunches after Stage 3 is interesting to me because as you know, about a 100% of the gas at Corpus Christi right now is currently coming out of the Permian basin. And we are a good credit and a good buyer and a reliable customer of producers to take that gas and convert it and sell it to the global markets. So, we're pretty excited about it. The other aspect of this is probably one of the most transparent industries I've ever been in, to where when we make the filing, you all will know about it, it'll be filed publicly and on a docket and reviewed. And so, you'll have four warning that we've shifted gears.

Right? Well, and I was going to see if I could get a little four warning there, I guess. But the next question, it actually, it does relate to Stage 3. I've seen in other places, some things actually already with numbers above 10 million tons being sort of quoted in terms of its capacity. You talked about debottlenecking on the first nine trains, but are you starting to get more confident already that you were conservative on the 10 million tons for Stage 3?

Yes. We like to do things with a full wrap. So, and Bechtel will guarantee, the performance as well as the budget and the schedule and for them to get comfortable with the guarantee they're going to darn well, make sure they can meet or exceed that number. And our permit though is for 11.5 million tons just to give you some insight.

Perfect. No, that's helpful. I appreciate it. Thanks guys.

Our next question comes from Mike Webber with Webber Research. Please go ahead.

Good morning, guys. How are you?

Good, Mike, how are you?

Good. I know we spent a bunch of time this morning already talking about a medium term pricing and CMI, but my primary question is for Anatol. And just curious if you can give some color around whether or not you all have been able to actually start to push six pricing yet? We've heard feedback across different parts of the space that you're starting to see people start to inch up SBA pricing, and just curious on your end, have you been able to do that yet, or is that something we'd expect for an expansion?

We -- the answer is for us to maximize value for ourselves and to come up with a solution that is attractive to our customers. So, in today's environment, the most attractive way to bridge that is to have a product that's differentiated that has these early volumes. And as we touched on earlier, those volumes are priced at the curve. So, the economics are influenced by those molecules that are in '22, '23, '24 and that has been moving prices for long-term commitments higher as a result. So, that's clearly playing out and we're on the beneficiary end of that. But that says we're perfectly -- we're perfectly content with having an MPV neutral solution that allows our customers to put that into the long-term commitment that they are making to us.

And it depends, Mike, right on what -- which parts of the value chain they want, if they want us to deliver it to their dock, then shipping is a pretty critical and valuable component of that transaction. So, at the market, the market's competitive.

And since then, you guys obviously you've executed your butts off, and Zach and his team have been able to really drive down your cost of capital, but to replicate those kind of per unit returns, being able to drive that SBA price up probably more difficult now than it was in 2011 to 2015. But I guess to the extent that having that a little, I'm trying to get a little bit more, a little sense of -- on a relative basis or love on an absolute basis, but to what degree, you're actually able to leverage those immediate CMI volumes actually drive that CMI or that SDA price back closer to the mid-2s or into the high-2s or even beyond 3, where you were in kind of 2011 to 2015, I think some context there and some sense of scale in terms of what you think is realistic as we head into what should be a pretty decent period between now and say the middle of the decade.

So Mike, I'll say this, I think you will be pleasantly surprised when you see the financial metrics when we FID Stage 3 and it's a combination of everything. So, we get paid a premium for reliable -- for being a reliable producer. We get paid a premium for handling, shipping and marketing, and all of that adds up to a very nice price back net back to us. And it works its way through CMI, because that's where all of our skills and our people are that handle that for us. But at the end of the day, it's a combination of all of the above. If you're asking for the plain vanilla FOB CP contract it's very competitive.

Right, yes. I guess I want to ask you, is that premium, whether that's widened out to any degree, and if I think about the valuation that's predicated on that kind of vanilla, that's a negative price point.

It's absolutely widened out shipping is at an all time high. And as you know, the Panama is congested. So, it takes a lot longer to get to Asia. Then shipping prices are a lot higher, so it all translates into higher overall prices.

Right, right. Okay, great. I'll follow-up offline. Thanks, guys. Appreciate it.

Thank you. We will take our final question from Sean Morgan with Evercore. Please go ahead.

Hey, thanks for taking the question, guys. So, I noticed early in the call, I talked about the hedges, primarily being non-cash and in the press release, you talked a little bit about how the IPMs tend to have a higher amount of hedging associated with them. So, I was kind of wondering just structurally aside from the longer duration and the international pricing, is there anything that's driving that and what percentage of the hedges that we saw being flowing through the income statement. This quarter were related to the new IPM business versus kind of the more historical business that you guys run?

Sure. So, this is Zach, and I'll just say on total derivatives, we had a $3.5 billion loss on an unrealized basis. So, anything forward-looking non-cash it was $3.1 billion. And on the IPM transactions alone, which is literally just three deals with Apache, EOG and Tourmaline, and Tourmaline started in Q3. At least we signed it in Q3. That was $2.5 billion. So, just to put it -- Yes, into perspective how big that is, and the reason for it is that they actually have to look out the entire length of that contract. And it's treated almost like a regular hedge, because instead of buying gas at Henry Hub, we're buying it at Gulf Coast LNG net back less our fixed fee. And every quarter where margins improved like they had a going from two -- like over $10 now and expanding even in the outer years, it makes the big move. Honestly, we kind of joke here. We hope to never see a major unrealized derivative gain because we'll have the opposite of what we're seeing in the market these days and going forward.

Okay. That's interesting. And then just really quickly one follow-up, so I noticed the margin deposits were broken out and it went up and its pretty small relative to the massive company built, but I'm just wondering, is that indicative of any stress customers with these kinds of high spot prices we're seeing in terms of their liquidity and you guys requiring more in the way of bank lender credits, or how did those margin deposits sort of function?

In terms of margin requirements, clearly when we do a little hedging, we don't go all out all that far, but we did some hedging even going into next year. So, those are some of the unrealized derivative losses. Cash collateral is often called for those; some of the unrealized derivative losses. Cash collateral is often called for those. But at the same time, we have like 15 or so, if not more is the counterparties on hedging and have hundreds and hundreds of millions of dollars of open credit there. And then, as you could see in our balance sheet, when we talk about over $2 billion cash, untapped, revolvers everywhere, it was a pretty minimal move for the overall company. And that that's how we like it. And that's honestly why we prefer these long-term deals on a Henry Hub plus basis. There's no cash collateral and we lock in the cash flows for even longer periods of time.

Okay. That's great. Thank you.

Thank you. That will conclude today's question-and-answer session. I will now turn the conference back to the management team for any final remarks.

Hi, this is Jack. I just want to say thank you again for all of your support. It's exciting times for us at Cheniere and we look forward to a strong finish in 2021, and a great start to 2022. Thank you very much.

This concludes today's conference call. Thank you for your participation. You may now disconnect.