Good day, ladies and gentlemen, and welcome to the Cheniere Energy Q3 2022 Earnings Call and Webcast. Today's call is being recorded. At this time, I'd like to turn the conference over to Randy Bhatia, Vice President of Investor Relations. Please go ahead.

Thanks, operator, and good morning, everyone. Welcome to Cheniere's Third Quarter 2022 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, Executive Vice President and CFO. Before we begin, I'd 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 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 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 all for your continued support of Cheniere. I'm pleased to be here this morning to highlight our third quarter 2022 results and achievements and discuss our positive outlook for the remainder of this year and into next, all of which continues to demonstrate Cheniere's market leadership and excellence throughout our business. Since our capital allocation update in September, we have remained laser-focused on our operations, ensuring reliable LNG production and supply for our customers amidst global energy shortages and challenges. In fact, just last week, we had a daily production record for the company, producing well north of 7 TBtu of LNG and also a daily record at Sabine Pass of approximately 5 TBtu of LNG. My congratulations to the Cheniere professionals for a job well done. Additionally, in conjunction with Bechtel's Engineering and Construction, we are off to a great start at Corpus Stage 3. We have rolled up our sleeves, hit the ground running and have already seen some early signs of potential acceleration on that project. Across the LNG market, volatility continues to dominate, driven by short-term supply-demand pressures. Recently, from record-breaking warmer weather, near-term prices have retreated from the highs we saw barely 2 months ago. Nevertheless, we are largely insulated from these price swings, given the highly contracted nature of our business, and we remain focused on long-term value creation as our priority with short-term market dislocations only serving to accelerate our long-term plans, as you heard from me and Zach in September. Now please turn to Slide 5, where I will review some key operational, financial and strategic highlights from what was yet another very successful quarter. For the third quarter, we generated consolidated adjusted EBITDA of approximately $2.8…

Thanks, Jack, and good morning, everyone. Please turn to Slide 8. Despite it being a shoulder season in many regions, the turbulence in the global gas and LNG markets continued throughout the third quarter with only a few brief stretches of [indiscernible]. While geopolitical conflicts and the related curtailment of Russian gas flows are largely responsible for supply shock in Europe this year, we believe that some cyclical dynamics also played a role in laying the groundwork for today's market conditions of elevated prices and volatility. In fact, we've signaled for some time that the rate of new liquefaction capacity coming online would decelerate significantly during the 2020 through 2024 period, given the lack of FIDs taken in the years prior. As you can see on the chart to the left, we estimate current capacity growth rates to be near 2%, a level not seen since 2012 when the market was also out of balance and prices clearly signaled the need for new LNG capacity. As a result, given the long lead time required to develop LNG projects, we expect market balances to potentially remain tight for the next several years, exacerbated by the crisis in Europe and the reduction of Russian supply to the European market. As shown in the middle chart, LNG imports from the U.S. have been the primary resource to offset the removal of over 50 Bcm of Russian gas imports from the European market this year, further reinforcing Jack's earlier point on the ability of U.S. LNG to respond quickly to market signals. As the primary source of global LNG supply growth for the past 4 years, the U.S. has surpassed Australia and Qatar to become the world's largest supplier measured by installed capacity this year, and this growth could not have come at a…

Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to review our third quarter 2022 financial results and key financial accomplishments, all of which continue to reflect our team's tireless efforts to ensure safe and reliable operations and seamless execution throughout this period of prolonged volatility in the global energy markets. Turning to Slide 12. During the third quarter, we generated adjusted EBITDA of approximately $2.8 billion, distributable cash flow of approximately $2 billion and a net loss of approximately $2.4 billion. Our third quarter results once again were supported by the sustained higher margin environment across global gas and LNG markets. Higher lifting margins due to higher Henry Hub prices across the quarter, and incremental margin achieved from certain portfolio optimization activities. Our quarterly results were achieved despite a couple of CMI cargoes moving into Q4 from Q3. In addition, in the third quarter, we recognized a portion of the payment from Chevron related to the early termination of the regasification TUA, which we expect to receive before year-end. We recognized [indiscernible] 560 TBtu of physical LNG during the third quarter, including 556 TBtu produced from our Sabine Pass or Corpus Christi projects and 4 TBtu sourced from third parties. Approximately 82% of these LNG volumes recognized in income were sold under long-term SPA or IPM agreements with terms greater than 10 years. Once again, the net income line continues to be impacted by the unrealized noncash derivative impact related to our long-term IPM agreements, as we have discussed on prior earnings calls. In the third quarter, we recognized $4.9 billion of these unrealized noncash [indiscernible] losses attributable to the continued growth of LNG margins and commodity price volatility. As a reminder, because GAAP requires mark-to-market accounting of these long-term gas supply agreements, but does not…

[Operator Instructions]. We'll take our first question from Michael Lapides with Goldman Sachs.

Just real quickly, can you talk, Jack, a little bit about time line. You hinted at it a little bit for Stage 3 in terms of potentially being able to move things forward a little bit, how much, how material? And then can you talk about the maintenance at Sabine Pass in 2023? I assume it's probably more shoulder month, but let me know if that's wrong. And how should we -- is there a way to quantify the impact on volume?

Michael, thanks. So first, on construction in Stage 3, I'm extremely pleased at the progress to date. You can tell from my talking points that I perfectly expect my staff and Bechtel to have underpromise and overdeliver on my expectations. And -- it's a little early at this point for us to revise our schedule. But I would stay tuned if we continue to have this favorable weather and we continue to execute the way the plant has developed. As far as maintenance, you're right, we try to do maintenance in the shoulder months where LNG prices typically are lowest. It's a 6-year cycle at Sabine. So it's an unusual year for us where we have 2 trains coming down basically at the same time to do maintenance on them. As far as quantities of the maintenance, I'll turn it over to Zach and he can give you more detail on that part of it.

Michael, as we think about '22 versus '23, we're going to be slightly up year-over-year on total production and that's really mainly due to the Train 6. We had about 11 months of production hitting P&L last -- this year with a little ramp-up in Q1. We have a full year of Train 6 for '23. But that will be offset a bit by this major maintenance that is definitively planned for next year. So basically, I'd say we are probably rounding down to 44 million tons for the year this year, and we'll be right around 45 million tons where the rest of the 7 trains are not -- that won't have the maintenance, we'll pick up the slack to an extent.

We'll take our next question from Michael Blum with Wells Fargo.

So just wanted to go back, Zach, to your comments on CapEx in '23. So you flagged the Corpus Christi Stage 3 spending. So that's clear. Anything else you flagged major? I know you talked in the past about prep work on Midscale 8 and 9. So I just wanted to see if there are any other major items.

That's about it, Michael. I mean the $1.5 billion is the, let's say, all-in levered costs that we would deploy next year. And honestly, that's kind of what we expect this year. We've spent about $1 billion already pre-FID and post-FID and have another $400 million to $500 million to go this quarter as we're like 12% progressed at Stage 3. On other CapEx, we're going to be spending money, let's say, hundreds of millions of dollars across the board on things to continue to optimize, but also develop at Corpus and Sabine. And you're just not going to notice it as clearly, we'll have billing into DCF next year when we come out with it officially in February.

Okay. Got it. That makes sense. And then I just wanted to ask kind of between your debt and equity allocation decisions quarter-by-quarter, third quarter buybacks are a little bit lower, debt purchase was higher. Clearly, buybacks are picked up in Q4. Just trying to see if there's any patterns we should be aware of or what's behind the decision process there?

Sure. So clearly, you could see in Q2, we bought back over $500 million of stock during that June period, specifically [Technical Difficulty] the stock had a little pressure on it, and we were opportunistic. And then if you just look at Q3 from to , the stock went up like $35. So you can imagine, as the stock is going up, we're obviously being less opportunistic. But when things are a little bit more stagnant or obviously, there's pressure on the stock, we're hitting it harder. And then another -- the other thing I'd add is we clearly had to wait till the announcement on capital allocation in mid-September, just with all the [indiscernible] that came with that to officially set up the 10b5-1 for Q4. And that's why the new plan with the upside allocation started in earnest in Q4, and we've already bought back over 1 million shares just in October.

We'll take our next question from Jeremy Tonet with JPMorgan.

I just want to kind of reconcile against the last update that we heard from you guys. A bit over a month ago with the September update, you gave guidance. And since then, spreads came in and Europe faced logistical issues, you now point to the high end of the EBITDA guide. Just wondering what positives materialized and will they carry into '23?

Jeremy, it's Zach. So a few things materialized for us in terms of -- I think there was an extra cargo at Corpus. Optimization, I mentioned in the prepared remarks, we had higher subchartering revenue as we really position the whole portfolio going into the winter and with elevated pricings on shipping, that added some money. And then we obviously were a little proactive on selling into the market even in September before the market came down a bit and now it is now just over $10 for the rest of the year. And that was offset a bit even by some crossover cargoes that we've pushed out again into '23. They're moving back and forth depending on whether they're going to hit Europe or Asia. So it only took a few hundred million there. And that's not to mention we released those final origination cargoes. We pretty much rolled those over into 2023 to keep that in the arsenal for the long-term origination team. But with all that, yes, we feel pretty good we'll be in the upper half of the guidance range.

Got it. Makes sense. I bet a little Cheniere conservatism was baked in there as well. So always good to see that. And just kind of continuing with this, we -- these European logistics issues carrying forward into 2023, just wondering if you see that kind of impacting your outlook now? And also just broadly macro question here, if Russia is sending much less gas into Europe in '23. How do you think Europe [indiscernible] next year?

Jeremy, it's Anatol. Thanks for the question. The good news on the Europe front is it is moving very aggressively to resolve these infrastructure issues. We spoke about our honor to inaugurate Eemshaven. That facility will double. We do expect that throughout '23, about 60 million tons of additional regas capacity will be added. That number will probably get over 70 million tons in '24. But we agree with you, we think Europe is in no way out of the woods without that pipeline flow. It is really -- for most of this year, it is next winter that we were more worried about because, obviously, this winter did have the benefit of a substantial amount of flow even in the first half of this year before Nord Stream was fully shut off. So it will be a challenge. The infrastructure issues will be addressed over the next really 6 to 12 months. You've already seen a dramatic decrease in the amount of floating storage in Europe, and we think that, that was a little bit of weather and this additional infrastructure solutions will get cleaned up quickly. But the molecules for Europe will be very difficult to come by over the coming years.

Got it. So just to be clear on that last point, you're seeing the winter fill next year looks like it could be as tight as it was this year?

Weather-dependent, of course, as always, but entirely possible that it will be more difficult to reach these 80-plus percent full storage levels.

We'll take our next question from Marc Solecitto with Barclays.

In terms of the liquefaction fee environment and the marginal cost of new supply, it wasn't too long ago where it seemed like the industry might have been trending towards the lower half of that 2 to 2.50 CMI margin assumption range? So just wondering with interest rates now at the highest they've been at in over 15 years and EPC costs trending higher, where do you see the marginal cost of new supply and liquefaction fees trending today?

Yes. Thanks, Marc. Anatol again. We expect that trend to play out. But I have to tell you kind of in the trenches, you haven't seen much of that. There are -- the competition among U.S. developers is still one that is anchoring expectations, buyer expectations in that low end of the range. I will say that it has been coming up somewhat, but in the aggregate between these aggressively priced offtake deals by some of the early-stage developers as well as the EPC inflationary pressures and the interest rate environment, that's a tough equation to solve, and we think that that's, of course, part of the reason why you haven't seen more projects [indiscernible]. Zach, do you want to add some thoughts on inflation?

Sure. So just to acknowledge the inflation out there that's clearly happening for everybody, and we think about our operating expenses or even our SG&A, our SPAs, which we have over 30 of with different counterparties all over the world, they all have a built-in annual escalator based on CPI for, let's say, approximately, give or take, 15%. And if you just bake that in and with how much we have in fixed fees, going into the new year, we're more than covering any inflation on O&M and SG&A for the company, which just highlights the stability of that run rate cash flow.

Got it. That's very helpful. And then as it relates to the 150 TBT open for next year, have you started to lock in some of your open exposure for 2023? And would that be included in that reference open capacity number?

Yes. So what we acknowledged in the prepared remarks and in the presentation is we actually have 150 TBtu truly open. And of that, we're reserving 20 TBtu for origination placeholders, so that $130 million, give or take, for a $1 move in margin, that's open today. However, I'd say we have probably sold onward and locked in fixed margins for around 20 TBtu for 2023 at this point. Clearly, the liquidity is pretty tough with how volatile it's been. But we're making a dent there and we'll give an even more robust update next year.

We'll take our next question from Jean Salisbury with Bernstein.

Anatol, I wanted to get your view on the medium-term LNG market. Obviously, some large moving pieces and whether more U.S. projects go forward and whether Russian gas keeps [indiscernible], but seeing everything that you can see now, do you think it's more likely that LNG will be overbuilt or underbuilt in the back half of the decade?

I really don't see this overbuild dynamic even in that '26, '27, '28 time frame. There's such an enormous amount of latent demand, if you will. We've been shying away from the term of demand destruction, right? We've termed a demand management. Even as prices pulled back in Europe modestly over the last 1 month, 1.5 months, you've seen a fairly dramatic resumption in industrial demand, right? So those numbers don't go away for a very long time. And yes, BASF and others may build facilities in the U.S. and in Qatar, but fundamentally, the demand picture in Europe just isn't going to change that much. And we still see a tremendous demand growth story out of Asia and EM in general. So we, of course, as you know, fully believe that the Qatari mega trades will continue to come on, the 4 under construction now, plus 2 more plus 2 more. There just aren't enough solutions and now with this very robust contracting, but relatively slow process to FID U.S. projects, that's just going to make the market that much tighter through the back half of this decade. So we see years and years of this dynamic before you can see a truly balanced market.

Jean, this is Jack. I always track how much capital is being invested in natural gas infrastructure around the world, and there's over $1 trillion right now of nat gas projects around the world with pipelines and power plants in regas facilities. So that, to me, is a signal that gas is here, it's here to stay for the long term and that the LNG side of it will continue to grow.

Great. That's -- I appreciate all that. As a follow-up, I'm just wondering what the waiting time for a new LNG FERC filing is these days? I think earlier this year, you kind of estimated 2 years but said maybe if the U.S. focused on it, it could be a lot faster than that. So I'm wondering if 2 years is still a good number or faster than that or possibly slower than that?

Yes. No, Jean, I'll tell you, over the last 6 years, we've doubled our business here at Cheniere. And today, more than ever, that permitting strategy, I believe, is essential, right, because it's more and more difficult with the current regulatory environment to make any mid-course changes, whether they're on design or construction. So we filed -- we prefiled for Midscale Trains 8, 9 that got accepted not too long ago. There's a 6-month period after prefiling that we need to wait. It's our expectation that we will file immediately thereafter, so early next year with 8, 9 and then -- and hopefully, my goal is to make those trains contiguous. So right after Train 7 is commissioned, I want to go to Train 8 and then to Train 9. So we're trying to move quickly. I think that's just strategically the whole permitting strategy part and making sure that you've crossed the t's and dotted the i's and your application is more important [indiscernible].

We'll take our next question from Brian Reynolds with UBS.

Maybe just a follow-up to Jean Ann's question on the FERC permitting process. Any insights on to whether we could see further growth at Corpus or Sabine? Are there any signposts that we should be looking for in terms of preference? And when should we expect maybe a pre-FERC filing process to begin there?

No, look, you know from our talking points that and Anatol's talking point that we're looking at 30-plus MTPA of growth across the portfolio. I would expect Sabine to be first. I'd expect sometime next year that we do a prefiling for additional growth there at Sabine. But again, like I said, we're making sure that we understand everything it is to know about that growth and that, that filing is complete, so it gets accepted and moved through the process appropriately. And then right after that, hopefully, Trains 8 and 9 will be done at Corpus, and we can focus on whatever additional expansion plans we have there.

Great. That's super helpful. Maybe as a follow-up, the ability to sell cargoes forward in the market, the times seem shorter and shorter relative to years past just given pricing and liquidity. Can you just talk about how that market is now? Is it improving in terms of being able to sell those cargoes forward? And could you be in a situation middle of next year going into the tight winter that was alluded to earlier, to where you'll be selling those cargoes basically at spot prices at that time?

Sure. So this is Zach. And I have mentioned this previously on calls, but it's just a totally different world than it was, let's say, 18 to 24 months ago, where you could lock in a cargo and maybe tie up capital for, I don't know, $10 million, $15 million, $20 million. We're tying up cargoes now into the end of the year, and that potentially requires us to reserve capital of almost $200 million. And we start talking about tying up cargoes financially into next year or a quarter plus away. That's over $0.5 billion still. So the volatility is just so elevated and even with, I guess, a drop in LNG prices to an extent even though we're still talking about $10-plus this year, $20-plus next year and onward, it just doesn't make it too tenable to handle 130 TBtu that are open for us. So what the CMI team has done tremendously well this year and is already doing as we speak, is selling physical cargoes on a fixed price basis or even on a Henry Hub plus basis. And that's how we've been able to give you these guidance updates with confidence, even though there's been just so much volatility. So for the time being, yes, we don't see financially hedging as a large tool for the company, but it will be a tool. I mean you see there's still margin deposits on the balance sheet of over $200 million for the quarter. So we're using it, but we're being quite selective.

We'll take our next question from Julien Dumoulin-Smith with Bank of America.

Just to come back to try to quantify some of this. In terms of improving returns, just if only simply because of the higher rate environment, can you try to speak to that a little bit more in terms of what you're prospectively seeing in your counterparty conversations? Again, I know that Anatol, you try to provide some context in terms of the offtake prices themselves, but maybe reframe that in terms of returns, if you can elaborate on that initially and maybe speak a little bit to the pace of contracting? Obviously, you've retained a certain portion in '23, but what are you seeing in terms of your own commitment pace next year as well?

All right. This is Zach. I'm going to try to answer some of that and then I'll hand it off to Anatol. But basically, what a lot of these folks are experiencing as they try to FID really don't pertain to us today. I mean we started locking in our costs earlier this year, and then we have a lump sum turnkey contract where I can still say to you that -- we're building Stage 3 at 6x CapEx to EBITDA, and it's under a lump sum turnkey contract with Bechtel and we have hundreds of millions of dollars of contingency that were baked into that cost that we haven't touched. So we feel very good that we were able to be competitive in our to range for long-term contracts, and we're going to make double-digit unlevered returns on Stage 3. We're in the process of permitting Trains 8 and 9 on top of that. Obviously, they're going to be incredibly cost-effective considering we're not using [indiscernible] to expand there. And we'll see where those prices shake out. But we think it's going to be extremely competitive, and we'll be able to offer a really competitive price out there without elevating prices all that much, if at all. I'll hand it off to Anatol though.

Yes, Julien. So we felt comfortable with this to range. As you heard some of the previous Q&A, I mean the market overall for U.S. projects has firmed up a bit, but it is still very much anchored in those early-stage developer proposals. We've always felt like we extract a premium for the operational excellence and the performance that we now have a track record of. We don't participate in the race to the bottom, and we have a lot of components to our contractual agreements like the inflation mechanism that Zach spoke to earlier that are heavily negotiated, and we think will stand the test of time much better than most of the other proposals that are in the market. So we're still very comfortable with the returns responsible for the top line of that Zach equation. I think we can continue to deliver those types of economics. And yes, we [indiscernible] with this brownfield advantage and operational excellence and cargoes that are incrementally available from debottlenecking as part of that commercial value proposition, but the numbers that we're giving you today, we still feel very good and strong about.

And it's nice to add that we're not really issuing debt all that much these days. We're just paying down billions of dollars a day. So we're just in a different world than we would have been 10 years ago in a rising rate environment.

Totally. Understood, right. It sounds like return disclosure that you guys are writing are largely unchanged albeit elevated nonetheless. If I can, just to come back and clarify from earlier on prefiling, should we expect a regular cadence as you think about the -- your regular deployment of new liquefaction out in the decade? As you alluded to a moment ago, you would expect next year some prefiling. Should we expect them to sort of overlap in a similar and regular cadence way? Or do you think that because you say you need to dot your i's and t's that you can't have as much of an overlap. I know that was a little bit of a thought earlier. But just coming back to clarify that.

So I think, Julien, you should expect some overlap between the 2 sites. We're not going to have overlap on 1 site.

We'll take our next question from Ben Nolan with Stifel.

I'm surprised that nobody has mentioned this yet, but how about Cristian Javier and those Astros yesterday, my goodness.

Thank you for mentioning that because the night before was a bad night and last night made up for. So we're very excited to have him come back home and bring home the World Series right here in Houston.

Absolutely. I'm with you. So my 2 quick questions here is, first of all, I'm curious where you stand as it relates to LNG shipping. Obviously, we've seen the shipping rates just explode here recently, and I know a lot of what you do is fully contracted, but maybe just any update on sort of how you're positioned in that respect.

Yes. Thanks, Ben. We operate a long-term business that has long-term commitments and lots of flexibility within that. We learned our lessons really before we started in the market and are not in a position to risk being short-shipping. So we're well protected. Our delivered contracts and our producer contracts have a lot of optionality embedded in them that are paid for by our customers, and we take advantage of that, as Zach mentioned earlier, in some of the optimization opportunities we've experienced over this year. So we're in good shape and the market give us on that side at the moment.

Yes. I'll just add. I mean at this point, we're basically the second largest charter of ships in the world. And we've been proactive on this as we sign up the [indiscernible] deals or IPM deals. We're typically almost simultaneously locking in long-term charters. So going into this winter, even going into this year, we've had a large portfolio that's well under $100,000 a day when prices have been doubled, tripled, sometimes quadrupled or more. So that's been part of the tailwinds to EBITDA this year and even part of how we got to the upper end of the guidance range at this point in just the last month is some of the subchartering that we've been able to do as we haven't used all our ships to get to Asia, but are directing them towards Europe.

That's great color. I appreciate that, Zach. And then as my follow-up, it's interesting to hear you guys talk about sort of beyond the next phase of Corpus Christi and looking to potentially do something at Sabine Pass. I'm curious how you're thinking about the way that's done? Obviously, here lately, you're doing the Midscale versions. Is that just because they happen to be a good fit for where -- what you're trying to do is Stage 3? Or are you thinking that whatever the Midscale model is probably the way that you're going to be moving forward with all your incremental development going forward?

No. We're looking at all the technologies. So we're looking at gas compression. We're looking at large electric compression. We're looking at Midscale electric compression. So we're doing a complete evaluation. I like the Midscale solution for Stage 3. It helped control the inflationary pressures that we see on the large trains with a lot of [indiscernible] nickel and precious metals. But it doesn't mean that's where we're going to stay for the rest of the portfolio. So we'll develop a solution that is appropriate for the site.

We'll take our next question from Alex Kania with Wolfe Research.

Just can you talk a little bit more maybe just about the broader landscape of these partially contracted LNG projects? Do you think that, ultimately, that a fair amount of those may not end up moving forward? And if so, do those kind of represent commercial opportunities for you to kind of discuss kind of contracting with some of these parties that are already on board, some projects that may end up not moving forward?

Yes, Alex. This is Anatol. I'll try that first and see if anyone else wants to chime in. But look, we -- with the loss of Arctic Russia as a major supply [indiscernible] to meet the LNG demand, U.S. was the next logical choice. You saw this rush to contract 40 million tons year-to-date and 30 million of that has yet to be performed on. And like with all of these -- there isn't a simple answer for these questions anymore as the market becomes large, diverse, has multiple participants. There are a lot of load serving entities in that 30 million tons that need the LNG, and there are a lot of opportunistic buyers in those 30 million tons that are just out there to see what can possibly get over the finish line and offer the kind of attractive economics that were too good to pass up. So there's some of each. We certainly think that we're in a great position to continue to grow our platform, do it judiciously and potentially benefit from some of the buyers that really need the supply over the coming years.

Great. Then maybe just a follow up on the rating agencies. I mean I know they've had some time to digest the capital allocation plan that they've had already some rating updates. Do you kind of have the sense though, broadly about how maybe that trend towards the investment-grade goal may look heading into next year or so? Just getting a sense of the rating agencies -- what else the rating agencies need to get you kind of uniformly into the BBB range?

Sure. This is Zach again. And I'll just say we feel quite confident that our balance sheet strategy has been validated even recently. With the momentum on the ratings, upgrades, finally starting to catch up to the momentum on the debt paydown on the credit metrics that are at this point under 3x even on an LTM basis. But I guess how I'll put it is we're on the -- in the spirit of the Astros being in the World Series and then they hit last night, we're in the home stretch on getting [indiscernible]. And basically, the game plan is we're going to inundate or overwhelm them with a little more debt paydown and EBITDA growth. And yes, it's just going to be too evident when you add on to that the execution from operations and construction and just the contracts. I mean we have over 30 counterparties, average rating, remaining life of the contracts is 17 years for over 90% of our capacity. So when you add all that up, yes, we're pretty confident we're going to get there by the first half of 2023, if not sooner. And yes, seeing all the agencies provide upgrades already this year, we're just getting started there.

We'll take our last question from Craig Shere with Tuohy Brothers.

Just kind of picking up a little on the last question about contracting. Note that long-term SPAs from perspective in actual U.S. projects kind of materially trailed off the last couple months. Given that brief hiatus, I wonder, Anatol, if you can opine on your confidence that the Europeans will step up to the table again into the first half of next year? And if you could give us a sense to the degree you think Cheniere is being shortlisted by the Europeans on prospective new long-term commitments due to a combination of your bridging cargoes, a desire to reward those who helped this year and a desire to work with partners that can make clean energy investments in the medium and long term in CCUS and hydrogen a priority?

Thanks, Craig, for the leading question. If I ever gave you the impression that we feel confident that there will be an armada of European load serving utilities as counterparties, I misspoke. I think that those will be few and far between. We, of course, have done the transactions with Equinor and Engie, as you know, this year, and we are optimistic that European-based buyers will be part of the portfolio and part of the solution going forward. But we do see the Asian market as the primary growth driver and the primary long-term contracting opportunity. Year-to-date, there have been freshest view, I think, what you would call European buyers that have come to the table. You'll see them here and there. We're obviously in those discussions. As you said, we bring a lot to the table, but they are fewer and far between. And even though we have been a critical part of rebalancing Europe last year and this year and we'll continue to do our best to support its efforts to meet its energy demands, we don't expect a lot of load serving European utilities to be in that 30-plus counterparty list going forward.

Thanks, everybody. Thanks for your support of Cheniere.

And ladies and gentlemen, this does conclude today's conference. We appreciate your participation. You may now disconnect.