Cheniere Energy -- How the Business Works

Cheniere Energy is the largest US LNG exporter and the second-largest globally, controlling roughly 50% of US export capacity and ~11% of global capacity. The business model is elegantly simple: source cheap US natural gas, liquefy it at world-class facilities in Louisiana and Texas, and ship it to global buyers under long-term take-or-pay contracts that guarantee cash flows regardless of commodity price swings. Over 95% of capacity is contracted through the mid-2030s, creating one of the most visible and durable revenue streams in the energy sector. Destination flexibility -- the ability to redirect cargoes to the highest-priced market in real time -- provides additional margin upside beyond contracted minimums. FY2025 revenue reached $20.0 billion with EBITDA of $6.94 billion and distributable cash flow of $5.3 billion.

Global market share estimates from industry analyses, IEA, and company filings. Sources: FinancialContent, gCaptain.

Toll-road economics with commodity upside. The core insight is that Cheniere is not a commodity company -- it is an infrastructure toll collector. The 95%+ take-or-pay contract book guarantees a fixed liquefaction fee per unit of gas processed, regardless of the prevailing LNG price. Feed gas costs are passed through to offtakers. This means the base business generates predictable, annuity-like EBITDA with minimal commodity exposure. The remaining ~5% of uncontracted capacity provides optionality during price spikes, as does destination flexibility on contracted volumes. The result is a floor on cash flows with an asymmetric upside skew.

Brownfield expansion creates a compounding flywheel. Each new train built on an existing site costs less and generates returns faster than a competitor building from scratch. At 7x CapEx/EBITDA versus 10-12x for greenfield projects, Cheniere can earn superior returns on incremental capital while competitors struggle to clear the investment hurdle. This brownfield advantage, combined with the Bechtel partnership that has delivered 9 trains on-time and on-budget, means Cheniere can expand capacity more cheaply, more quickly, and with more certainty than anyone else in the Western Hemisphere.

The demand setup is structural, not cyclical. Global LNG demand has grown at a 5%+ CAGR over the last decade, driven by coal-to-gas switching in Asia and energy security concerns in Europe. This is not a one-time event -- it is a multi-decade transition as emerging economies industrialize and developed economies decarbonize their power grids. Cheniere is positioned at the intersection of US energy abundance and global energy demand, with the infrastructure to connect them.

Capital return accelerates the compounding. With $5.3 billion in distributable cash flow in FY2025, Cheniere is deploying a $10 billion share buyback authorization through 2030, targeting a reduction from ~220 million shares to 175 million. Combined with 10% annual dividend growth, this creates a powerful per-share compounding dynamic. Management targets $30/share DCF by end of decade at 175 million shares -- implying roughly $5.25 billion in annual distributable cash flow on a smaller share base. At a 10x DCF multiple, that implies an intrinsic value of approximately $525 per share, roughly 87% above the current price.