(Reuters) -U.S. liquefied natural gas (LNG) company Cheniere Energy (NYSE:LNG) Inc on Thursday reported a third-quarter loss on derivative contracts while delivering revenue and adjusted profit that more than doubled on surging LNG demand.
The top U.S. exporter of LNG said it took a $5.49 billion loss on derivatives and foreign exchange from mark-to-market declines in the value of its long-term gas contracts.
Shares rose a fraction to $178.85 in mid-day trading as the company disclosed an October 1 million share buyback that was double its third-quarter purchases and as executives pointed to demand for new LNG supplies lasting late into the decade.
Cheniere reported a net loss of $2.39 billion for the quarter ended Sept. 30, up from a loss of $1.08 billion in the same quarter a year ago.
Revenue rose to $8.85 billion for the three months, from $3.20 billion a year earlier, on higher volumes and prices for its LNG.
The company is pursuing permits to expand its Texas and Louisiana gas-liquefaction plants to double total capacity to 60 million tonnes of LNG per year, said Chief Executive Jack Fusco.
"There is an enormous amount of latent demand" from Europe and Asia buyers to soak up new supplies, said Executive Vice President Anatol Feygin on a call with investors. It will take years "before you can see a truly balanced market," he said.
Third-quarter earnings benefited from higher-margin LNG sales into the spot market and from a payment from Chevron Corp (NYSE:CVX) to exit a terminal contract, Jefferies analyst Sam Burwell said in a note.
Its LNG volumes increased by 12% during the third quarter versus a year earlier, and its number of cargoes shipped rose by 11% to 156, the company said. Cheniere is protected from soaring tanker freight rates by its long-term charter contracts, Feygin said.
China's lower demand for LNG amid this year's COVID-19 lockdowns will likely continue into winter months. However, its reduced call on supplies during the third quarter was offset by higher fuel purchases by Thailand, Japan and Taiwan, Feygin said.
While LNG prices in Europe have recently cooled as it neared this year's gas-storage target, the continent is on track to add 60 million tonnes of regasification facilities next year, and increase that to 70 million tonnes in 2024, he said.
Its outlook for 2022 consolidated adjusted profit remains at up to $11.5 billion and full-year 2022 distributable cash flow at up to $8.6 billion, each of which were increased by about $1.2 billion in September.