LNG 3Q2016 Earnings Note

Feels like LNG is blind man trying to figure out way to mountain top ||

In our opinion, Cheniere needs to buy back all CCH HoldCo II Convertible Senior Notes (CCH Holdco 2 Convertibles). We don’t like complexity and dilutive effect on equity. We believe Sabine Pass LNG (SPL) is not the end, but should’ve been only first of three acts, the second which is Corpus Christi LNG (CCL), but we believe there is potential for third act involving E&P, pipelines or marketing and trading (M&T) or all three. We like that Cheniere is to roll-up CQH, and expect roll-up of CQP in long-term. We’re not positive on Cheniere venturing into liquids export and equally unenthusiastic about foreign ventures, although we’re now willing to give Cheniere benefit of doubt given Jack’s leadership and past track-record. We believe new Anadarko basin pipeline feels right, but mid-scale LNG plant feels wrong. Instead Chenier should focus on CCL 3 and even SPL 6, in our opinion. We believe that there are better ways to finance expansion program, but, long-term, company faces under-leverage problem. We’d like Cheniere to take excess cash flow to pay dividend after rolling up CQH and CQP and after its third act. Though loose now, we expect global LNG markets to tighten and expect Europe to continue to migrate towards hub pricing/trading, and Asia to start hub pricing/trading.

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LNG 2Q2016 Earnings Note

LNG: Revelations little; uncertainty great; strategy mystery ||

In our opinion, Cheniere needs to buy back all CCH HoldCo II Convertible Senior Notes (CCH Holdco 2 Convertibles). We don’t like complexity and dilutive effect on equity. We believe Sabine Pass LNG (SPL) is not the end, but should’ve been only first of three acts, the second which is Corpus Christi Liquefaction (CCL), but we believe there is potential for third act involving E&P, pipelines or marketing and trading (M&T) or all three. We look for Cheniere to roll-up CQP and CQH in long-term. We’re not positive on Cheniere venturing into liquids export and equally unenthusiastic about foreign ventures, although we’re now willing to give Cheniere benefit of doubt given Jack’s leadership and past track-record. We would like CCL 3 and even SPL 6 to have more merchant exposure. We believe that there are better ways to finance expansion program, but, long-term, company faces under-leverage problem. We’d like Cheniere to take excess cash flow to pay dividend after rolling up CQH and CQP and after its third act. Though loose now, we expect global LNG markets to tighten and expect Europe to continue to migrate towards hub pricing/trading, and Asia to start hub pricing/trading.

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Appointment of Jack Fusco to CEO is likely good for shareholder value

Cheniere Energy appoints Jack Fusco, former CEO and Executive Chairman of Calpine Corporation, as its President and CEO
Jack has a long track record – since his days at Orion Power Holdings – of increasing shareholder value at every business he has led
His strength has been taking strategically wayward companies and bringing discipline, focus and efficiency back into the consciousness of the organization and developing a core strategy that is clear, simple and easily executable
His nature is to be risk-averse, perhaps too much so, in our opinion
What we expect under Jack’s leadership:

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LNG 1Q2016 Earnings Note

LNG: Revelations little; uncertainty great; strategy mystery ||

In our opinion, Cheniere should buy back all CCH HoldCo II Convertible Senior Notes (CCH Holdco 2 Convertibles). We don’t like complexity and dilutive effect on equity. We believe Sabine Pass LNG (SPL) is not the end, but should’ve been only first of three acts, the second which is Corpus Christi Liquefaction (CCL), but we believe there is potential for third act involving E&P, pipelines or marketing and trading (M&T) or all three. We look for Cheniere to roll-up CQP and CQH in long-term. We’re not positive on Cheniere venturing into liquids export and equally unenthusiastic about foreign ventures. We would like CCL 3 and even SPL 6 to have more merchant exposure. We believe that there are better ways to finance expansion program, but, long-term, company faces under-leverage problem. We’d like Cheniere to take excess cash flow to pay dividend after rolling up CQH and CQP and after its third act. Though loose now, we expect global LNG markets to tighten and expect Europe to continue to migrate towards hub pricing/trading, and Asia to start hub pricing/trading.

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LNG 4Q2015 Earnings Note

LNG: Revelations little; uncertainty great; strategy mystery ||

In our opinion, Cheniere should buy back all CCH HoldCo II Convertible Senior Notes (CCH Holdco 2 Convertibles). We don’t like complexity and dilutive effect on equity. We believe Sabine Pass LNG (SPL) is not the end, but should’ve been only first of three acts, the second which is Corpus Christi Liquefaction (CCL), but we believe there is potential for third act involving E&P, pipelines or marketing and trading (M&T) or all three. We look for Cheniere to roll-up CQP and CQH in long-term. We’re not positive on Cheniere venturing into liquids export and equally unenthusiastic about foreign investments. We would like CCL 3 and even SPL 6 to have more merchant exposure. We believe that there are better ways to finance expansion program, but, long-term, company faces under-leverage problem. We’d like Cheniere to take excess cash flow to pay dividend after rolling up CQH and CQP and after its third act. Though loose now, we expect global LNG markets to tighten and expect Europe to continue to migrate towards hub pricing/trading, and Asia to start hub pricing/trading.

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LNG Initiation Report

LNG: Triumphant re-revival is in question now ||

In our opinion, Cheniere should buy back all CCH HoldCo II Convertible Senior Notes (CCH Holdco 2 Convertibles). We don’t like complexity and dilutive effect on equity. We were confident of Cheniere’s revival under Charif Souki’s leadership, but wait to see, if new stewardship will have long-term vision, judgment, knowledge, experience, savvy and credibility to return stock to lofty levels of its recent past. We believe Sabine Pass LNG (SPL) is not the end, but should’ve been only first of three acts, the second which is Corpus Christi Liquefaction (CCL), but we believe there is potential for third act involving E&P, pipelines or marketing and trading (M&T) or all three. We look for Cheniere to roll-up CQP and CQH in long-term. We believe that CCL trains #4&5 will be some of the last liquefaction plants to be built in continental US. We’re not positive on Cheniere venturing into liquids export and equally unenthusiastic about foreign investments. We would like CCL 3 and even SPL 6 to have more merchant exposure. We believe that there are better ways to finance expansion program, but, long-term, company faces under-leverage problem. We’d like Cheniere to take excess cash flow to pay dividend after rolling up CQH and CQP and after its third act. Though loose now, we expect global LNG markets to tighten and expect Europe to continue to migrate towards hub pricing/trading, and Asia to start hub pricing/trading. We also expect US to become a baseload producer of LNG in concert with Qatar and Russia – in long-term Iran too – with countries like Australia and certain African and Asian producers to be swing producers.

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Barring abnormal weather, we expect stronger commodity prices

NATURAL GAS
• As expected, due to mild weather, gas prices dipped below $3/MMBTU and continues to languish
• However, the strange turn in March weather has alleviated the downward pressure on gas prices
• Our forward-looking forecast on commodity prices does not consider the possibility of additional strange weather patterns occurring, i.e., we assume normal weather for the rest of 2017
• We believe that two factors will contribute to higher demand that will drive gas prices up in 2017 and 2018, which would keep gas prices mean-reverting above $3.50/MMBTU levels, in our view:
o Higher economic growth conditioned on reductions in both corporate and personal tax rates, and
o Accelerating liquefied natural gas (LNG) exports
• We believe that higher economic growth should eclipse the approximately 1.9% growth in supply (some 1.4BCF/Day) in 2017 projected by the EIA
o Our optimism wouldn’t be warranted under the economic environment of the last 6 years or so, which saw annual average economic growth of just above some 1.5%
o Our optimism is based on the expected accelerating economic activity brought on by the expectant reduction in corporate tax rates and enhanced by an expectant cut in personal income tax rates as well; we believe that these new economic and tax policies will create a positive virtuous economic cycle that would propel GDP growth beyond 3%, which should quickly absorb a 1.9% growth in natural gas supply, in our opinion

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