Good day, and welcome to the third quarter 2026 Cheniere Energy earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Randy Bhatia. Please go ahead.
Thanks, operator. Good morning, everyone, and welcome to Cheniere's third quarter 2026 earnings conference call. The slide presentation and access to the webcast for today's call are available at cheniere.com. 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, a reconciliation of non-GAAP measures to the most comparable GAAP measure can be found in the presentation appendix. The call agenda is shown on slide three. After prepared remarks from Jack, Anatol, and Zach, we will open the call for Q&A. I'll now turn the call over to Jack Fusco, Cheniere's Chairman, President, and CEO.
Thank you, Randy. Good morning, everyone. Thanks for joining us today as we review our results from the third quarter of 2026 and the third consecutive increase in our annual financial guidance. Volatility in the global LNG market persisted throughout the third quarter, and the market remains supply constrained without a lasting resolution to the conflict in the Middle East, even as we approach the peak winter months in key LNG demand centers. Cheniere's stable and reliable operations, coupled with our new capacity from Corpus Christi Stage 3, all benefit the market's overall balances. The prices we're seeing today, especially in the spot market, are a clear signal that the market needs additional LNG supply.
Against that backdrop, we have seen significant commercial momentum across short, medium, and especially long-term contract structures, which not only reinforce the themes around energy security, diversity, and durability of supply portfolios that we discussed last quarter, but also helps provide the commercial support necessary for Cheniere to answer the market's calls for new supply while holding to our financial standard. As you have seen, last Thursday at the QatarEnergy headquarters in Doha, His Excellency Minister Al-Kaabi and I executed 4 million tons of long-term SPAs. We reminisced about our last meeting in February. We're thinking about QE as a long-term buyer would have sounded outlandish. The discussion highlighted how closely our views align, both anchored in a long-term perspective and shared values of honesty and respect.
Very few have been impacted by the Gulf War in Iran and the new regional order as much as Qatar and QE in particular. They had built a business and strong reputation as the most reliable LNG producer. As the world got upended, it is truly impressive they did not just wait for the return to normal. Instead, they embarked on a bold new vision to redefine themselves. His Excellency Al-Kaabi made it clear that he wanted the first step of their new strategy to be a long-term SPA with Cheniere. For that, I am truly grateful and humbled to add QE as a long-term customer. Please turn to slide five, where I will highlight our key results and accomplishments for the third quarter of 2026 and introduce our upwardly revised guidance ranges for the full year.
We achieved two major milestones during the third quarter, the production and export of our 5,000th LNG cargo and the substantial completion of the seventh and final train of Corpus Christi Stage 3. Cheniere achieved the 5,000 cargo milestone faster than any other LNG producer in the world, reaching the mark just 10 years after our first cargo. Those 5,000 Cheniere cargoes represent over 340 million tons of LNG that we have supplied, powering economies and improving lives in markets around the world. On our August earnings call, I told you that first LNG from Train 7 at Stage 3 was imminent, and it happened that weekend. Barely three weeks later, in late August, substantial completion of Train 7 was achieved, completing the Stage 3 project in familiar Cheniere Bechtel fashion, safely, ahead of schedule, and on budget.
I would like to congratulate all of our employees around the world on these remarkable achievements, as they are enabled by the hard work and dedication of our entire workforce and their commitment to operational excellence and safety every single day. Cheniere's stable and reliable LNG operations, coupled with sustained elevated market pricing, continued throughout the third quarter. We generated consolidated adjusted EBITDA of approximately $1.9 billion, distributable cash flow of approximately $1.2 billion and net income of approximately $1.2 billion. During the third quarter, we produced and exported a quarterly record 188 cargoes for 684 TBtu, an approximately 17% increase over the same period last year. Our production and operations continued to outperform in the third quarter, thanks to the accelerated substantial completion and start-up of the seventh train at Stage 3, as well as higher reliability rates compared to the third quarter of 2025.
Earlier this week, we achieved an all-time daily production record of over 8.33 TBtu produced across Sabine and Corpus as we continue to outperform at both sites. For the third consecutive quarter, we are increasing our full year 2026 financial guidance, this time to $8.75 billion-$9.25 billion of consolidated adjusted EBITDA and $6.05 billion-$6.55 billion of DCF. Zach will cover the details of this guidance increase later on the call. We look forward to delivering financial results within these further upwardly revised ranges for the year. Anatol and the commercial team have been extremely busy, and since our last call, have signed long-term SPAs with two new customers aggregating approximately 5 million tons, extending into the 2050s, in which we expect to support our brownfield growth plans at both Sabine Pass and Corpus Christi.
First, in late September, we announced a new SPA with Petrobras for 0.8 million tons per annum for 22 years. The signing of this contract in the year of our 10th anniversary of our first LNG cargo is particularly special to us, since that first LNG cargo we exported back in 2016 was actually sold to Petrobras. As I mentioned, we announced new SPAs with QatarEnergy for up to 4 million tons extending through 2054. During the quarter, we deployed approximately $1.5 billion under our capital allocation plan. We repurchased approximately 2.8 million shares for approximately $730 million. As persistent volatility in our shares continue to present opportunities for our repurchase plan to be active. We funded nearly $740 million of growth CapEx with equity and debt.
This morning, we announced an increase in our quarterly dividend of over 12% to $0.625 or $2.50 annualized, following through on our commitment to raise the dividend by at least 10% per year through the rest of the decade. Turn now to Slide 6. We will provide an update on the status of our brownfield growth projects. First, on the Midscale Trains 8 & 9 and debottlenecking project. We have now safely progressed to over 58% complete as of the end of September and continue to track ahead of schedule across critical engineering, procurement, and construction work streams. We crossed over 1 million man-hour threshold on the project in August, and construction activities today are focused on piping and steel installation across both trains.
Critical equipment such as fabricated steel and cold boxes have arrived at site, which we expect will enable continued progress ahead of schedule as we move further into the construction phase of execution. While we are optimistic the schedule for Midscale Trains 8 & 9 can accelerate, we do not currently forecast any volume contribution in 2027 from this project. Next, on phase I of the SPL Expansion Project. I covered this project in depth last quarter. We are approaching FID on this brownfield expansion, which is expected to add well over 6 million tons per annum of production capacity to our platform at Sabine Pass. In September, FERC issued the final Environmental Impact Statement, or EIS, on the SPL Expansion Project. This important regulatory step increases our visibility to the final approval expected around the end of the year, and we intend to FID very quickly thereafter.
Also, during the quarter, we obtained commitments from our bank syndicate for a term loan sized to finance approximately 50% of the total estimated project cost of phase I, adding to our confidence in the FID timeline around the end of the year. Since the beginning of the year, we have spent almost $500 million on early engineering and procurement work with Bechtel and Baker Hughes, giving the project a bit of a head start while de-risking cost and schedule with key high value and long lead time equipment orders. Moving on to phase I of the CCL Expansion Project. We have advanced this project considerably since our last call with a major regulatory step, as well as the commercial progress with our recent long-term contract announcements.
On the regulatory side, in September, we received our draft EIS from FERC, solidifying our expectation of a FERC permit around the middle of next year. There are some additional regulatory approvals that will be required in order to FID, but the expected timeline of the necessary regulatory approvals around year-end 2027 is intact. I am extremely excited and optimistic about these growth projects. The first phases of SPL and CCL Expansion Projects represent opportunities to accretively grow our platform by over 20%, leveraging our brownfield infrastructure position while maintaining our capital investment discipline and upholding the Cheniere standard. We believe these projects will enable us to deliver our shareholders more of the through-cycle risk-adjusted returns they have become accustomed to.
We continue to be inspired by the increasingly critical role Cheniere plays in the global energy market, and growth projects like these help ensure our position. Delivering on our promises to customers, investors, communities, and employees will endure for decades to come. With that, I will now hand it over to Anatol to discuss the LNG market. Thank you all again for your continued support of Cheniere.
Thanks, Jack, and good morning, everyone. Please turn to slide eight. Third quarter provided a clear reminder that the global LNG industry continues to function under a sustained supply disruption. Starting in the upper left, vessel traffic through the Strait of Hormuz did increase towards the end of the quarter. LNG tanker transits briefly reached roughly 50% of pre-war peak levels before declining again in recent weeks. This reversal comes amid a significant deterioration in security and stability, as attacks on vessels have accelerated sharply, including those targeting LNG carriers. The brief recovery in transits, therefore, should not be read as evidence of normalization, and transit levels are likely to remain uneven. Average transit activity remains materially below pre-war levels, LNG flows remain constrained, and the recent increase has already shown signs of reversing as security conditions deteriorate.
The impact is visible in global supply, with cumulative LNG export growth turning negative during the third quarter, as losses from strait-constrained supply more than offset growth elsewhere. Higher production, stronger loadings from the United States and Canada provided meaningful support but were not sufficient to fully replace those lost volumes. This tightening was clearly reflected in prices. TTF and JKM averaged over $21 and $22 per MMBtu, respectively, over the quarter, with price appreciation accelerating from July. The rise was also reflected in the forward curves of both benchmarks since our last call in August, with TTF and JKM each up over $10 per MMBtu for Cal 2027, 76% and 74% higher respectively. Importantly, the move has not been limited to 2027.
Prices and net backs through the end of the decade have also moved higher as the market is increasingly pricing the possibility that the current disruption persists for longer than initially expected. We have been opportunistic along the liquid part of the curve with placing some unsold volume recently and capturing these higher margins. The demand response has also been notable. China remains the clearest example of a market with demand flexibility, and we expect its LNG imports to finish the year at approximately 60 million tonnes, down for a second consecutive year. Several markets traditionally viewed as highly price-sensitive have remained surprisingly resilient. Southeast Asia imported approximately 25% more LNG year-to-date, led by Thailand, Malaysia, and Indonesia. Even smaller markets such as Vietnam and the Philippines showed positive demand growth as well.
In South Asia, while Pakistan continues to show weakness as expected due to factors particular to its economy and policy constraints, India's demand for cargoes remains resilient. LNG imports to the country have risen 21% year-to-date and 9% year-over-year in Q3, despite average JKM prices that are 43% and 94% higher compared to 2025. Growth across these regions is particularly notable, especially amid generally difficult market conditions and growing competition for limited supplies. Price sensitivity remains very real, particularly in China, but elevated prices have not resulted in broad-based demand destruction across emerging Asia. We expect this competition to continue to intensify through the fourth quarter as the two major basins compete for winter supplies. Europe entered October with storage at approximately 72% full, the lowest level for that date since 2011.
That leaves the region with materially less inventory cushion than in recent winters and increases its needs to compete for LNG through the coming winter. Following the sharp increase in U.S. LNG deliveries to Asia earlier this year, Europe has already begun pulling a greater share of U.S. volumes back toward the Atlantic as it prepares for winter. The message from the third quarter is straightforward: supply growth outside the strait has helped, but the global LNG market has not yet rebuilt an adequate buffer. Until currently constrained supply recovers more consistently, we expect competition for available cargoes to remain elevated. Let's turn to slide nine to elaborate further. One of the key components of greater market resilience is infrastructure. Over the last four years following the Russia-Ukraine crisis, Europe invested significantly in LNG regas capacity to help phase out Russian gas.
Today, Europe has about 73 MTPA more total regas capacity than it did in 2022. The winter balance shown in the chart benefits from roughly 37 million tonnes of additional seasonal deliverability. That expansion has proved crucial in managing bottlenecks and increasing optionality amid significantly reduced Russian gas supplies over the past two years. Europe begins this winter from a much lower storage position. At the same time, Russian supply is scheduled to decline further as LNG restrictions take effect and pipeline imports continue to be phased out. The chart on the left puts those factors together. We show Europe's historical winter supply from domestic production, pipeline imports, storage withdrawals, and LNG, and overlay the available regas headroom and end-of-winter storage buffer.
Even assuming Europe exits winter with a relatively lean storage buffer of 30 BCM or approximately 28% full, broadly consistent with last year, it would require around 93 BCM or 69 million tonnes of LNG. That is approximately 7% more than last winter, equivalent to roughly 64 additional cargoes. That would come in a global LNG market where cumulative supply growth has turned negative, meaning Europe will need to compete more aggressively with other buyers for a smaller pool of available incremental volume. There is some flexibility around that outcome. Storage could be drawn lower, but not indefinitely. The historical low was around 18%, reached in 2018 when Europe entered the following summer with much greater certainty around Russian pipeline supply than it has today. That suggests the practical downside from a 28% exit level is limited, particularly given the need to refill inventories ahead of the following winter.
Importantly, supply conditions in individual countries could be much tighter than the European average we tend to focus on as is currently the case in Germany, Netherlands, Austria and others. This can create regional inventory and deliverability stress even if the aggregate balance looks manageable. Weather remains another important uncertainty. Across recent winters, the difference between a warm and a cold winter has been roughly 25 BCM of demand. Relative to approximately 104 BCM of European storage capacity, that represents roughly 10 to 15 percentage points of potential upside or downside to end winter inventories around our base case. Europe has sufficient infrastructure to balance the winter, but the margin for error is limited. The key question is when the price signal is required this winter to attract additional LNG or in 2027 to rebuild inventories. Beyond import infrastructure, the industry overall has also been working to build supplies.
The industry reached FID on 77 million tons per annum last year, and a further 52 million tons per annum so far this year. This capacity will, of course, help the market balance over time, even if Hormuz flows remain constrained for longer. Focusing on this year, increased supplies from U.S. and Canada added 23 million tons, and together with a 14 million ton increase elsewhere, nearly offset the 41 million ton year-over-year loss due to the Straits closure. Absent the disruption, this additional supply would have otherwise contributed to incremental liquidity and flexibility, supporting much needed price moderation and market balancing. Looking forward, projects already under construction continue to add supply. As shown in the middle chart, global LNG supply growth resumes from 2028, even if currently Strait-constrained volumes remain unavailable. Any recovery of those volumes would provide additional supply availability.
Finally, the chart on the right illustrates how the global demand landscape continues to grow if supply availability is not handicapped. This growth is anchored by three pillars in Asia, complemented by other regions and sectors. China remains an important source of long-term demand growth, even though near-term imports have proven highly flexible. The more notable development in 2026 has been the resilience of South and Southeast Asian demand, despite unusually high prices and constrained supply. Several of these markets have continued to grow LNG consumption in what has effectively been a significant real-world stress test of affordability. In parallel, buyers that made long-term commitments and are receiving their contracted volumes have been better positioned to manage spot market volatility. Current pricing illustrates this.
Long-term contracted Henry Hub-linked FOB cargoes are currently loading in roughly the $6 per MMBtu range, compared with global spot prices at times above $30 an MMBtu. This pricing differential highlights how long-term contracting can support affordability and protect against extreme volatility. Looking later in the decade, additional liquefaction capacity should improve both availability and affordability of supplies, supporting a re-acceleration in underlying LNG demand growth across a broader range of markets. That broadening demand base is already visible in our own commercial activity, including the recently announced Petrobras agreement and our newly announced agreement with QatarEnergy. We have executed nearly 5 MTPA of long-term agreements with new-to-Cheniere counterparties from new-to-Cheniere regions. We think that is an important validation of both the increasingly diverse sources of long-term LNG demand, and in particular, the strength and continued attractiveness of Cheniere's commercial offering.
We remain actively engaged with counterparties powered by our strong relationships with the most active LNG players through our marketing and origination teams. With that, I'll turn the call over to Zach to review our financial results and guidance.
Thanks, Anatol, and good morning, everyone. I'm pleased to be here today to discuss our financial results, our further improved financial forecast for 2026, our follow-through on our capital allocation plans, and our preliminary production outlook for 2027. Please turn to slide 11. For the third quarter 2026, we generated consolidated adjusted EBITDA of approximately $1.9 billion. Distributable cash flow of approximately $1.2 billion, and net income of approximately $1.2 billion. Compared to Q3 2025, our results reflect higher volumes of LNG delivered, higher marketing margins achieved, as well as contributions from further optimization, both upstream and downstream of our facilities. For the quarter, we recognized in income a new quarterly record of 697 TBtu of LNG, thanks to improved operational reliability across our platform, as well as the substantial completion of Stage 3. Our quarterly volumes recognized in income continue to be impacted by period-to-period in-transit cargo dynamics.
While the third quarter volumes benefited from in-transit volume at the end of Q2, the impact to EBITDA and DCF was offset by the in-transit volume at the end of Q3, given today's even more elevated and volatile margin environment. Our strong operational and financial results year-to-date enabled our team to deploy approximately $1.5 billion under our capital allocation plan. As Jack noted, this morning, we declared a dividend of $0.625 per common share, or $2.50 annualized, an increase of over 12% from the prior quarter.
With this increase, we have grown our dividend by approximately 90% since its initiation five years ago. We maintain our commitment to growing the dividend by at least 10% annually through the end of this decade, while maintaining a relatively low dividend payout ratio to ensure our financial flexibility through cycle to self-fund our accretive growth objectives and maintain an opportunistic and impactful share repurchase program to have a strong shareholder return payout ratio. Case in point, in the third quarter, we repurchased approximately 2.8 million shares for approximately $730 million. As of today's filing, we are down to approximately 204 million shares outstanding, having repurchased over 8 million shares year-to-date, deploying over $2 billion as we systematically allocate and opportunistically deploy the remaining approximately $8 billion under our current share repurchase authorization.
As a key tenet of our capital allocation strategy, share repurchases remain an advantaged form of capital return for shareholders, enabling all of us to own more of Sabine and Corpus over time, and the billions of dollars of contracted cash flows into the second half of this century, while still prioritizing our ability to continue to accretively grow our infrastructure platform. Moving to the balance sheet, I'd like to first highlight that last week, S&P upgraded Corpus Christi Holdings to A-, reflecting the substantial completion of Stage 3 and marking the first A-grade rating across the Cheniere complex, a testament to the strategic management of our balance sheet over the years. We expect our ratings to remain in the current ranges of low A to high BBB at the projects and solidly BBB or better at the corporates going forward.
These levels enable us to maintain sufficient leverage capacity to fund our growth effectively with up to 50% leverage and internally generated cash flows. During the quarter, we launched the financing for the first phase of the SPL Expansion Project, securing commitments for a $3.25 billion senior secured delayed draw term loan. Along with previous excess bond proceeds, it will finance 50% of the expected total cost of the project, while the other half of total project costs for the first phase will be funded with cash flows from SPL operations. We expect to close on this facility, an SPL and CQP revolver extension, upon receipt of the remaining permit approvals and a formal FID. We appreciate the long-term support of our bank group of over 35 global financial institutions that has consistently partnered with us through the years, helping Cheniere to consistently deliver world-class infrastructure projects with market-leading economics.
During the quarter, we funded over $700 million of growth capital across our business as we progressed construction of Midscale 8 and 9, development of the SPL and CCL Expansion Projects, as well as enhancing our Gregory Power Plant. Of the total spend during the quarter, over $600 million was equity-funded with cash flows from operations. Over half of the spend during the quarter was related to the Midscale Trains recently completed or currently under construction. With commercial support in place, the EPC contract and financing commitments lined up, we are well positioned to reach FID on the first phase of the SPL Expansion Project in the coming months after receipt of final regulatory approvals. This project has been developed to maximize brownfield economics and meet or exceed our required hurdle rates under our disciplined approach to growth capital investments.
With phase I of the SPL Expansion Project now at the starting line, our development efforts turn squarely to Corpus, ensuring the first phase of the CCL Expansion Project meets the same high standard in order to deliver our shareholders the most competitive risk-adjusted returns in energy infrastructure today. With the recent nearly 5 million tons per annum of long-term contracts signed, we are commercially well-placed for the first phase expansion at Corpus to grow the overall platform to approximately 75 MTPA, approximately 25% growth from our run rate production profile today with Midscale Trains 8 & 9. Turn now to slide 12, where I will discuss our upwardly revised 2026 financial guidance, as well as introduce our preliminary production forecast for 2027.
We are raising our guidance ranges for full year 2026 consolidated adjusted EBITDA and distributable cash flow by $850 million and $750 million respectively, bringing expected consolidated adjusted EBITDA to $8.75 billion-$9.25 billion and distributable cash flow to $6.05 billion-$6.55 billion, representing over $30 per share of DCF. Compared to the initial 2026 guidance provided in February, we have raised the midpoint of EBITDA guidance by $2 billion. Today, we are also tightening our CQP distribution guidance for the year, increasing the midpoint by $0.10- $3.30-$3.40 per common unit. These increases are primarily driven by further improvement in global gas spreads since our last call.
Despite less than 1 million tons open as of the last call, Train 7 of Stage 3 was completed a few weeks earlier than forecast, and the balance of year LNG netbacks have moved materially up ahead of the winter heating season from over $10 in August to over $20 today. The timing of a few year-end high-margin CMI cargoes shifting into 2026 also contributed to today's increase. As always, optimization upstream and downstream of the plants locked in amidst the volatility provided an additional tailwind. We are maintaining our expected 2026 production range of 53 million-54 million tons, and we have very little volume remaining unsold for the balance of 2026. However, despite having very little open exposure, we are maintaining the $500 million guidance ranges like we did in 2022's price environment.
As results could still be impacted by a number of factors, particularly given the sustained elevated pricing and volatility in LNG markets. As one cargo sold at spot prices today could contribute almost $100 million in EBITDA, amplifying the potential impact from timing of certain cargoes around year-end and from even the slightest movements in the production forecast while still remaining within our range. Looking ahead to 2027, we've completed the initial production forecast for both Sabine Pass and Corpus Christi. With all mid-scale trains at Corpus Stage 3 complete and successful de-bottlenecking achieved across our platform, we expect to produce approximately 56 million-58 million tons of LNG in total across our two sites next year, up over 3 million tons year-over-year at the midpoint and inclusive of planned maintenance across both sites.
The 2027 production forecast is at the higher end of our run rate guidance, with Stage 3 fully operational thanks to no long-duration major turnarounds planned next year, as well as the de-bottlenecking success we've had in recent years. We have several new contracts commencing throughout the year, as well as the ramping of some existing contracts, resulting in approximately 52 million tons of volume sold under long-term contracts in 2027, up from 46 million-47 million tons in 2026. Accordingly, we expect to have approximately 5 million tons of spot volume available for CMI to sell into the market, or approximately 250 TBtu, which our team has been opportunistically selling and/or hedging throughout this year, leaving approximately 1 million tons or 50 TBtu of unsold open capacity for full year 2027 as of today.
Therefore, we currently forecast that a $1 change in market margins would impact EBITDA by approximately $50 million for the full year. Once again, highlighting the significant cash flow visibility of the contracted platform. Consistent with previous years, we intend to provide 2027 financial guidance on our February call. Our track record of consistently outearning our run rate guidance and delivering results well above our initial guidance for the year once again demonstrates the vast competitive advantages afforded by our world-class infrastructure platform. The Cheniere model is underpinned by decades of cash flow visibility from our portfolio of long-term creditworthy contracts and our proactive approach to opportunistically locking in fixed margins for our spot cargo sales and optimizing upstream and downstream of our facilities.
Since our last call, we have secured approximately $18 billion of fixed margins, of which nearly $1 billion is in the last few months of 2026 alone, plus over $2 billion of additional forward opportunistic selling of CMI cargoes across the next few years, and approximately $15 billion of fixed fees into the second half of this century, thanks to our newly signed long-term contracts with Petrobras and QE. In the midst of the current market volatility, Cheniere is doubling down on operational excellence and being the premier contracted infrastructure company with unmatched cash flow visibility and unwavering financial discipline that should compound over time for continued industry-leading risk-adjusted returns through cycles and for decades to come. That concludes our prepared remarks. Thank you for your time and your interest in Cheniere. Operator, we are ready to open the line for questions.
Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you please limit yourself to one question and one follow-up to allow everyone an opportunity to ask a question. Again, press star one to ask a question. We'll go first to Theresa Chen with Barclays.
Good morning. Going back to your comments, Jack, on the QatarEnergy SPA. With QE indicating this morning that its U.S. LNG purchases are part of a long-term diversification strategy to hedge against disruptions in the Strait, and given now that QE has been one of your largest global competitors and is now a customer, what does that tell you about the role of U.S. LNG, its strategic value, and how the competitive landscape for global liquefaction may be evolving?
Well, thank you, Theresa. First off, with QE, like I said in my prepared remarks. They, of anybody, have had the biggest impact from the Gulf War. I applaud His Excellency and his ability to pivot and change his strategy to become more of a diversified trader of LNG. Like Cheniere, QE and Cheniere share quite a few common goals. I think, yes, U.S. LNG is becoming more and more valuable to the world overall, but our relationship and our ability to, one, meet their needs, and then two, be a reliable supplier for the world, is really showing through. I will ask Anatol, Theresa, if he has anything to add since he was with me during the signing ceremony last Thursday.
Yeah. Thanks, Theresa. Thanks, Jack. His Excellency, first of all, I would say, as we have said to you guys forever, we never viewed QE as a competitor. It is the bedrock of this industry, and we wish it a speedier recovery as possible to its full potential. His Excellency, months ago, said that QE would evolve into, quote, "the largest trader by far," end quote. As Jack already mentioned, we look forward to supporting its ambitions and enabling it to restore itself to the reliable operator and able provider to the industry. We are honored to be partners with QE and look forward to building on that relationship.
Thank you. More near term, as global gas prices continue to climb higher in the lead-up to winter without any obvious near-term relief valve to ease the ongoing supply shock, concerns about demand destruction across Europe and Asia remain topical. Anatol, understanding per your earlier comments that demand in ex-China EM Asia has remained relatively resilient, if we do begin to see signs of demand destruction in that region in particular, how do you think this could impact longer-term adoption rates in the region?
Well, I guess one component of that is, as we mentioned and as you know well, is that anybody that has long-term contracts is very insulated from this. It is an industry that is lifting from the U.S. Gulf Coast at about $6 FOB in, again, a $30+ market currently. So for those long-term committed, credit-worthy counterparties, the solution is obvious and very attractive. Again, we are honored to be able to reliably supply that. The world, though, has been surprisingly resilient, as we touched on. Europe has seen very little incremental demand destruction. As we measure it is down roughly 20% since pre the Ukraine war levels. All of that is that demand destruction and demand elasticity. But we do not see Europe in a position to give a lot more.
How this crisis resolves itself, and this is a crisis that we saw coming in late February, early March, and have been discussing it and warning really Europe writ large about this ever since. This is the least surprising development in the LNG market of the year, and we hope that they find a solution. But we actually are pleasantly surprised that we have not seen a lot of demand destruction.
Thank you.
We'll go next to Doug Irwin of Citi.
Hey, team. Thanks for the question. I wanted to maybe start with the forward sold volumes for 2027. On our math, if we take the current curve on old unsold volumes, we're getting to maybe an implied market expectation of somewhere around $6 margins on those forward sold volumes baked into current consensus. Can you maybe just help frame how we should be thinking about forward sold margins in 2027, just given how volatile the commodity tape has been here throughout the year?
Sure. I'll take this. On the last call in early August, I basically said that we had already sold about 1.5 million tons for 2027 proactively. At that point, it was all well under $10. In the last, let's say two to three months, we've sold another 2.5 million tons to get to that 4 million tons that we mentioned in the prepared remarks, let's say well over $10. So for 4 million tons, safe to say that's locked in around $10. We have 5 million tons for the year, so there's still some floating. Margins are clearly higher than that, and that's why we give a little sense to everyone of what $1 moves in margins can do for EBITDA next year.
I'd say we have a good amount of open capacity still for this winter, and then it's spread out relatively evenly thereafter. But when margins double like this, we're not cute about it. We proactively sell it, lock in the fixed fees, and increase the cash flow visibility. To think of 2026 as a banner year for, I mean, we've raised guidance by $2 billion. But this ain't one-off. It's not going to be too far off in 2027, just with adding basically almost 5 million tons of capacity. When you think about the fact that about 1 million tons this year
Was taken out of P&L because it was commissioning and timing, then selling it at $10. Next year is going to be not too far off from what we are achieving right now in 2026. With basically Train 7 at Sabine FID in the coming months, we are basically locking in $9 billion of EBITDA run rates at a fraction, and that is probably an understatement, but a fraction of the margins you see on the curves today. Not one-off and we are looking forward to ending a great year in 2026 and having a really strong year in 2027.
Got it. That is great to hear. Maybe just as a follow-up, just curious where you are in the EPC process for the Corpus expansion, when you might be needing to lock in a contract there, and if there is any early indication on what pricing might look like relative to the Sabine expansion.
Yeah. Doug, this is Jack. We are in the process of what I call value engineering, which is we work really closely with Bechtel and with our process engineers and our staff to make sure that we are getting the best price possible. It is a little bit longer process for us, but ends up in creating significant value like you are going to see when we FID Sabine Pass Train 7. Since the Corpus expansion is almost a duplicate of Train 7, we are fully engaged to make that happen.
I will just add a few more things on the Corpus expansion. Clearly, over the last couple of months, signing almost 5 million tons, it is kind of a different ballgame commercially for long-term contracts to underpin not just the first phase of Sabine, but the first phase of growth at Corpus. We probably have an extra 5-plus million tons of contracts that we will not need to fully contract Sabine 7. That is in good shape. If you just look at the FID we did for Midscale 8 and 9, and most of you understand what the first phase is going to look like for Sabine 7, which is going to be over 6 million tons. We are minimizing the amount of infrastructure that needs to be built by utilizing the brownfield advantages we have with tanks, berths, and pipelines already in place and foundation work.
We're adding the debottlenecking equipment that can get more out of not just the incremental train, but all of the trains existing at the sites. We plan to do the same thing at Stage 4, phase I at Corpus. We have to pull out all these stops just to hold to the Cheniere standard, hold to that 7x CapEx to EBITDA, hold to unlevered contracted returns of 10% for these projects. We're basically the only ones in the industry building under $1,000 a ton. That's the goal, and Bechtel is clearly aware of that as well, and we look forward to working on that as the permits come in through the year in 2027. We have a good sense that we should be in a position by the end of 2027 to have a fully permitted project there.
Got it. Thanks for the time.
We'll go next to Keith Stanley with Wolfe Research.
Hi. Good morning.
Good morning.
The company previously laid out a $30 a share run rate DCF figure, including the two brownfield expansions. Can you talk to how that's maybe evolved a little bit, given billions of dollars of incremental cash flow now this year and likely next year? I would think your share count is probably projected to be quite a bit lower than what you've previously laid out.
Yeah, we'll get to that. Let us FID Train 7 at Sabine in, let's say, in the coming months, and we'll owe you all a new run rate with just Train 7 and that debottlenecking at Sabine, and then give you a sense of where we stand on the first phase of Corpus as the incremental step-up of run rate EBITDA over time. With that said, we upsized the buyback in February to over $10 billion when margins for this year were $5 for the rest of the year, margins for next year were under $4, and margins after that were under $3. Since then, we've increased guidance by $2 billion. Just mentioned we locked in like $3+ billion just in the last couple of months for the rest of this decade.
There's a bit more than originally forecasted when we said there was over $25 billion of capital to deploy. At the same time, the CapEx to build out at both sites to get to 75 million tons is still going to be around a third of our DCF per year. If anything, we'll deploy the buyback a bit quicker than through 30 and have to upsize that and yeah, maybe have a new goal for share count in the run rate.
That's helpful. Thanks for that. The second thing, Zach, if you have any more details, the guidance raise is really large, and I get the spreads are where they are, and you can squeeze out a few cargoes on timing and the like. But anything else you'd point to on optimization, or is it as simple as just squeezing out a few more cargoes and like you said, it's $100 million a cargo?
It's a little of everything, but we're still somewhat flummoxed sometimes how people try to estimate our quarterly guidance. But then, somehow we miss that by, let's say, $100 million, and then we crush everyone on full year guidance. There were only two quarters left in the year. So we've been very clear that we produce a lot more in the winter months, the winter quarters of the year. So I'd say to date, for the first three quarters, we probably produced about 13 million tons a quarter. We're going to produce over 14 million tons in the forecast to meet the guidance range in Q4. But there's other things that just are not transparent until we show you the results. Like a good portion of our open capacity was in Q4, not over the summer months of this year.
But people could also see that net backs went over $15, went over $20 later in the quarter, in Q3, and a lot of that was lifted is being delivered into Q4 as well. But if I had to break it out, let's say we had about a half a million tons open as of the last call. Prices are up 10 bucks from like 10 to 20 or so. So that's $250 million. Three cargoes, give or take, that are moving from, let's say, early January to late December, now that they're locked and sold, was another $250 million. Optimization that you mentioned was another $150 million, which is unique to an extent considering how it's just elevated pricing and very volatile environment. But at the same time, it was split 50/50 upstream and downstream.
We're going to generate about $700+ million of optimization this year across the platform. And we usually don't guide to that, and I probably won't guide to much of that in early February. With that said, for the last few years, it's been about a half a billion dollars, give or take, each and every year. And then on top of that, Train 7 at Stage 3 was a bit early. So a few weeks there gave us an extra cargo, and like you said, that's $100 million. So you add a few of those things up, and yeah, we get to the $9 billion midpoint.
We always say, Keith, we're firing on all cylinders.
Thank you very much. Appreciate all the detail.
We'll go next to Jeremy Tonet with JPMorgan.
Hi, good morning.
Good morning, Jeremy.
Just wanted to look out at the contracting front. You guys have picked up some nice momentum there. Definitely did not have Qatar on our radar there, so well done. Just wanted to see, as we think about the geopolitical developments in the world today and how that's changed things, you talk about these new customers to Cheniere. Do you see the opportunity for more new customers to Cheniere like this? Are there new conversations with customers? Could you just give us any more color, I guess, on that front in general?
Sure, Jeremy, it's Anatol. Thanks for the question. I agree with you. We didn't have QE on our bingo card in February or even in May of this year. Through the middle of the year, our position was that the LNG buyers in the world expect QE to be back ratably and reliably. That really only changed, I have to admit, around Q3, maybe at the end of the failed ceasefire. Obviously we've touched on what QE's new strategy looks like and what Cheniere and U.S. LNG what role we play. I think what you've seen from us should put to bed discussions of long-term contracting being under pressure, discussions of how long is the durability of this business, demonstrating clearly that 50s are a comfortable place to land long-term contracts. We think that'll continue to evolve.
The crystal ball today is you'll continue to see all of the above. You'll continue to see producer deals from us. You'll continue to see Asia. Our reputation, as Jack already touched on and as you know well, is sterling in the industry and the QE support and endorsement doesn't hurt that. So we think we'll continue to do repeat business, and you'll see, we think, some interesting stuff from us over the next couple of quarters. Given the current portfolio of now coming up on 40 long-term counterparties, I do think it'll be weighted to repeat customers, but you'll continue to see really all of the above, and that's what's going to allow us to continue to perform to our standard economically.
Got it. That's helpful. We look forward to the exciting things to come there. Maybe if we could pivot towards the permitting side. I was just wondering if you had expectations for permitting reform to make its way through, just given everything that's happening in D.C. And as it relates to Cheniere specifically, if you could just remind us what the strategy is, how much is under development right now for incremental capacity, and thoughts on if there could be more down the line.
Jeremy, this is Jack. As you know, when we filed for our permits for both Sabine and Corpus Christi, there were over 20 million tons at each site to bring us to a little over 100 million ton platform in total. Zach and I have talked to all of you about is making sure you understand that our execution strategy is to do one large train at each facility, and then some additional debottlenecking at each facility first. We're trying to maximize our brown field advantages without having to build another tank or berth. Our permits should be well in hand before either permitting reform or some of the new FERC processes that they're proposing, like a blanket authorization, actually become effective.
I would expect to have Sabine's permits in hand before the end of this year, and Corpus' middle to the third quarter of next year. So well before any of these other initiatives become effective.
Got it. That's helpful. I'll leave it there. Thank you.
We'll go next to Brandon Bingham with Scotiabank.
Hey, good morning. Thanks for taking my questions here. Appreciate all the commentary on the global macro side of things, particularly around the European outlook. It seems like they might be walking a little bit of a tightrope there into winter. Just curious, what sort of opportunity set could that create for you guys? Should there be just a normal winter or any other European disruption, do you think it would maybe spur some long-term contracting pickup for surety of supply, or would this be maybe more an opportunity on the optimization side of things? Just how that might unfold.
Thanks, Brandon. It's Anatol. Really all of the above. Europe continues to come up with ways to make its life more challenging, and how we navigate that in supporting our existing European customers, which are to date, still the plurality of our counterparties, and how we engage with them going forward and support them long-term as those initial commitments start to get to the point where we're discussing additional business with them in the future, are all things that are aided by everything that we've discussed. One of the relief valves that we have seen and one of the reasons, you touched on this as well, and we've touched on it a couple of times during this discussion.
One of the reasons that cargoes came into this year that Zach mentioned is because the Arb opened to Europe, and Europe has been attracting more cargoes over the last couple of months in realization of the challenges that it may have. Really all of the above. That volatility creates some opportunities for additional optimization. It gives us a chance to monetize some of the optionality we have in our IPM contracts, and fundamentally, will continue to be a tailwind for the long-term commitments as it figures out how to navigate this new world with less Russian supply pipeline and LNG, while still a fairly robust need for gas that is, as we already discussed, proved resilient even in this high-price environment.
Okay, great. That is really helpful. Maybe kind of turning to supply side of things here, feed gas supply. There is a lot of debate back and forth right now around Permian versus Haynesville for the wave of U.S. Gulf Coast capacity coming online. You guys have already kind of mitigated some of that, but kind of thinking more towards all the other projects set to ramp up here and to what extent they might have foreseen some of these issues around the Permian side of things. Or just where do you guys see those basins feeding into it, and what issues could that maybe bring up that would kind of push out some of this supply ramp out into the right?
Well, Brandon, we have been at it for 10 years, so we have kind of seen it all. As you know, we draw from all five basins and all the way up from Canada. So there is a huge variability in the natural gas spec between each of the different basins. I do not know enough technically about what they are building or what they are trying to do, but I can tell you I am pleased that we have figured it out so far, and we are able to manage around it reliably, but in a whole host of different natural gas quality specs. So it is challenging, at least.
Yeah. Fair enough.
Our last question comes from Jean Ann Salisbury of Bank of America.
Hi, just a quick one for Anatol. Wanting to go back to the supply-demand outlook. Do you view the lower demand from China this year as all due to price elasticity? Have you changed your outlook structurally for what China's demand for LNG is at various JKM prices?
Yes and no. It is an incredibly capable system that is very well-contracted on a long-term basis. Talk about the poster child that is lifting sixes and delivering to Europe thirties, right? As a system, few are as capable as China, and as we have discussed, the quantum of infrastructure, the quantum of underutilized industrial and power assets that could be dispatched at lower prices when those economics are more attractive, we still think will lift China's overall LNG imports into the 130 million-140 million ton range from the 60-ish that it will print this year. We think its high three years ago was 83 million tons, and its regas capacity has doubled since that era.
Yeah, price elastic, incredibly capable, and going into this year, we thought we would see that from China, but as you well know, and as we have already discussed, we are looking at a year that was supposed to have $5 margins, not $27 margins.
Great. Thanks, Anatol. I will leave it there.
At this time, I will turn the call back to the speakers for any additional or closing comments.
This is Jack. I just want to thank all of you for your interest in Cheniere and your support. Be safe.
This does conclude today's conference. We thank you for your participation.