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Based in Houston, Cheniere Energy Partners LP (CQP) has international offices in London, Singapore, Beijing, and Tokyo. Its distributions are variable and typically taxed at an advantageous rate. The partnership’s performance has been solid, although leverage is somewhat high. Low-risk services provided by CQP’s subsidiaries, however, are partly offsetting factors.

Cheniere Energy Partners LP (CQP)
 

The partnership reported Q1 net income of $353 million, down 29.7% year-over-year, primarily due to $277 million in unfavorable variances related to fair-value changes of derivative instruments. Despite the decline in net income, adjusted EBITDA climbed 5.6% to $1.87 billion, while total revenue of $5.44 billion jumped 28%. Adjusted EBITDA and revenue benefited from continued strength in LNG shipments, exceeding analysts’ expectations.

CQP pays a quarterly fixed distribution of $0.775 per common unit, plus a variable distribution based on adjusted EBITDA. In our opinion, the fixed distribution appears well covered this year. This investment remains suitable for high-risk taxable portfolios.

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