What caused LNG's Q2 2024 earnings to fall short?

Cheniere Energy's Q2 2024 earnings fell short, missing expectations, due to a combination of factors: 1. **Unfavorable Fair Value of Derivative Instruments**: The most significant factor contributing to the decline in earnings was the unfavorable swing in the fair value of derivative instruments. These derivatives are used to hedge the company's exposure to natural gas prices, but in Q2 2024, they resulted in a $300 million loss compared to a $4.7 billion gain in the same quarter the previous year. This significant decrease in fair value negatively impacted the company's net income. 2. **Lower Natural Gas Prices**: The company's revenue from short-term agreements saw a substantial drop of 75.6%, amounting to $793 million, as international gas prices decreased from their 2022 peaks and global LNG supplies improved. This reduction in short-term revenue, coupled with the challenges posed by derivative instruments, contributed to the lower-than-expected earnings. 3. **Operational Challenges**: The company faced indirect impacts from an Arctic freeze in January, which affected feed gas quality and posed production challenges during the quarter. These operational hurdles, combined with the broader market conditions, influenced the company's financial performance. In summary, the fall in Q2 2024 earnings can be attributed to an unfavorable change in the fair value of derivative instruments, lower natural gas prices, and operational challenges. These factors, either directly or indirectly, affected the company's profitability for the period. |code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code| |---|---|---|---|---|---|---| |LNG|LNG.N|Cheniere Energy|2023 Q3|173.68972746331238|7.03|169| |LNG|LNG.N|Cheniere Energy|2024 Q1|-90.36199095022624|2.13|169| |LNG|LNG.N|Cheniere Energy|2024 Q2|-31.550802139037437|3.84|169| |code|Ticker|Name|Date|Total Revenue YoY|Total Revenue|market_code| |---|---|---|---|---|---|---| |LNG|LNG.N|Cheniere Energy|2023 Q3|-53.01626751016719|4.159E9|169| |LNG|LNG.N|Cheniere Energy|2023 Q4|-46.91249312052834|4.823E9|169| |LNG|LNG.N|Cheniere Energy|2024 Q1|-41.81942544459644|4.253E9|169| |LNG|LNG.N|Cheniere Energy|2024 Q2|-20.74597757191614|3.251E9|169|