HOUSTON, Aug. 6 /PRNewswire-FirstCall/ -- Cheniere Energy,
Inc. ("Cheniere") (NYSE Amex: LNG) reported net income of
$85.7 million, or $1.55 per share (basic) and $0.86 per share (diluted), for the second quarter
2010 compared with a net loss of $13.1
million, or $0.25 per share
(basic and diluted), for the comparable 2009 period. Included
in the quarter ended June 30, 2010,
is a gain on the sale of equity method investment of $128.3 million, or $2.32 per share (basic) and $1.11 per share (diluted). Included in the
quarter ended June 30, 2009, is a
gain on the early extinguishment of debt of $45.4 million, or $0.88 per share (basic and diluted). For
the six month period ended June 30,
2010, Cheniere reported net income of $50.5 million, or $0.92 per share (basic) and $0.62 per share (diluted), compared to a net loss
of $95.8 million, or $1.91 per share (basic and diluted) during the
corresponding period in 2009. Included in the six month period
ended June 30, 2010, is a gain on the
sale of equity method investment of $128.3
million, or $2.33 per share
(basic) and $1.16 per share
(diluted). Included in the six month period ended June 30, 2009, is a gain on the early
extinguishment of debt of $45.4
million, or $0.91 per share
(basic and diluted). Results are reported on a consolidated basis
and include our 90.6 percent ownership interest in Cheniere Energy
Partners, L.P. ("Cheniere Partners").
Overview of Significant 2010 Events:
- In March 2010, Cheniere
Marketing, LLC, ("Cheniere Marketing") entered into various
agreements with JPMorgan LNG Co. ("LNGCo"), an indirect subsidiary
of JPMorgan Chase & Co., providing Cheniere Marketing with
financial support to source more cargoes of LNG than it could
source on a stand-alone basis;
- In May 2010, we used $102.0 million of cash received from the sale of
our 30% interest in Freeport LNG Development, L.P. ("Freeport LNG")
to repay a portion of our 2007 term loan;
- In June 2010, we used
$63.6 million of cash and cash
equivalents held in a terminal use agreement ("TUA") reserve
account established in connection with the 2008 convertible loans
to repay a portion of the 2008 convertible loans as a result of the
assignment of the Cheniere Marketing TUA to a subsidiary of
Cheniere Partners; and
- In June 2010, Cheniere Partners
initiated a project to add liquefaction services at the Sabine Pass
LNG receiving terminal that would transform the terminal into a
bi-directional facility capable of liquefying natural gas and
exporting LNG in addition to importing and regasifying
foreign-sourced LNG. Cheniere Partners, under its subsidiary
Sabine Pass Liquefaction, LLC, initiated the regulatory
process in July 2010 by filing a
request with the Federal Energy Regulatory Commission to begin the
NEPA pre-filing process.
Results
Cheniere reported income from operations of $24.7 million and $55.7
million for the three and six month periods ended
June 30, 2010, respectively, compared
to income of $0.3 million and a loss
of $37.1 million for the comparable
periods in 2009. For the quarter and six months ended
June 30, 2010, total revenues
increased $30.3 million and
$108.6 million, respectively. LNG
receiving terminal revenues increased $28.1
million and $95.0 million for
the quarter and six months ended June 30,
2010, respectively, compared to the comparable 2009 periods
as a result of the commencement of capacity payments under two
third-party TUAs that became effective on April 1, 2009 and July 1,
2009. Marketing and trading revenues increased
$2.2 million and $13.8 million for the quarter and six months
ended June 30, 2010, respectively,
compared to the same periods in 2009 due to an increase in physical
gas sales, gains on derivative instruments and margins and fees
associated with the LNGCo arrangement entered into during
March 2010.
Total operating costs and expenses increased $5.9 million and $15.8
million for the quarter and six month period ending
June 30, 2010, respectively, compared
to the comparable 2009 periods. LNG receiving terminal and pipeline
operating expenses increased $0.6
million and $4.6 million,
respectively, for the quarter and six month periods ended
June 30, 2010 compared to the
corresponding periods in 2009 due to the achievement of full
operability of the Sabine Pass LNG receiving terminal.
Depreciation, depletion and amortization expense increased
$2.8 million and $6.4 million in the quarter and six months ended
June 30, 2010, respectively, compared
to the comparable 2009 periods due to the achievement of full
operability of the Sabine Pass LNG receiving terminal in the third
quarter of 2009. Included in general and administrative expenses
were non-cash compensation expenses of $3.2
million and $9.2 million for
the quarter and six months ended June 30,
2010, respectively, compared to $4.6
million and $8.8 million,
respectively, for the comparable 2009 periods.
Interest expense, net increased $5.0
million and $18.9 million for
the quarter and the six months ended June
30, 2010, respectively, compared to the same periods in 2009
primarily due to less interest subject to capitalization partially
offset by lower interest expense due to debt principal repayments
made during the second quarter of 2010.
Derivative gains decreased $0.8
million and $2.9 million in
the second quarter 2010 and six months ended June 30, 2010, respectively, compared to the
comparable 2009 periods due to the change in the fair value of
derivatives instruments tied to our LNG inventory.
As of June 30, 2010, we had
unrestricted cash and cash equivalents of $73.9 million and accounts receivable and other
working capital from LNG and natural gas marketing activities of
approximately $28 million that is
available to Cheniere, excluding Cheniere Partners.
Restricted cash and cash equivalents as of June 30, 2010 were $159.1
million, which were designated for the following purposes:
$17.0 million and $43.1 million for Sabine Pass LNG and Cheniere
Partners working capital, respectively; $96.1 million for interest payments related to
the Sabine Pass LNG senior notes and $2.9
million for other restricted purposes.
LNG Marketing and Trading
During 2009, Cheniere Marketing began trading in the LNG
markets. Cheniere Marketing purchases LNG and enters into
derivative contracts to hedge the cash flows from future sales of
the LNG inventory. Due to the nature of the hedging strategy,
earnings are recognized in operating results as physical sales
occur, derivatives are settled or the fair value of the derivatives
change due to changes in natural gas prices. In the interim,
the LNG held in the storage tanks at the Sabine Pass LNG receiving
terminal is recorded at the lower of cost or market based on the
NYMEX natural gas index price for the last day of the period less
basis differentials.
Net revenues from marketing and trading for the quarter and the
six months ended June 30, 2010, were
$1.0 million and $13.2 million, respectively, compared to
($1.2) million and ($0.7) million in the comparable 2009 periods.
The increase in revenues quarter over quarter was primarily
due to fixed fees and margins earned from LNGCo. The increase
over the six month periods was primarily related to physical sales
of inventory and roll off of hedges.
As of June 30, 2010 and
December 31, 2009, Cheniere Marketing
and Sabine Pass LNG had approximately 143,000 million British
thermal units ("MMBtu") and 7,778,000 MMBtu of LNG inventory,
respectively. In April 2010,
Cheniere Marketing sold its remaining LNG inventory of 2,415,000
MMBtu to LNGCo.
Strategic Outlook
Our strategic focus is to safely manage and operate the Sabine
Pass LNG receiving terminal and Creole Trail pipeline, serve our
customers, monetize the 2.0 Bcf/d of regasification capacity we
have reserved at the Sabine Pass LNG receiving terminal and develop
other LNG terminal and pipeline related projects.
Additionally, we are focusing on improving our capital
structure and addressing upcoming maturities.
Our strategy to monetize our TUA capacity includes entering into
long-term TUAs with third parties, developing a portfolio of
long-term, short-term and spot LNG purchase agreements and entering
into business relationships for the domestic marketing of natural
gas that is imported by Cheniere Marketing into the Sabine Pass LNG
receiving terminal. During the first quarter of 2010,
Cheniere Marketing entered into a multi-year services agreement
with LNGCo. We believe this arrangement strengthens our
ability to participate in the LNG markets by allowing us to source
LNG and utilize our capacity at the Sabine Pass LNG receiving
terminal and our network of relationships in the most effective
way. This arrangement reduces our working capital
requirements to purchase and hedge LNG.
In June 2010, Cheniere Partners
initiated a project to add liquefaction services at the Sabine Pass
LNG receiving terminal that would transform the terminal into a
bi-directional facility capable of liquefying natural gas and
exporting LNG in addition to importing and regasifying
foreign-sourced LNG. As currently contemplated, the
liquefaction project would be designed and permitted for up to four
modular LNG trains, each with a peak processing capacity of up to
approximately 0.7 Bcf/d of natural gas and an average liquefaction
capacity of approximately 3.5 million tons per annum ("mtpa").
The initial project phase will include two modular trains and
the capacity to process on average approximately 1.2 Bcf/d of
pipeline quality natural gas. We believe that the time and cost
required to develop the project would be materially lessened by
Sabine Pass LNG's existing large acreage and infrastructure.
Commencement of construction is subject to regulatory approvals and
a final investment decision contingent upon Cheniere Partners
obtaining satisfactory construction contracts and entering into
long-term customer contracts sufficient to underpin financing of
the project. We anticipate LNG export could commence as early as
2015.
Our strategy to improve our capital structure and address
maturities of our existing indebtedness may include entering into
long-term TUAs or LNG purchase agreements, refinancing our existing
debt, issuing equity or other securities, selling assets or a
combination of the foregoing. During the first half of 2010,
we sold our 30 percent interest in Freeport LNG and repaid a
portion of our 2007 term loan. In June
2010, Cheniere Marketing assigned its TUA to a subsidiary of
Cheniere Partners and concurrently entered into a new VCRA with the
subsidiary effective July 1, 2010.
This assignment resulted in the release of working capital
that was used to repay a portion of the 2008 convertible loans.
Cheniere Energy, Inc. is a Houston-based energy company primarily engaged
in LNG related businesses, and owns and operates the Sabine Pass
LNG receiving terminal and Creole Trail pipeline in Louisiana. Cheniere is pursuing related
business opportunities both upstream and downstream of the Sabine
Pass LNG receiving terminal. Additional information about
Cheniere Energy, Inc. may be found on its web site at
www.cheniere.com.
For additional information, please refer to the Cheniere Energy,
Inc. Quarterly Report on Form 10-Q for the period ended
June 30, 2010, filed with the
Securities and Exchange Commission.
This press release contains certain statements that may include
"forward-looking statements" within the meanings of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of
historical facts, included herein are "forward-looking statements."
Included among "forward-looking statements" are, among other
things, (i) statements regarding Cheniere's business strategy,
plans and objectives and (ii) statements expressing beliefs and
expectations regarding the development of Cheniere's LNG receiving
terminal and pipeline businesses. Although Cheniere believes that
the expectations reflected in these forward-looking statements are
reasonable, they do involve assumptions, risks and uncertainties,
and these expectations may prove to be incorrect. Cheniere's
actual results could differ materially from those anticipated in
these forward-looking statements as a result of a variety of
factors, including those discussed in Cheniere's periodic reports
that are filed with and available from the Securities and Exchange
Commission. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. Other than as required under the securities laws,
Cheniere does not assume a duty to update these forward-looking
statements.
(Financial Table
Follows)
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Cheniere Energy,
Inc.
Selected Financial
Information
(in thousands, except per share
data) (1)
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Three Months
Ended
June 30,
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Six Months Ended
June 30,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LNG receiving terminal
revenues
|
$
|
66,337
|
|
$
|
38,201
|
|
$
|
133,164
|
|
$
|
38,201
|
|
|
Oil and gas sales
|
|
884
|
|
|
839
|
|
|
1,421
|
|
|
1,573
|
|
|
Marketing and trading,
net
|
|
1,029
|
|
|
(1,156)
|
|
|
13,170
|
|
|
(656)
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|
|
Other
|
|
25
|
|
|
75
|
|
|
37
|
|
|
75
|
|
|
Total revenues
|
|
68,275
|
|
|
37,959
|
|
|
147,792
|
|
|
39,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
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LNG receiving terminal and
pipeline development expenses
|
|
1,143
|
|
|
91
|
|
|
1,861
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|
|
—
|
|
|
LNG receiving terminal and
pipeline operating expenses
|
|
9,807
|
|
|
9,251
|
|
|
22,619
|
|
|
18,029
|
|
|
Oil and gas production and
exploration costs
|
|
113
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|
|
77
|
|
|
211
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|
|
164
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|
|
Depreciation, depletion and
amortization
|
|
15,612
|
|
|
12,795
|
|
|
31,236
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|
|
24,857
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|
|
General and administrative
expenses
|
|
16,910
|
|
|
15,422
|
|
|
36,128
|
|
|
33,219
|
|
|
Total operating costs and
expenses
|
|
43,585
|
|
|
37,636
|
|
|
92,055
|
|
|
76,269
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income (Loss) from
operations
|
|
24,690
|
|
|
323
|
|
|
55,737
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|
|
(37,076)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Gain on sale of equity method
investment
|
|
128,329
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|
|
—
|
|
|
128,329
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|
|
—
|
|
|
Derivative gain
(loss)
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|
(44)
|
|
|
762
|
|
|
461
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|
|
3,324
|
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Gain (loss) on early
extinguishment of debt
|
|
(1,011)
|
|
|
45,363
|
|
|
(1,011)
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|
45,363
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Interest expense, net
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|
(66,950)
|
|
|
(61,959)
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|
|
(134,145)
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|
|
(115,209)
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Interest income
|
|
142
|
|
|
388
|
|
|
239
|
|
|
1,199
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Other income
(expense)
|
|
16
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|
|
46
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(87)
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(17)
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Income tax benefit
|
|
—
|
|
|
—
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|
|
—
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|
|
—
|
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|
Non-controlling
interest
|
|
505
|
|
|
2,026
|
|
|
987
|
|
|
6,624
|
|
|
Net income (loss)
|
$
|
85,677
|
|
$
|
(13,051)
|
|
$
|
50,510
|
|
$
|
(95,792)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net income (loss) per common
share—basic
|
$
|
1.55
|
|
$
|
(0.25)
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|
$
|
0.92
|
|
$
|
(1.91)
|
|
|
Net income (loss) per common
share—diluted
|
$
|
0.86
|
|
$
|
(0.25)
|
|
$
|
0.62
|
|
$
|
(1.91)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding—basic
|
|
55,317
|
|
|
51,576
|
|
|
55,161
|
|
|
50,121
|
|
|
Weighted
average number of common shares outstanding—diluted
|
|
116,596
|
|
|
51,576
|
|
|
110,610
|
|
|
50,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
June 30,
2010
|
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December 31,
2009
|
|
|
|
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(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cash and cash
equivalents
|
$
|
73,940
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|
$
|
88,372
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Restricted cash and cash
equivalents
|
|
76,164
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|
|
138,309
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LNG inventory
|
|
501
|
|
|
32,602
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|
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Accounts and interest
receivable
|
|
21,565
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|
|
9,899
|
|
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Other current assets
|
|
18,526
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|
|
17,093
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|
|
Non-current restricted cash and
cash equivalents
|
|
82,892
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|
|
82,892
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|
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Property, plant and equipment,
net
|
|
2,187,044
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|
|
2,216,855
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|
|
Debt issuance costs,
net
|
|
41,347
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|
|
47,043
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|
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Goodwill
|
|
76,819
|
|
|
76,819
|
|
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Other assets
|
|
28,683
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|
|
22,738
|
|
|
Total assets
|
$
|
2,607,481
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|
$
|
2,732,622
|
|
|
|
|
|
|
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Current liabilities
|
$
|
56,517
|
|
$
|
66,212
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|
|
Long-term debt, net of
discount
|
|
2,902,881
|
|
|
3,041,875
|
|
|
Deferred revenue
|
|
31,773
|
|
|
33,500
|
|
|
Other liabilities
|
|
2,875
|
|
|
23,162
|
|
|
Non-controlling
interest
|
|
203,422
|
|
|
217,605
|
|
|
Stockholders' deficit
|
|
(589,987)
|
|
|
(649,732)
|
|
|
Total liabilities and
stockholders' deficit
|
$
|
2,607,481
|
|
$
|
2,732,622
|
|
|
|
|
|
|
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|
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June 30, 2010
|
|
Sabine
Pass LNG, L.P.
|
|
Cheniere Energy
Partners, L.P.
|
|
Other Cheniere
Energy, Inc.
|
|
Consolidated
Cheniere Energy,
Inc.
|
|
|
Cash and cash
equivalents
|
|
$
|
—
|
|
$
|
—
|
|
$
|
73,940
|
|
$
|
73,940
|
|
|
Restricted cash and cash
equivalents
|
|
|
113,087
|
|
|
43,116
|
|
|
2,853
|
|
|
159,056
|
|
|
Total
|
|
$
|
113,087
|
|
$
|
43,116
|
|
$
|
76,793
|
|
$
|
232,996
|
|
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(1) Please refer to the Cheniere
Energy, Inc. Quarterly Report on Form 10-Q for
the period ended June 30, 2010, filed
with the
Securities and Exchange Commission.
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SOURCE Cheniere Energy, Inc.
Copyright g. 6 PR Newswire