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Last updated on April 24, 2014 at 5:22 EDT

Cheniere Energy Reports Third Quarter 2013 Results

November 8, 2013

HOUSTON, Nov. 8, 2013 /PRNewswire/ — Cheniere Energy, Inc. (“Cheniere”) (NYSE MKT: LNG) reported a net loss attributable to common stockholders of $100.8 million, or $0.46 per share (basic and diluted), for the three months ended September 30, 2013, compared to a net loss attributable to common stockholders of $109.0 million, or $0.52 per share (basic and diluted), for the comparable 2012 period. For the nine months ended September 30, 2013, Cheniere reported a net loss attributable to common stockholders of $372.7 million, or $1.71 per share (basic and diluted), compared to a net loss attributable to common stockholders of $238.5 million, or $1.40 per share (basic and diluted), during the corresponding period of 2012.

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Significant items for the three months and nine months ended September 30, 2013 were $33.4 million, or $0.15 per share (basic and diluted), and $75.0 million, or $0.34 per share (basic and diluted), respectively, compared to $11.4 million, or $0.05 per share (basic and diluted), and $70.0 million, or $0.41 per share (basic and diluted), respectively, for the comparable 2012 periods. Significant items for the quarter related to liquefied natural gas (“LNG”) terminal development expenses and derivative gains/losses, and for the nine months ended September 30, 2013, significant items also included loss on early extinguishment of debt. LNG terminal development expenses were primarily for the liquefaction facilities Cheniere Energy Partners, L.P. (“Cheniere Partners”) is developing through Sabine Pass Liquefaction, LLC (“Sabine Pass Liquefaction”) at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the “Sabine Pass Liquefaction Project”) and the proposed liquefaction facilities being developed by us near Corpus Christi, Texas (the “Corpus Christi Liquefaction Project”). Derivative gains/losses were primarily the result of the change in fair value of Sabine Pass Liquefaction’s interest rate derivatives to hedge the exposure to volatility in a portion of the floating-rate interest payments under the four credit facilities. Loss on early extinguishment of debt was related to Sabine Pass Liquefaction amending and replacing its $3.6 billion credit facility with four credit facilities aggregating $5.9 billion in May 2013.

Results are reported on a consolidated basis and include our ownership interest in Cheniere Partners, which was 57.9% as of September 30, 2013.

Liquefaction Projects Update

Sabine Pass Liquefaction Project

Cheniere Partners is developing up to six natural gas liquefaction trains (“Trains), each with a design production capacity of approximately 4.5 mtpa, at the Sabine Pass LNG terminal adjacent to the existing regasification facilities. We have received Federal Energy Regulatory Commission (“FERC”) and Department of Energy (“DOE”) approvals for Trains 1 through 4, and we have filed all required regulatory applications with the FERC and DOE to develop Trains 5 and 6.

The Trains are in various stages of development.

    --  Construction on Trains 1 and 2 began in August 2012, and as of September
        30, 2013, the overall project for Trains 1 and 2 was approximately 45%
        complete, which is ahead of the contracted schedule.  Based on our
        current construction, we anticipate that Train 1 will produce LNG by
        late 2015.
    --  Construction on Trains 3 and 4 began in May 2013, and as of September
        30, 2013, the overall project for Trains 3 and 4 was approximately 10%
        complete.  To date, soil stabilization has been completed and pile
        driving, our next critical path item, is underway.  We expect Trains 3
        and 4 to become operational in late 2016 and 2017, respectively.
    --  We continue to make progress with the commercialization and development
        of Trains 5 and 6.  To date, we have completed two LNG sale and purchase
        agreements ("SPAs") for approximately 3.75 mtpa, in aggregate, of LNG
        volumes that commence with the start of Train 5 operations.  Annual
        fixed fee revenues associated with these SPAs are approximately $0.6
        billion.  Bechtel has begun the front-end engineering design ("FEED") on
        Trains 5 and 6, and we have commenced the regulatory approval process.
        In September 2013, we filed the complete application with the FERC.  In
        February 2013 and in April 2013, we filed Free Trade Agreement ("FTA")
        and non-FTA export applications for LNG volumes under the SPAs with
        Total Gas & Power North America, Inc. ("Total") and Centrica plc
        ("Centrica"), respectively.  In September 2013, we filed FTA and non-FTA
        export applications for LNG volumes for the un-contracted volumes from
        Train 5 and for all volumes from Train 6.  To date, we have received
        authorization from the DOE to export LNG volumes to FTA countries under
        the Total SPA and Centrica SPA.  FTA authorization for the remaining
        volumes from Train 5 and all volumes from Train 6 as well as non-FTA
        authorizations for both Trains 5 and 6 are pending.

Corpus Christi Liquefaction Project

We are also continuing to make progress on the commercialization and development of the Corpus Christi Liquefaction Project, which is being designed for up to three Trains with aggregate design production capacity of 13.5 mtpa of LNG.

To date, the Corpus Christi Liquefaction Project is one of the top three projects under review at the FERC and is fifth on the DOE’s Order of Precedence list, which lists the order in which the DOE will be processing non-FTA LNG export applications. In August 2012, we filed applications with the FERC for authorization to site, construct and operate the Corpus Christi Liquefaction Project and with the DOE requesting multi-contract authorization to export up to 767 Bcf per year of domestically produced LNG from the Corpus Christi Liquefaction Project to FTA and non-FTA countries. We have received authorization from the DOE to export up to 767 Bcf per year of domestically produced LNG to FTA countries from the Corpus Christi Liquefaction Project.

In September 2013, we received the lump-sum turnkey contract price for the Corpus Christi Liquefaction Project from Bechtel, which has allowed us to commence commercialization of the Corpus Christi Liquefaction Project.

We will contemplate making a final investment decision to commence construction of the Corpus Christi Liquefaction Project based upon, among other things, entering into acceptable commercial arrangements, receiving all regulatory approvals and obtaining financing.


    Timelines for Liquefaction Projects

                                       Target Date
                                       -----------

                                Sabine Pass Liquefaction                      Corpus Christi Liquefaction
                                ------------------------                      ---------------------------

    Milestone                           Trains                 Trains                   Trains                    Trains 1-3

                                        1 & 2                   3 & 4                   5 & 6
    ---                                 -----                   -----                   -----

    DOE export                         Received               Received             T5: Received FTA       Received FTA;   Pending Non-
     authorization                                                                                                    FTA

                                                                                   Pending Non-FTA

    Definitive
     commercial
     agreements                   Completed 7.7 mtpa     Completed 8.3 mtpa         T5: Completed                                 2014

                                                                                       T6: 2014

    -BG Gulf
     Coast LNG,
     LLC                               4.2 mtpa               1.3 mtpa

    -Gas
     Natural
     Fenosa                            3.5 mtpa

    - KOGAS                                                   3.5 mtpa

    -GAIL
     (India)
     Ltd.                                                     3.5 mtpa

    -Total Gas
     & Power
     N.A.                                                                              2.0 mtpa

    -Centrica
     plc                                                                              1.75 mtpa

    EPC
     contract                         Completed               Completed                          2015                        2013/2014

    Financing                                                                                    2015                             2014

    - Equity                          Completed               Completed

    -Debt
     commitments                       Received                Received

    FERC
     authorization

    -FERC
     Order                             Received               Received                           2015                             2014

    -
     Certificate
     to
     commence
     construction                      Received               Received

    Issue
     Notice to
     Proceed                          Completed               Completed                          2015                             2014

    Commence
     operations                             2015/2016               2016/2017               2018/2019                            2,018

Q3 2013 Results

For the quarter and nine months ended September 30, 2013, Cheniere reported loss from operations of $45.9 million and $249.6 million, respectively, compared to $54.5 million and $59.9 million for the respective comparable periods in 2012. Net operating losses were primarily affected by general and administrative expenses due to non-cash compensation expenses from the granting of awards under the long-term incentive plan related to Trains 1 through 4 of the Sabine Pass Liquefaction Project and by LNG terminal operating expenses, which resulted primarily from costs incurred to purchase LNG to maintain the cryogenic readiness of the regasification facilities at the Sabine Pass LNG terminal. Non-cash compensation expenses were $24.7 million and $187.1 million for the three and nine months ended September 30, 2013, respectively, compared to $50.2 million and $54.1 million for the respective comparable 2012 periods.

Changes in interest expense for the three and nine months ended September 30, 2013, respectively, compared to the comparable 2012 periods were primarily as a result of reduction of our indebtedness outstanding in 2012 and capitalization of interest on Sabine Pass Liquefaction’s debt.

Cheniere Energy, Inc. is a Houston-based energy company primarily engaged in LNG-related businesses, and owns and operates the Sabine Pass LNG terminal and Creole Trail Pipeline in Louisiana. Cheniere is pursuing related business opportunities both upstream and downstream of the Sabine Pass LNG terminal. Through its subsidiary, Cheniere Energy Partners, L.P., Cheniere is developing a liquefaction project at the Sabine Pass LNG terminal adjacent to the existing regasification facilities for up to six Trains, each of which will have a design production capacity of approximately 4.5 mtpa. Construction has begun on Trains 1 through 4 at the Sabine Pass Liquefaction Project. Cheniere has also initiated a project to develop liquefaction facilities near Corpus Christi, Texas. The Corpus Christi Liquefaction Project is being designed and permitted for up to three Trains, with aggregate design production capacity of up to 13.5 mtpa of LNG and which would include three LNG storage tanks with capacity of 10.1 Bcfe and two LNG carrier docks. Commencement of construction for the Corpus Christi Liquefaction Project is subject, but not limited, to obtaining regulatory approvals, entering into long-term customer contracts sufficient to underpin financing of the project, entering into an engineering, procurement and construction contract, obtaining financing, and Cheniere making a final investment decision. We believe LNG exports from the Corpus Christi Liquefaction Project could commence as early as 2018.

For additional information, please refer to the Cheniere Energy, Inc. website at www.cheniere.com and Quarterly Report on Form 10-Q for the period ended September 30, 2013, 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 fact, 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, including the construction and operation of liquefaction facilities, (ii) statements regarding our expectations regarding regulatory authorizations and approvals, (iii) statements expressing beliefs and expectations regarding the development of Cheniere’s LNG terminal and pipeline businesses, including liquefaction facilities, (iv) statements regarding the business operations and prospects of third parties, (v) statements regarding potential financing arrangements and (vi) statements regarding future discussions and entry into contracts. 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)


                                      Cheniere Energy, Inc.

                                 Selected Financial Information

                            (in thousands, except per share data) (1)

                                Three Months Ended                      Nine Months Ended

                                   September 30,                          September 30,
                                  -------------                          -------------

                                2013                  2012                 2013               2012
                                ----                  ----                 ----               ----

    Revenues

    LNG terminal
     revenues                            $66,735               $65,939             $199,222           $199,269

    Marketing and
     trading
     revenues                    590                 (292)                  441              (1,641)

    Other                        385                   351                1,130              1,171
                                 ---                   ---                -----              -----

    Total revenues            67,710                 65,998                200,793              198,799

    Operating costs and
     expenses

    LNG terminal
     operating
     expense                  30,098                 14,056                76,425              36,606

    LNG terminal
     development
     expense                  11,046                 11,721                50,214              54,629

    Depreciation,
     depletion and
     amortization             15,246                 15,233                45,533              47,001

    General and
     administrative
     expense                  57,096                 79,427                277,971              120,236

    Other                        100                    78                  258                244
                                 ---                   ---                  ---                ---

    Total operating
     costs and
     expenses                113,586                 120,515                450,401              258,716
                             -------                 -------                -------              -------

    Loss from
     operations              (45,876)                (54,517)                (249,608)              (59,917)
                             -------                 -------                --------              -------

    Other income (expense)

    Interest
     expense, net            (52,528)                (45,504)                (134,806)              (159,719)

    Loss on early
     extinguishment
     of debt                       -                    -                (80,510)              (15,098)

    Derivative gain
     (loss), net             (22,335)                  287                55,706              (288)

    Other income
     (expense)                    65                 (12,081)                  954              (11,500)
                                 ---                 -------                  ---              -------

    Total other
     expense                 (74,798)                (57,298)                (158,656)              (186,605)
                             -------                 -------                --------              --------

    Loss before
     income taxes
     and non-
     controlling
     interest              (120,674)                 (111,815)                (408,264)              (246,522)

    Income tax
     provision                (1,809)                 (61)                (2,751)              (211)
                              ------                   ---                ------               ----

    Net loss               (122,483)                 (111,876)                (411,015)              (246,733)

    Non-
     controlling
     interest                 21,659                 2,875                38,323              8,277
                              ------                 -----                ------              -----

    Net loss
     attributable
     to common
     stockholders                      $(100,824)            $(109,001)           $(372,692)         $(238,456)
                                        ========              ========             ========           ========

    Net loss per
     share
     attributable
     to common
     stockholders -
     basic and
     diluted                              $(0.46)               $(0.52)              $(1.71)            $(1.40)

    Weighted
     average number
     of common
     shares
     outstanding -
     basic and
     diluted                 220,734                 208,712                217,940              170,414


                                 September                December
                                    30,                      31,

                                      2013                   2012
                                      ----                   ----

    Cash and cash equivalents                  $374,164              $201,711

    Restricted cash and cash
     equivalents                   577,945                  520,263

    Accounts and interest
     receivable                     26,079                  3,486

    LNG inventory                   14,401                  7,045

    Prepaid expenses and other      16,471                  16,058

    Non-current restricted
     cash and cash equivalents     828,858                  272,924

    Property, plant and
     equipment, net              5,705,567                  3,282,305

    Debt issuance costs, net       340,856                  220,949

    Non-current derivative
     assets                         64,309                     -

    Goodwill                        76,819                  76,819

    Other                          100,384                  37,525
                                   -------                  ------

    Total assets                             $8,125,853            $4,639,085
                                             ==========              ========

    Current liabilities                        $213,237              $159,763

    Long-term debt, net of
     discount                    5,574,195                  2,167,113

    Deferred revenue                18,500                  21,500

    Non-current derivative
     liabilities                         -                  26,424

    Other liabilities                3,572                  2,680

    Non-controlling interest     2,027,136                  1,751,604

    Stockholders' equity           289,213                  510,001

    Total liabilities and
     equity                                  $8,125,853            $4,639,085
                                             ==========              ========


                  Sabine           Cheniere                   Other               Consolidated
                                   Partners                 Cheniere              Cheniere
                 Pass LNG
                 --------

    Cash
     and
     cash
     equivalents        $        -            $           -                 $374,164               $374,164

     Restricted
     cash
     and
     cash
     equivalents  139,591          (2) 1,238,740               (3)   28,472               1,406,803
                  -------              ---------                     ------               ---------

    Total                 $139,591               $1,238,740                 $402,636             $1,780,967
                          ========                 ========                 ========             ==========

As of September 30, 2013, we had unrestricted cash and cash equivalents of $374.2 million available to Cheniere. In addition, we had consolidated restricted cash and cash equivalents of $1,406.8 million (which included cash and cash equivalents available to Cheniere Partners, in which we own a 57.9% interest, and Sabine Pass LNG) designated for the following purposes: $798.6 million for the Sabine Pass Liquefaction Project, $75.0 million for the Creole Trail Pipeline and $329.4 million for Cheniere Partners’ working capital; $164.8 million for interest payments related to the Sabine Pass LNG senior secured notes and CTPL credit facility; $10.5 million for Sabine Pass LNG’s working capital; and $28.5 million for other restricted purposes.


    (1)      Please
             refer to
             the
             Cheniere
             Energy,
             Inc.
             Quarterly
             Report on
             Form 10-Q
             for the
             period
             ended
             September
             30, 2013,
             filed
             with the
             Securities
             and
             Exchange
             Commission.

    (2)      All cash
             and cash
             equivalents
             presented
             above for
             Sabine
             Pass LNG
             are
             considered
             restricted
             to us,
             but $10.5
             million
             is
             considered
             unrestricted
             for
             Sabine
             Pass LNG.

    (3)      All cash
             and cash
             equivalents
             presented
             above for
             Cheniere
             Partners
             are
             considered
             restricted
             to us,
             but
              $339.9
             million
             is
             considered
             unrestricted
             for
             Cheniere
             Partners,
             including
             the $10.5
             million
             considered
             unrestricted
             for
             Sabine
             Pass LNG.

SOURCE Cheniere Energy, Inc.


Source: PR Newswire