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Cheniere Energy, Inc. Reports Second Quarter 2014 Results

HOUSTON, July 31, 2014 /PRNewswire/ -- Cheniere Energy, Inc. ("Cheniere") (NYSE MKT: LNG) reported a net loss attributable to common stockholders of $201.9 million, or $0.90 per share (basic and diluted), for the three months ended June 30, 2014, compared to a net loss attributable to common stockholders of $154.8 million, or $0.71 per share (basic and diluted), for the comparable 2013 period. For the six months ended June 30, 2014, Cheniere reported a net loss attributable to common stockholders of $299.7 million, or $1.34 per share (basic and diluted), compared to a net loss attributable to common stockholders of $271.9 million, or $1.26 per share (basic and diluted), during the corresponding period of 2013.

Results include significant items for the three and six months ended June 30, 2014 of $189.8 million and $236.6 million, compared to $7.1 million and $41.6 million for the comparable 2013 periods, respectively. The significant items for the three and six months ended June 30, 2014 related to liquefied natural gas ("LNG") terminal development expenses, derivative losses, and loss on early extinguishment of debt. LNG terminal development expenses were primarily for the liquefaction facilities being developed by us near Corpus Christi, Texas (the "Corpus Christi Liquefaction Project"), and 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"). Derivative 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 Sabine Pass Liquefaction's four credit facilities (the "2013 Liquefaction Credit Facilities"). Loss on early extinguishment of debt was related to Sabine Pass Liquefaction's write-off of debt issuance costs in connection with the early extinguishment of $2.1 billion of the 2013 Liquefaction Credit Facilities.

General and administrative expense decreased $67.4 million and $79.3 million in the three and six months ended June 30, 2014, respectively, as compared to the three and six months ended June 30, 2013, primarily as a result of the timing of awards under bonus plans relating to the Sabine Pass Liquefaction Project. Included in general and administrative expenses were non-cash compensation expenses of $24.6 million and $59.2 million for the three and six months ended June 30, 2014, respectively, compared to $103.2 million and $162.4 million for the comparable 2013 periods, respectively.

Results are reported on a consolidated basis and include our ownership interest in Cheniere Partners, which is based on our 100% ownership of the general partner and 84.5% ownership interest in Cheniere Energy Partners LP Holdings, LLC which owns 55.9% of Cheniere Partners.

Overview of Recent Significant Events

  • Our wholly owned subsidiary, Corpus Christi Liquefaction, LLC ("Corpus Christi Liquefaction"), has entered into LNG Sale and Purchase Agreements ("SPAs") beginning in the second quarter 2014 through July 2014 with the following customers for the Corpus Christi Liquefaction Project:
    • Endesa Generación, S.A. (which has been assigned to Endesa S.A.) and Endesa S.A. (together, "Endesa") under which Endesa has agreed to purchase a total of 117.3 million MMBtu of LNG per year (approximately 2.25 mtpa) upon the date of the first commercial delivery of LNG from Train 1;
    • Iberdrola S.A. ("Iberdrola") under which Iberdrola has agreed to purchase a total of 39.7 million MMBtu of LNG per year (approximately 0.76 mtpa) upon the date of first commercial delivery of LNG from Train 2. In addition, Corpus Christi Liquefaction will provide Iberdrola with bridging volumes of 19.8 million MMBtu per contract year, starting on the date on which Train 1 becomes commercially operable and ending on the date of the first commercial delivery of LNG from Train 2;
    • Gas Natural Fenosa LNG SL ("Gas Natural Fenosa") under which Gas Natural Fenosa has agreed to purchase a total of 78.2 million MMBtu of LNG per year (approximately 1.5 mtpa) upon the date of first commercial delivery of LNG from Train 2;
    • Woodside Energy Trading Singapore Pte Ltd ("Woodside") under which Woodside has agreed to purchase a total of 44.1 million MMBtu of LNG per year (approximately 0.85 mtpa) upon the date of first commercial delivery of LNG from Train 2;
    • PT Pertamina (Persero) ("Pertamina") under which Pertamina has agreed to purchase an additional 39.7 million MMBtu of LNG per year (approximately 0.76 mtpa) upon the date of first commercial delivery of LNG from Train 2; and
    • Électricité de France, S.A. ("EDF") under which EDF has agreed to purchase 40.0 million MMBtu of LNG per year (approximately 0.77 mtpa) upon the date of first commercial delivery of LNG from Train 3. In addition, Corpus Christi Liquefaction will provide EDF with bridging volumes of 20.0 million MMBtu per contract year, starting on the date on which Train 2 becomes commercially operable and ending on the date of the first commercial delivery of LNG from Train 3.
  • In May 2014, Sabine Pass Liquefaction issued an aggregate principal amount of $2.0 billion of 5.75% Senior Secured Notes due 2024 and $0.5 billion of 5.625% Senior Secured Notes due 2023. Net proceeds from the offering of approximately $2.5 billion were used to repay certain outstanding indebtedness under the 2013 Liquefaction Credit Facilities, and the remaining proceeds are being used to pay a portion of the capital costs in connection with the construction of the first four natural gas liquefaction trains ("Trains") of the Sabine Pass Liquefaction Project in lieu of a terminated portion of the commitments under the 2013 Liquefaction Credit Facilities.

Liquefaction Projects Update

Sabine Pass Liquefaction Project

Through Cheniere Partners we are developing up to six Trains, each with an expected nominal production capacity of approximately 4.5 mtpa at the Sabine Pass LNG terminal adjacent to the existing regasification facilities.

The Trains are in various stages of development.

  • Construction on Trains 1 and 2 began in August 2012, and as of June 30, 2014, the overall project for Trains 1 and 2 was approximately 69% complete, which is ahead of the contractual schedule. Based on our current construction schedule, we anticipate that Train 1 will produce LNG as early as late 2015.
  • Construction on Trains 3 and 4 began in May 2013, and as of June 30, 2014, the overall project for Trains 3 and 4 was approximately 36% complete, which is ahead of the contractual schedule. We expect Trains 3 and 4 to become operational in late 2016 and 2017, respectively.
  • Trains 5 and 6 are under development. We have entered into SPAs for approximately 3.75 mtpa in aggregate that commence with the date of first commercial delivery for Train 5. We have received authorizations from the Department of Energy ("DOE") to export 503 Bcf per year of LNG volumes from Trains 5 and 6 to free trade agreement ("FTA") countries. Authorization to export LNG to non-FTA countries is pending. Federal Energy Regulatory Commission ("FERC") authorization is also pending. We will contemplate making a final investment decision to commence construction on Trains 5 and 6 based upon, among other things, entering into acceptable commercial arrangements, receiving all regulatory approvals and obtaining financing.

Corpus Christi Liquefaction Project

We continue to make progress on the commercialization and development of the Corpus Christi Liquefaction Project, which is being designed for up to three Trains with expected aggregate nominal production capacity of approximately 13.5 mtpa of LNG.

  • To date, we have entered into SPAs aggregating approximately 6.9 mtpa of LNG volumes commencing with Trains 1 and 2 and 0.77 mtpa of LNG volumes commencing with Train 3.
  • We have received authorization from the DOE to export up to 767 Bcf per year of domestically produced LNG to FTA countries. Authorization to export LNG to non-FTA countries is pending. FERC authorization is also pending.

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

1 & 2


Trains

3 & 4


Trains

5 & 6



DOE export authorization


Received


Received


Received FTA

Pending Non-FTA


Received FTA;
 Pending Non-FTA

Definitive commercial agreements


Completed
7.7 mtpa


Completed
8.3 mtpa


T5: Completed

T6: 2014


T1-T2: Completed

- 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



- PT Pertamina








1.52 mtpa

- Endesa, S.A.








2.25 mtpa

- Iberdrola, S.A.








0.76 mtpa

- Gas Natural Fenosa LNG SL








1.50 mtpa

- Woodside Energy Trading Singapore








0.85 mtpa

- Électricité de France, S.A.








0.77 mtpa

EPC contract


Completed


Completed


2015


Completed

Financing






2015


2014

- Equity


Completed


Completed





- Debt commitments


Received


 Received





FERC authorization









- FERC Order


Received


Received


2014/2015


2014/2015

- Certificate to commence construction


Received


Received





Issue Notice to Proceed


Completed


Completed


2015


2015

Commence operations


2015/2016


2016/2017


2018/2019


2018/2019

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 is expected to have a nominal 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 for up to three Trains, with expected aggregate nominal production capacity of approximately 13.5 mtpa of LNG, 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, obtaining financing, and Cheniere making a final investment decision. Cheniere believes that 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 quarter ended June 30, 2014, 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 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)

(unaudited)



Three Months Ended


Six Months Ended


June 30,


June 30,


2014



2013



2014



2013


Revenues












LNG terminal revenues

$

66,841



$

66,426



$

133,260



$

132,487


Marketing and trading revenues (losses)

324



416



981



(149)


Other

480



335



954



745


Total revenues

67,645



67,177



135,195



133,083














Operating costs and expenses












General and administrative expense

67,720



135,076



141,528



220,875


Depreciation

17,298



15,173



32,773



30,286


LNG terminal operating expense

29,409



31,068



43,096



46,327


LNG terminal development expense

15,263



22,081



27,375



39,168


Other

90



57



170



159


Total operating costs and expenses

129,780



203,455



244,942



336,815














Loss from operations

(62,135)



(136,278)



(109,747)



(203,732)














Other income (expense)












Interest expense, net

(43,789)



(42,016)



(84,059)



(82,278)


Loss on early extinguishment of debt

(114,335)



(80,510)



(114,335)



(80,510)


Derivative gain (loss), net

(60,178)



95,509



(94,859)



78,041


Other income (expense)

(189)



413



121



889


Total other expense

(218,491)



(26,604)



(293,132)



(83,858)














Loss before income taxes and non-controlling interest

(280,626)



(162,882)



(402,879)



(287,590)


Income tax provision

(84)



(1,022)



(176)



(942)


Net loss

(280,710)



(163,904)



(403,055)



(288,532)


Less: net loss attributable to non-controlling interest

(78,782)



(9,140)



(103,317)



(16,664)


Net loss attributable to common stockholders

$

(201,928)



$

(154,764)



$

(299,738)



$

(271,868)














Net loss per share attributable to common stockholders—basic and diluted

$

(0.90)



$

(0.71)



$

(1.34)



$

(1.26)


Weighted average number of common shares outstanding—basic and diluted

223,602



217,397



223,406



216,520


 


June 30,


December 31,


2014



2013


ASSETS

(unaudited)




Current assets






Cash and cash equivalents

$

889,887



$

960,842


Restricted cash and cash equivalents

670,659



598,064


Accounts and interest receivable

4,175



4,486


LNG inventory

5,800



10,563


Prepaid expenses and other

20,963



17,225


Total current assets

1,591,484



1,591,180








Non-current restricted cash and cash equivalents

1,855,769



1,031,399


Property, plant and equipment, net

7,933,868



6,454,399


Debt issuance costs, net

259,716



313,944


Non-current derivative assets

20,236



98,123


Goodwill

76,819



76,819


Other

121,403



107,373


Total assets

$

11,859,295



$

9,673,237








LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities






Accounts payable

$

30,205



$

10,367


Accrued liabilities

320,918



186,552


Deferred revenue

26,639



26,593


Other

13,121



13,499


Total current liabilities

390,883



237,011








Long-term debt, net

8,987,850



6,576,273


Long-term deferred revenue

15,500



17,500


Other non-current liabilities

4,105



2,396








Commitments and contingencies












Stockholders' equity






Preferred stock, $0.0001 par value, 5.0 million shares authorized, none issued




Common stock, $0.003 par value






Authorized: 480.0 million shares at June 30, 2014 and December 31, 2013






Issued and outstanding: 238.1 million shares at June 30, 2014 and December 31, 2013

715



716


Treasury stock: 9.2 million shares and 9.0 million shares at June 30, 2014 and December 31, 2013, respectively, at cost

(189,646)



(179,826)


Additional paid-in-capital

2,533,119



2,459,699


Accumulated deficit

(2,400,645)



(2,100,907)


Total stockholders' equity

(56,457)



179,682


Non-controlling interest

2,517,414



2,660,375


Total equity

2,460,957



2,840,057


Total liabilities and equity

$

11,859,295



$

9,673,237


As of June 30, 2014, we had cash and cash equivalents of $889.9 million available to Cheniere. In addition, we had current and non-current restricted cash and cash equivalents of $2,526.4 million (which included current and non-current restricted cash and cash equivalents available to Cheniere Partners, Sabine Pass Liquefaction and Sabine Pass LNG, L.P.) designated for the following purposes: $2.1 billion for the Sabine Pass Liquefaction Project, $51.4 million for Cheniere Creole Trail Pipeline, L.P., $91.1 million for interest payments related to the Sabine Pass LNG senior secured notes, and $319.2 million for other restricted purposes.

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SOURCE Cheniere Energy, Inc.

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