-- Commitment Obtained for $250mm Financing
-- Sabine Pass 2.6 Bcf/d Construction Complete
-- Creole Trail Pipeline Construction Complete
HOUSTON--(BUSINESS WIRE)--Aug. 11, 2008--Cheniere Energy, Inc.
(AMEX:LNG) reported a net loss of $132.3 million, or $2.81 per share
(basic and diluted), for the second quarter of 2008 compared with a
net loss of $41.1 million, or $0.76 per share (basic and diluted),
during the corresponding period in 2007. Not including the impact of
the restructuring charges in the second quarter of 2008, our net loss
would have been $53.7 million.
Losses from operations were $103.5 million for the second quarter
of 2008 compared to $40.2 million for the second quarter of 2007. This
increase of $63.3 million primarily resulted from restructuring
charges totaling $78.6 million associated with the previously
announced downsizing of our natural gas marketing and corporate
operations and cancellation of our two ship charters. Total charges
included $17.1 million of non-cash items and $46.7 million of
restricted cash items, of which $24.1 million occurred in the second
quarter. LNG receiving terminal and pipeline development expenses and
general and administrative expenses decreased $8.0 million and $9.6
million, respectively over the prior period due to more costs this
period qualifying for capitalization.
At June 30, 2008, Cheniere held restricted cash and cash
equivalents and treasury securities totaling $296.2 million of which
$264.8 million was held at Cheniere Energy Partners with $69.4 million
dedicated to the completion of the construction of the Sabine Pass LNG
receiving terminal, $141.3 million reserved for interest payments on
the Sabine Pass LNG, L.P. senior secured notes and $54.1 million as a
reserve for distributions to Cheniere Partners' common unit holders.
At June 30, 2008, Cheniere had unrestricted cash and cash
equivalents of $162.6 million compared to $296.5 million at December
31, 2007. Creole Trail pipeline expenditures incurred through June 30,
2008 were $547.7 million. On a cash basis, we had spent $522.9 million
through June 30, 2008 and expect to spend an additional $33.1 million
of cash from July 1, 2008 until completion of the pipeline.
Strategic Options / Liquidity Update
On August 6, 2008, we accepted a commitment for $250 million of
convertible security financing in order to repay the $95 million
bridge loan obtained in May and to provide for additional funds for
working capital and general corporate purposes. The commitment is
subject to certain conditions, including regulatory approvals,
completion of definitive documentation and absence of any material
adverse events. We expect to complete the financing in August 2008 and
will provide details of the transaction upon closing.
With this financing and our recently announced restructuring, we
are confident that we will be able to conduct our business for a
minimum of three years, even assuming we are wholly unsuccessful in
our efforts to exploit our 2.0 Bcf/d reserved capacity at the Sabine
Pass terminal and our other business initiatives.
As part of our strategic review process, we had implemented a
restructuring plan aimed at reducing costs and capital requirements.
Due to our restructuring efforts summarized below, we now estimate
ongoing operating and general and administrative expenses at the
parent level of Cheniere Energy Inc. to be $30 to $40 million on an
annualized basis. Steps taken during the quarter included:
-- Entering into a domestic marketing agreement for the sale of
LNG with JPMorgan Ventures Energy Corporation,
-- Reducing our personnel due to the downsizing of our natural
gas marketing activities, and
-- Terminating two LNG vessel time charter leases.
In consideration for termination of the time charters we will
forfeit cash collateral that had been classified as non-current
restricted cash.
Sabine Pass Terminal - Construction Complete for 2.6 Bcf/d
Terminal Capacity
Subject to the completion of routine punch list items, as of June
30, 2008, we had completed construction of the initial 2.6 Bcf/d of
send out capacity and 10.1 Bcf of storage capacity at the Sabine Pass
receiving terminal. The terminal is operating and able to accept
commercial cargoes. The commissioning process was initiated in April
2008 and is estimated to be completed in the third or fourth quarter
of 2008. To date, three LNG cargoes have been obtained for the
commissioning process and we expect to obtain one more cargo to
complete the process. Construction for the remaining 1.4 Bcf/d was
approximately 79% complete as of the end of the second quarter.
Our estimated aggregate cost to construct the Sabine Pass LNG
receiving terminal is approximately $1,462 million, before operating
expenses during construction, future commissioning costs, and
financing costs, an increase of approximately $36 million from our
estimate as of March 31, 2008 due to commissioning costs not
previously budgeted. Our estimated total construction, commissioning
and operating cost budget through the achievement of full operability
is approximately $1,559 million. As of June 30, 2008, we incurred
approximately $1,437 million of our total budget. Our remaining
construction, commissioning and operating costs are anticipated to be
funded from restricted cash and cash equivalents designated for
construction, working capital or additional financing.
Creole Trail Pipeline - Construction Complete
As of June 30, 2008, the Creole Trail Pipeline, consisting of 94
miles of pipeline, had been placed into commercial operations. This
pipeline provides 2.0 Bcf/d transmission capacity from the Sabine Pass
terminal to Gillis, Louisiana. Total costs, excluding financing costs,
are expected to be approximately $556 million.
Cheniere Energy, Inc. is developing a network of three LNG
receiving terminals and related natural gas pipelines along the Gulf
Coast of the United States. Cheniere is pursuing related business
opportunities both upstream and downstream of the terminals. Cheniere
is also the founder and holds a 30% limited partner interest in a
fourth 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, 2008,
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)
Cheniere Energy, Inc.
Selected Financial Information
(in thousands) (1)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 2007 2008 2007
---------- --------- ---------- ---------
Revenues $ 914 $ 872 $ 2,391 $ (385)
Operating costs and expenses
LNG receiving terminal
and pipeline
development expenses 2,566 10,532 9,282 16,286
LNG receiving terminal
and pipeline operating
expenses 416 -- 416 --
Exploration costs 24 14 93 372
Oil and gas production
costs 114 101 207 168
Depreciation, depletion
and amortization 3,333 1,513 5,617 2,589
General and
administrative expenses 19,364 28,936 50,043 50,197
Restructuring charges 78,564 -- 78,564 --
---------- --------- ---------- ---------
Total operating
costs and expenses 104,381 41,096 144,222 69,612
---------- --------- ---------- ---------
Loss from operations (103,467) (40,224) (141,831) (69,997)
Derivative loss (11,536) -- (12,366) --
Loss from equity method
investments (3,000) -- (4,800) --
Interest expense, net (21,402) (25,930) (41,251) (52,356)
Interest income 4,801 24,120 14,405 45,703
Other income (expense) (34) (184) (71) (183)
Income tax benefit -- -- -- --
Minority interest 2,305 1,099 3,670 1,158
---------- --------- ---------- ---------
Net loss $(132,333) $(41,119) $(182,244) $(75,675)
========== ========= ========== =========
Net loss per common share--
basic and diluted $ (2.81) $ (0.76) $ (3.87) $ (1.38)
========== ========= ========== =========
Weighted average number of
common shares outstanding--
basic and diluted 47,129 54,391 47,053 54,640
========== ========= ========== =========
Cheniere Energy, Inc.
Selected Financial Information
(in thousands) (1)
June 30, December 31,
2008 2007
------------ ------------
(Unaudited)
Cash and Cash Equivalents $ 162,615 $ 296,530
Restricted Cash and Cash Equivalents 192,302 228,085
Other Current Assets 74,754 75,997
Non-Current Restricted Cash, Cash
Equivalents and Treasury Securities 103,922 542,148
Property, Plant and Equipment, Net 2,074,380 1,645,112
Debt Issuance Costs, Net 51,496 44,005
Goodwill 76,844 76,844
LNG Held for Commissioning 65,416 --
Other Assets 30,612 53,578
------------ ------------
Total Assets $ 2,832,341 $ 2,962,299
============ ============
Current Liabilities $ 136,370 $ 173,101
Long-Term Debt 2,852,000 2,757,000
Deferred Revenue 40,000 40,000
Other Liabilities 6,015 8,637
Minority Interest 268,809 285,675
Stockholders' (Deficit) Equity (470,853) (302,114)
------------ ------------
Total Liabilities and Stockholders'
(Deficit) Equity $ 2,832,341 $ 2,962,299
============ ============
(1) Please refer to the Cheniere Energy, Inc. Quarterly Report on
Form 10-Q for the period ended June 30, 2008, filed with the
Securities and Exchange Commission.
CONTACT: Cheniere Energy, Inc., Houston
Investors/Media:
Christina Cavarretta, 713-375-5100
SOURCE: Cheniere Energy, Inc.
