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Cheniere Energy Reports Fourth Quarter and YE 2012 Results



          Cheniere Energy Reports Fourth Quarter and YE 2012 Results

PR Newswire

HOUSTON, Feb. 22, 2013

HOUSTON, Feb. 22, 2013 /PRNewswire/ -- For the quarter and year ended December
31, 2012, Cheniere Energy, Inc. ("Cheniere") (NYSE MKT: LNG) reported a net
loss of $94.3 million, or $0.44 per share (basic and diluted), and $332.8
million, or $1.83 per share (basic and diluted), respectively, compared with a
net loss of $57.8 million, or $0.66 per share (basic and diluted), and $198.8
million, or $2.60 per share (basic and diluted), respectively, for the same
periods in 2011. 

(Logo: http://photos.prnewswire.com/prnh/20090611/AQ31545LOGO)

For the quarter ended December 31, 2012, results include significant items of
$54.1 million, or $0.25 per share, related to liquefied natural gas ("LNG")
terminal and pipeline development expenses primarily for the liquefaction
facilities Cheniere Energy Partners, L.P. ("Cheniere Partners") is developing
at the Sabine Pass LNG terminal adjacent to the existing regasification
facilities (the "Sabine Pass Liquefaction Project") and the liquefaction
facilities being developed by us near Corpus Christi, Texas (the "Corpus
Christi Liquefaction Project") and losses due to the early extinguishment of
debt.  Excluding these significant items, the adjusted net loss for the
quarter ended December 31, 2012 was $40.3 million, or $0.19 per share (basic
and diluted).  

For the year ended December 31, 2012, results include significant items of
$135.2 million, or $0.74 per share, related to LNG terminal and pipeline
development expenses primarily for the Sabine Pass Liquefaction Project and
Corpus Christi Liquefaction Project, losses due to the early extinguishment of
debt, and other expenses that primarily consisted of the write-down of a
royalty interest.  Excluding these significant items, the adjusted net loss
for the year ended December 31, 2012 was $197.6 million, or $1.09 per share
(basic and diluted).  

Results are reported on a consolidated basis and include our ownership
interest in Cheniere Partners, which was 59.5% as of December 31, 2012.

Overview of Recent Significant Events

  o In October 2012, the U.S. Department of Energy ("DOE") granted us
    authority to export  approximately 15 million metric tons per annum
    ("mmtpa") of domestically produced LNG to Free Trade Agreement ("FTA")
    countries from the proposed Corpus Christi Liquefaction Project.  In
    August 2012, we had filed an application with the Federal Energy
    Regulatory Commission ("FERC") to site, construct and operate the Corpus
    Christi Liquefaction Project and an application with the DOE requesting
    multi-contract authorization to export  LNG  from the Corpus Christi
    Liquefaction Project to all current and future countries with which the
    U.S. has an FTA as well as to any country with which the U.S. does not
    have an FTA in effect;
  o In October/November 2012, Sabine Pass LNG, L.P. ("Sabine Pass LNG")
    repurchased its $550.0 million 7.25% Senior Secured Notes due 2013 by
    issuing $420.0 million of 6.50% Senior Secured Notes due in 2020 (the
    "2020 Notes") and by Cheniere Partners selling 8.0 million common units in
    an underwritten public offering at a price of $25.07 per common unit for
    net cash proceeds of $194.0 million;
  o In December 2012, Sabine Pass Liquefaction, LLC ("Sabine Pass
    Liquefaction") announced the commencement of the development of Train 5
    and Train 6 of the Sabine Pass Liquefaction Project and that it has
    entered into an LNG sale and purchase agreement ("SPA") with Total Gas &
    Power North America, Inc. ("Total") under which Total has agreed to
    purchase approximately 2.0 mmtpa of LNG volumes upon the commencement of
    Train 5 operations;
  o In December 2012, Sabine Pass Liquefaction and Bechtel Oil, Gas and
    Chemicals, Inc. ("Bechtel") entered into a lump sum turnkey contract for
    the engineering, procurement and construction ("EPC") of Train 3 and Train
    4 of the Sabine Pass Liquefaction Project; and
  o In February 2013, Sabine Pass Liquefaction issued an aggregate principal
    amount of $1.5 billion of 5.625% Senior Secured Notes due 2021 (the
    "Sabine Liquefaction Notes").  Proceeds from the offering are intended to
    be used to pay capital costs incurred in connection with the construction
    of Train 1 and Train 2 of the Sabine Pass Liquefaction Project in lieu of
    a portion of the commitments under Sabine Pass Liquefaction's $3.6 billion
    senior secured credit facility.

2012 Results

Cheniere reported loss from operations of $75.8 million for the year ended
December 31, 2012 compared to income from operations of $58.1 million for the
comparable period in 2011. 

Total revenues decreased $24.2 million, from $290.4 million in 2011 to $266.2
million for year ended December 31, 2012 primarily as a result of lower of
cost or market adjustments to LNG inventory and less LNG export activity. 
Results for the year ended December 31, 2012 were also impacted by increases
in general and administrative expenses of $63.7 million, from $88.4 million in
2011 to $152.1 million in 2012 primarily due to the August 2012 vesting of
awards under the long-term incentive plan related to Train 1 and Train 2 of
the Sabine Pass Liquefaction Project. Included in general and administrative
expenses were non-cash compensation expenses of $53.2 million for the year
ended December 31, 2012 and $24.4 million for the comparable 2011 period.  LNG
terminal and pipeline operating expenses increased $18.0 million, from $39.1
million in 2011 to $57.1 million in 2012 primarily as a result of the loss
incurred to purchase LNG to maintain the cryogenic readiness of the Sabine
Pass LNG terminal and increased dredging services in 2012.  LNG terminal and
pipeline development expenses increased $25.3 million, from $40.8 million in
2011 to $66.1 million in 2012 as a result of costs incurred to develop the
Sabine Pass Liquefaction Project and Corpus Christi Liquefaction Project.

During 2012, we extinguished all outstanding indebtedness, excluding debt of
Cheniere Partners and its subsidiaries.  The average debt outstanding
decreased year over year, resulting in a $58.6 million decrease in interest
expense in 2012 as compared to the comparable 2011 period. 

Liquefaction Projects Update

Sabine Pass Liquefaction Project

Cheniere Partners continues to make progress on the Sabine Pass Liquefaction
Project, which is being developed for up to six natural gas liquefaction
trains ("Trains"), each with a nominal production capacity of approximately
4.5 mmtpa.  The Trains are in various stages of development.

  o Train 1 and Train 2 have received all FERC and DOE approvals.  We have
    secured approximately $5.7 billion of required financing to construct
    Train 1 and Train 2.  We have issued a full notice to proceed to Bechtel
    and have commenced construction of Train 1 and Train 2 and the related new
    facilities needed to treat, liquefy, store and export natural gas.  As of
    December 31, 2012, the overall project for Train 1 and Train 2 was
    approximately 18% complete.  The estimated substantial completion dates
    for Train 1 and Train 2 are ahead of the contractual schedule for
    guaranteed substantial completion, and we anticipate that Train 1 will
    achieve initial LNG production in late 2015.
  o Train 3 and Train 4 have received all FERC and DOE approvals, and we have
    entered into a lump sum turnkey EPC contract with Bechtel for Train 3 and
    Train 4.  Construction of Train 3 and Train 4 and the related facilities
    is expected to commence upon, among other things, obtaining financing
    commitments sufficient to fund construction and making a positive final
    investment decision.  We are in the process of securing the required
    financing for the construction of Train 3 and Train 4 and expect
    construction to begin in 2013.
  o We recently began the development of Train 5 and Train 6.  In September
    2012, we entered into an agreement with Total whereby Sabine Pass
    Liquefaction will gradually obtain access to Total's send-out capacity and
    other services provided under its terminal use agreement with Sabine Pass
    LNG that may be used to accommodate the development of Train 5 and Train
    6.  Bechtel has begun preliminary engineering on Train 5 and Train 6, and
    we expect to initiate the regulatory approval process in the first half of
    2013.  In December 2012, we entered into an SPA  with Total under which
    Total has agreed to purchase approximately 2.0 mmtpa of LNG volumes upon
    the commencement of Train 5 operations.

Corpus Christi Liquefaction Project

As currently contemplated, the Corpus Christi Liquefaction Project is being
designed for up to three LNG trains with an aggregate peak capacity of
approximately 15 mmtpa.  We have engaged Bechtel to complete front-end
engineering and design work and expect to have cost estimates in the second
half of 2013.

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
(approximately 15 mmtpa) of LNG from the Corpus Christi Liquefaction Project
to any non-FTA countries.  In October 2012, the DOE granted us authority to
export approximately 15 mmtpa per year of domestically produced LNG to FTA
countries from 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 1 & 2  Trains 3 &  Trains 5 & 6  Trains 1-3
                                      4
                                                                Received -
  DOE export                                      Initiating    FTA;
• authorization         Received      Received    Filings 1H13
                                                                Pending -
                                                                Non-FTA
  Definitive            Completed     Completed
• commercial                                                    2H13
  agreements            7.7 mmtpa     8.3 mmtpa
  - BG Gulf Coast LNG,  4.2 mmtpa     1.3 mmtpa
  LLC
  - Gas Natural Fenosa  3.5 mmtpa
  - KOGAS                             3.5 mmtpa
  - GAIL (India) Ltd.                 3.5 mmtpa
  - Total Gas & Power                             2.0 mmtpa
  N.A.
• EPC contract          Completed     Completed   TBD           4Q13
• Financing                           1H13        TBD           1Q14
  commitments
  - Equity              Received
  - Debt                Received
                                                  Initiating
• FERC authorization    Received      Received                  1Q14
                                                  Filings 1H13
  - Certificate to
  commence              Received      2013
  construction
• Commence              Completed     2013        TBD           1Q14
  construction
• Commence operations   2015/2016     2016/2017   TBD           2017

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 with a nominal
production capacity of approximately 4.5 mmtpa. Construction has begun on
Train 1 and Train 2 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 nominal production capacity of up to 15
mmtpa 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 2017.

For additional information, please refer to the Cheniere Energy, Inc. website
at www.cheniere.com and Annual Report on Form 10-K for the period ended
December 31, 2012, 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      Year Ended

                           December 31,            December 31,
                           2012         2011       2012          2011
Revenues
LNG terminal revenues      $ 66,625     68,594     $ 265,894     $ 274,272
Oil and gas sales          327          489        1,492         2,568
Marketing and trading      469          3,499      (1,172)       13,554
Other                      —            8          6             50
Total revenues             67,421       72,590     266,220       290,444
Operating costs and
expenses
LNG terminal and pipeline  11,483       7,867      66,112        40,803
development expenses
LNG terminal and pipeline  20,470       10,077     57,076        39,101
operating expenses
Depreciation, depletion    19,406       15,421     66,407        63,405
and amortization
General and administrative 31,845       31,311     152,081       88,427
expenses
Other                      132          150        376           562
Total operating costs and  83,336       64,826     342,052       232,298
expenses
Income from operations     (15,915)     7,764      (75,832)      58,146
Loss on early              (42,587)     —          (57,685)      —
extinguishment of debt
Interest expense, net      (41,092)     (65,526)   (200,811)     (259,393)
Derivative gain, net       346          (1,087)    58)           (2,251)
Other income (expense)     133          75         (11,367)      320)
Non-controlling interest   4,584        1,123)     12,861        4,582)
Income tax provision       207          (160)      (4)           (160)
Net loss                   $ (94,324)   (57,811)   $ (332,780)   $ (198,756)
Net loss per common        $ (0.44)     (0.66)     $ (1.83)      $ (2.60)
share-basic and diluted
Weighted average number of
common shares              215,586      87,591     181,768       76,483
outstanding-basic and
diluted

 

                                                 December 31,   December 31,
                                                 2012           2011
Cash and cash equivalents                        $  201,711     $  459,160
Restricted cash and cash equivalents             520,263        102,165
LNG inventory                                    7,045          6,562
Accounts and interest receivable                 3,486          3,043
Prepaid expenses and other                       16,058         20,522
Non-current restricted cash and cash equivalents 272,924        82,892
Property, plant and equipment, net               3,282,305      2,107,129
Debt issuance costs, net                         220,949        33,356
Goodwill                                         76,819         76,819
Other assets                                     37,525         23,677
Total assets                                     $  4,639,085   $  2,915,325
Current liabilities                              $  159,763     $  584,960
Long-term debt, net of discount                  2,167,113      2,474,711
Deferred revenue                                 21,500         25,500
Non-current derivative liabilities               26,424         —
Other liabilities                                2,680          3,146
Non-controlling interest                         1,751,604      208,575
Stockholders' equity (deficit)                   510,001        (381,567)
Total liabilities and deficit                    $  4,639,085   $  2,915,325

 

                         Sabine        Cheniere       Other       Consolidated
                                       Partners                   Cheniere
                         Pass LNG                     Cheniere
Cash and cash            $  —          $  —           $  201,711  $    201,711
equivalents
Restricted cash and cash 98,694    (2) 685,542    (3) 8,951       793,187
equivalents
Total                    $  98,694     $  685,542     $  210,662  $    994,898

As of December 31, 2012, we had unrestricted cash and cash equivalents of
$201.7 million available to Cheniere. In addition, we had consolidated
restricted cash and cash equivalents of $793.2 million (which included cash
and cash equivalents and other working capital available to Cheniere Partners,
in which we own a 59.5% interest, and Sabine Pass LNG) designated for the
following purposes: $685.5 million for the Liquefaction Project and for
Cheniere Partners' working capital, $92.3 million for interest payments
related to the Sabine Pass LNG Senior Secured Notes described; $6.4 million
for Sabine Pass LNG's working capital; and $9.0 million for other restricted
purposes.

    Please refer to the Cheniere Energy, Inc. Annual Report on Form 10-K for
(1) the year ended December 31, 2012, filed with the Securities and Exchange
    Commission.
    All cash and cash equivalents presented above for Sabine Pass LNG are
(2) considered restricted to us, but $5.2 million is considered unrestricted
    for Sabine Pass LNG.
    All cash and cash equivalents presented above for Cheniere Partners are
    considered restricted to us, but $419.3 million is considered unrestricted
(3) for Cheniere Partners, including the $5.2 million considered unrestricted
    for Sabine Pass LNG.   Subsequent to December 31, 2012, Sabine Pass
    Liquefaction issued the Sabine Liquefaction Notes.  The $1,466 million net
    proceeds are considered restricted to us and Cheniere Partners. 

 

SOURCE Cheniere Energy, Inc.

Website: http://www.cheniere.com
Contact: Investors: Christina Burke, 713-375-5104, Nancy Bui: 713-375-5280,
Media: Diane Haggard, 713-375-5259
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