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Cheniere Energy Partners Reports First Quarter 2013 Results



         Cheniere Energy Partners Reports First Quarter 2013 Results

PR Newswire

HOUSTON, May 3, 2013

HOUSTON, May 3, 2013 /PRNewswire/ -- Cheniere Energy Partners, L.P. ("Cheniere
Partners") (NYSE MKT: CQP) reported a net loss of $42.5 million for the three
months ended March 31, 2013, compared to a net loss of $19.3 million for the
comparable 2012 period.  Results include significant items of $21.4 million
for the three months ended March 31, 2013 and $18.7 million for the comparable
2012 period related to development expenses primarily for the liquefaction
facilities being developed at the Sabine Pass LNG terminal adjacent to the
existing regasification facilities (the "Liquefaction Project") and derivative
losses primarily due to the change in fair value of interest rate derivatives
that were entered into by Sabine Pass Liquefaction, LLC ("Sabine Pass
Liquefaction") in August 2012 in connection with its $3.6 billion senior
secured credit facility (the "Liquefaction Credit Facility"). 

Results for the three months ended March 31, 2013 were also impacted by
increases in general and administrative expenses of $15.6 million compared to
the comparable 2012 period primarily due to increased costs incurred to manage
the construction of Train 1 and Train 2, which resulted from a management
services agreement entered into by Sabine Pass Liquefaction, in which Sabine
Pass Liquefaction is required to pay a wholly owned subsidiary of Cheniere
Energy, Inc. a monthly fee based upon the capital expenditures incurred in the
previous month for the Liquefaction Project.  These payments are being funded
from proceeds received from the Liquefaction Project's equity and debt
financings. 

Overview of Recent Significant Events

  o In February 2013, Sabine Pass Liquefaction issued an aggregate principal
    amount of $1,500 million of 5.625% Senior Secured Notes due 2021 (the
    "2021 Sabine Pass Liquefaction Notes").  In April 2013, Sabine Pass
    Liquefaction issued an additional $1,500 million of notes, including an
    aggregate principal amount of $500 million of the 2021 Sabine Pass
    Liquefaction Notes and $1,000 million of 5.625% Senior Secured Notes due
    2023.  The $500 million aggregate principal amount constitutes a further
    issuance of and forms a single series with the 2021 Sabine Pass
    Liquefaction Notes.  Net proceeds from these offerings are intended to be
    used to pay capital costs incurred in connection with the construction of
    Train 1 and Train 2 of the Liquefaction Project in lieu of a portion of
    the commitments under the Liquefaction Credit Facility;
  o In February 2013, we sold 17.6 million common units for net proceeds,
    after deducting expenses, of $372.4 million, which includes the general
    partner's proportionate capital contribution of approximately $7.4
    million.  We intend to use the proceeds from this offering for costs
    associated with the Liquefaction Project; and
  o In March 2013, Sabine Pass Liquefaction entered into an LNG sale and
    purchase agreement ("SPA") with Centrica plc ("Centrica") that commences
    upon the date of first commercial delivery for Train 5 and includes an
    annual contract quantity of 91.25 million MMBtu of LNG and a fixed fee of
    $3.00 per MMBtu, equating to expected annual contracted cash flow from
    fixed fees of $274 million.

Liquefaction Project Update

We continue to make progress on the 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 Federal Energy Regulatory Commission
    ("FERC") and Department of Energy ("DOE") approvals.  We have secured
    approximately $5.9 billion of required financing to construct Train 1 and
    Train 2 and have commenced construction.  As of March 31, 2013, the
    overall project for Train 1 and Train 2 was approximately 26% 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 Oil, Gas and
    Chemicals, Inc. ("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 the first half of
    2013.
  o We recently began the development of Train 5 and Train 6.  We have
    completed two SPAs for approximately 3.75 mmtpa, in aggregate, of LNG
    volumes that commence with the start of Train 5 operations. Bechtel has
    begun preliminary engineering on Train 5 and Train 6, and we have
    commenced the regulatory approval process.  In February 2013, we commenced
    the National Environmental Policy Act ("NEPA") pre-filing process with
    FERC, and we expect to file a formal application with FERC in the second
    half of 2013.  In February 2013 and in April 2013, we filed export
    applications with the DOE for exports to all current and future countries
    with which the U.S. has a Free Trade Agreement ("FTA") as well as to any
    country with which the U.S. does not have an FTA in effect for the SPA
    with Total Gas & Power North America, Inc. and the Centrica SPA,
    respectively.

 

Liquefaction Project Timeline
                                      Target Date
                                      Sabine Pass Liquefaction
                                      Trains         Trains         Trains
Milestone
                                      1 & 2          3 & 4          5 & 6
DOE export authorization              Received       Received       Initiated
                                                                    Filings
Definitive commercial agreements      Completed 7.7  Completed 8.3
                                      mmtpa          mmtpa
- BG Gulf Coast LNG, LLC              4.2 mmtpa      1.3 mmtpa
- Gas Natural Fenosa                  3.5 mmtpa
- KOGAS                                              3.5 mmtpa
- GAIL (India) Ltd.                                  3.5 mmtpa
- Total Gas & Power N.A.                                            2.0 mmtpa
- Centrica plc                                                      1.75 mmtpa
EPC contract                          Completed      Completed      2H14
Financing commitments                                1H13           1H15
- Equity                              Received
- Debt                                Received
FERC authorization                    Received       Received       2H14
- Certificate to commence             Received       Received
construction
Commence construction                 Completed      1H13           1H15
Commence operations                   2015/2016      2016/2017      2018

2013 Distributions

We estimate that the annualized distribution to common unitholders for fiscal
year 2013 will be $1.70 per unit.  We will pay a cash distribution per common
unit of $0.425 to unitholders of record as of May 1, 2013, and the related
general partner distribution on May 15, 2013. 

Cheniere Partners owns 100 percent of the Sabine Pass LNG terminal located on
the Sabine Pass deep water shipping channel less than four miles from the Gulf
Coast.  The Sabine Pass LNG terminal has regasification facilities that
include existing infrastructure of five LNG storage tanks with capacity of
approximately 16.9 billion cubic feet equivalent (Bcfe), two docks that can
accommodate vessels of up to 265,000 cubic meters and vaporizers with
regasification capacity of approximately 4.0 Bcf/d.  Cheniere Partners is
developing natural gas liquefaction facilities at the Sabine Pass LNG terminal
adjacent to the existing regasification facilities (the "Liquefaction
Project").  Cheniere Partners plans to construct over time up to six natural
gas liquefaction trains ("Trains", each in sequence, "Train 1", "Train 2",
"Train 3", "Train 4", "Train 5" and "Train 6"), which are in various stages of
development.  Each Train is expected to have a nominal annual capacity of
approximately 4.5 mmtpa.  Cheniere Partners' wholly owned subsidiary, Sabine
Pass Liquefaction, LLC ("Sabine Pass Liquefaction"), has entered into lump sum
turnkey contracts for the engineering, procurement and construction of Train
1, Train 2, Train 3 and Train 4 with Bechtel Oil, Gas and Chemicals, Inc.
("Bechtel").  Sabine Pass Liquefaction has commenced construction of Train 1
and Train 2 and the related new facilities needed to treat, liquefy, store and
export natural gas.  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 of such Trains and
making a positive final investment decision.  Sabine Pass Liquefaction
recently began the development of Train 5 and Train 6 and commenced the
regulatory process in February 2013. Sabine Pass Liquefaction has also entered
into six third-party LNG sale and purchase agreements ("SPAs"). The customers
include BG Gulf Coast LNG, LLC ("BG") for 5.5 mmtpa, Gas Natural
Aprovisionamientos SDG S.A. ("Gas Natural Fenosa") for 3.5 mmtpa, Korea Gas
Corporation ("KOGAS") for 3.5 mmtpa, GAIL (India) Ltd. ("GAIL") for 3.5 mmtpa,
Total Gas & Power North America, Inc. ("Total") for 2.0 mmtpa and Centrica plc
("Centrica") for 1.75 mmtpa.  In addition, Sabine Pass Liquefaction has
entered into an SPA with Cheniere Marketing, LLC ("Cheniere Marketing") for up
to 2.0 mmtpa of LNG that is produced but not already committed to third
parties.  The BG and Cheniere Marketing SPAs commence with the start of Train
1 operations and the Gas Natural Fenosa SPA commences with the start of Train
2 operations.  The KOGAS and GAIL SPAs commence with the start of Train 3 and
Train 4 operations, respectively, and the Total and Centrica SPAs commence
with the start of Train 5 operations.   Cheniere Partners has placed
documentation pertaining to the Liquefaction Project, including the
applications and supporting studies, on its website located at
http://www.cheniereenergypartners.com.

For additional information, please refer to the Cheniere Energy Partners, L.P.
website at www.cheniereenergypartners.com and Quarterly Report on Form 10-Q
for the period ended March 31, 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 facts, included herein are
"forward-looking statements." Included among "forward-looking statements" are,
among other things, (i) statements regarding Cheniere Partners' 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 Partners' LNG terminal
and liquefaction business, (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 Partners 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 Partners' 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 Partners' 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 Partners does not assume a duty to update these
forward-looking statements.

 (Financial Table Follows)

 

Cheniere Energy Partners, L.P.
Selected Financial Information
(in thousands, except per unit data) ^(1)
                                             Three Months Ended
                                             March 31,
                                             2013 ^(2)          2012 ^(2)
Revenues
Revenues                                     $   65,563       $ 66,958
Revenues—affiliate                           511              2,365
Total revenues                               66,074           69,323
Expenses
Operating and maintenance expense            8,018            6,112
Operating and maintenance                    6,168            2,998
expense—affiliate
Depreciation expense                         10,650           10,629
Development expense                          3,484            16,669
Development expense—affiliate                451              1,231
General and administrative expense           3,231            1,681
General and administrative                   19,156           5,112
expense—affiliate
Total expenses                               51,158           44,432
Income from operations                       14,916           24,891
Other income (expense)
Interest expense, net                        (40,262)         (43,458)
Derivative loss, net                         (17,468)         (836)
Other                                        327              71
Total other expense                          (57,403)         (44,223)
Net loss                                     $   (42,487)     $ (19,332)
Basic and diluted net income per common      $   0.10         $ 0.23
unit
Weighted average number of common units
outstanding used for basic and diluted       45,547           31,017
net income per common unit calculation
                                         March 31, 2013 ^(3)    December 31,
                                                                2012 ^(3)
Cash and cash equivalents                    $   456,852      $ 419,292
Restricted cash and cash equivalents             252,854        92,519
LNG Inventory                                    2,157          2,625
Other current assets ^(4)                        21,024         18,108
Non-current restricted cash and cash             1,466,602      272,425
equivalents
Property, plant and equipment, net               3,241,990      2,704,895
Debt issuance costs, net                         245,804        220,949
Other assets                                     22,248         17,465
Total assets                                 $   5,709,531    $ 3,748,278
Current liabilities ^(4)                     $   284,542        155,410
Long-term debt, net of discount                  3,668,286      2,167,113
Deferred revenue, including affiliate            37,673         36,220
Long-term derivative liability                   21,978         26,424
Other liabilities ^(4)                           300            303
Total partners' capital                          1,696,752      1,362,808
Total liabilities and partners' capital      $   5,709,531    $ 3,748,278


    Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on
(1) Form 10-Q for the period ended March 31, 2013, filed with the Securities
    and Exchange Commission.
    Consolidated operating results of Cheniere Energy Partners, L.P. and its
(2) consolidated subsidiaries for the three months ended March 31, 2013 and
    2012.
(3) Consolidated balance sheets of Cheniere Energy Partners, L.P. and its
    consolidated subsidiaries.
(4) Amounts include transactions between Cheniere Energy Partners, L.P. and
    Cheniere Energy, Inc. or subsidiaries of Cheniere Energy, Inc.

SOURCE Cheniere Energy Partners, L.P.

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