Press Releases

Cheniere Energy, Inc. NYSE American: LNG

Cheniere Energy, Inc. Reports Second Quarter 2016 Results

-- Jack A. Fusco Appointed as President and Chief Executive Officer

-- Sabine Pass Train 1 Achieved Substantial Completion; Commercial Operations Underway

HOUSTON, Aug. 9, 2016 /PRNewswire/ -- Cheniere Energy, Inc. ("Cheniere") (NYSE MKT: LNG) reported a net loss1 of $298.4 million, or $1.31 per share (basic and diluted), for the three months ended June 30, 2016, compared to a net loss of $118.5 million, or $0.52 per share (basic and diluted), for the comparable 2015 period. Net Loss, As Adjusted2 was $140.2 million, or $0.61 per share (basic and diluted), for the three months ended June 30, 2016, compared to a Net Loss, As Adjusted of $211.2 million, or $0.93 per share (basic and diluted), for the comparable 2015 period.

For the six months ended June 30, 2016, Cheniere reported a net loss of $619.3 million, or $2.71 per share (basic and diluted), compared to a net loss of $386.2 million, or $1.71 per share (basic and diluted), for the comparable 2015 period. For the six months ended June 30, 2016, Net Loss, As Adjusted was $278.3 million, or $1.22 per share (basic and diluted), compared to a Net Loss, As Adjusted of $333.9 million, or $1.47 per share (basic and diluted), for the comparable 2015 period.

For the three and six months ended June 30, 2016, Net Loss, As Adjusted excludes the impact of changes in the fair value of our interest rate, commodity and FX derivatives, loss on early extinguishment of debt, share-based compensation related to employee separations, and impairment expense (recovery). Loss on early extinguishment of debt was associated with the write-off of debt issuance costs by Sabine Pass Liquefaction, LLC ("SPL") and Cheniere Corpus Christi Holdings, LLC ("CCH") in connection with the refinancing of a portion of their credit facilities and by Cheniere Creole Trail Pipeline, L.P. as a result of the prepayment of its outstanding term loan. For the three and six months ended June 30, 2015, Net Loss, As Adjusted excludes the impact of changes in the fair value of interest rate, commodity and FX derivatives, loss on early extinguishment of debt related to the write-off of debt issuance costs by SPL primarily in connection with the refinancing of a portion of its credit facilities in March 2015, and impairment expense.

"The second quarter of 2016 saw Cheniere's continued transition from a development company into an operating one. During the quarter we took over care, custody, and control of Train 1 of the Sabine Pass Liquefaction Project and commenced commercial sales of LNG. After substantial completion, we exported 5 cargoes of LNG under our contract with BG Gulf Coast LNG, LLC (Shell) as of the end of the second quarter. Commissioning activities at Train 2 continue with first LNG achieved in late July, and our remaining Trains under construction continue on time and on budget," said Jack Fusco, Cheniere's President and CEO. "On the financial front, we continued to manage our debt maturity profile by successfully issuing bonds to prepay a portion of the outstanding borrowings under credit facilities for both the Sabine Pass Liquefaction Project and the CCL Project."

Second Quarter 2016 Highlights

  • In May 2016, the Cheniere Board of Directors appointed Jack A. Fusco as President and Chief Executive Officer.
  • In May 2016, CCH issued an aggregate principal amount of $1.25 billion of 7.0% Senior Secured Notes due 2024. Net proceeds from the offering were used to prepay a portion of the outstanding borrowings under CCH's credit facility and to pay fees and expenses incurred in connection with the offering and prepayment.
  • In May 2016, Cheniere Partners and Bechtel Oil, Gas and Chemicals, Inc. ("Bechtel") announced that Train 1 of the Sabine Pass Liquefaction Project achieved substantial completion.
  • In June 2016, SPL issued an aggregate principal amount of $1.5 billion of 5.875% Senior Secured Notes due 2026. Net proceeds from the offering were used to prepay a portion of the outstanding borrowings under SPL's credit facilities and to pay fees and expenses incurred in connection with the offering and prepayment.

Second Quarter and Year to Date 2016 Results

Adjusted EBITDA2 for the three and six months ended June 30, 2016 was a loss of $3.7 million and $47.9 million, respectively, compared to a loss of $60.5 million and $86.5 million, respectively, for the comparable 2015 periods. During the three months ended June 30, 2016, we began recognizing LNG revenues and cost of sales from the Sabine Pass Liquefaction Project (defined below) following the substantial completion of the first liquefaction train ("Train 1"). Prior to substantial completion, amounts received from the sale of commissioning cargoes were offset against LNG terminal construction-in-process because these amounts were earned during the testing phase for the construction of Train 1 of the Sabine Pass Liquefaction Project. We expect sales of LNG cargoes from future liquefaction trains ("Trains") to be reported in the same manner.

Total operating costs and expenses increased $89.4 million and $120.4 million during the three and six months ended June 30, 2016 compared to the three and six months ended June 30, 2015, respectively, generally as a result of the commencement of operations of Train 1 of the Sabine Pass Liquefaction Project. Depreciation and amortization expense increased during the three and six months ended June 30, 2016 as we began depreciation of our assets related to Train 1 of the Sabine Pass Liquefaction Project upon reaching substantial completion. General and administrative expense during the three and six months ended June 30, 2016 decreased from the comparable 2015 period, which was partially due to a decrease in share-based compensation as a result of vesting of restricted stock awards in the second half of 2015, and partially due to a reallocation of resources from general and administrative activities to operating and maintenance activities following commencement of operations at the Sabine Pass Liquefaction Project.

Included in marketing expense and general and administrative expense were share-based compensation expenses of $31.5 million and $45.8 million for the three and six months ended June 30, 2016, respectively, compared to $43.0 million and $58.1 million for the comparable 2015 periods, respectively.

Our financial results are reported on a consolidated basis. Our ownership interest in Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE MKT: CQP) consists of 100% ownership of the general partner of Cheniere Partners and 80.1% ownership interest in Cheniere Energy Partners LP Holdings, LLC (NYSE MKT: CQH) which owns a 55.9% limited partner interest in Cheniere Partners.

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 million tonnes per annum ("mtpa") of LNG, at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the "Sabine Pass Liquefaction Project").

The Trains are in various stages of operation, construction, and development.

  • Construction on Trains 1 and 2 began in August 2012, and as of June 30, 2016, the overall project completion percentage for Trains 1 and 2 was approximately 99.4%, which is ahead of the contractual schedule. Train 1 achieved substantial completion in May 2016. Each Train is expected to achieve substantial completion upon the completion of construction, commissioning and the satisfaction of certain tests. The commissioning process on Train 2 has commenced, and based on the current construction schedule, Cheniere Partners expects substantial completion of Train 2 to be achieved in late September 2016.
  • Construction on Trains 3 and 4 began in May 2013, and as of June 30, 2016, the overall project completion percentage for Trains 3 and 4 was approximately 87.4%, which is ahead of the contractual schedule. Based on the current construction schedule, Cheniere Partners expects Trains 3 and 4 to reach substantial completion in 2017.
  • Construction on Train 5 began in June 2015, and as of June 30, 2016, the overall project completion percentage for Train 5 was approximately 38.3%, which is ahead of the contractual schedule. Engineering, procurement, subcontract work and Bechtel direct hire construction were approximately 77.0%, 58.0%, 37.8% and 2.0% complete, respectively. Based on the current construction schedule, Cheniere Partners expects Train 5 to reach substantial completion in 2019.
  • Train 6 is currently under development, with all necessary regulatory approvals in place. Cheniere Partners expects to make a final investment decision and commence construction on Train 6 upon, among other things, entering into an engineering, procurement, and construction contract, entering into acceptable commercial arrangements, and obtaining adequate financing.

Sabine Pass Liquefaction Project

Liquefaction Train

Train 1

Train 2

Trains 3-4

Train 5

Project Status

Operational

Commissioning

87% Overall Completion

38% Overall Completion

Expected Substantial Completion

-

2H 2016

2017

2019

 

Corpus Christi LNG Terminal

We are developing up to three Trains, each with an expected nominal production capacity of approximately 4.5 mtpa of LNG, near Corpus Christi, Texas (the "CCL Project").

The Trains are in various stages of construction and development:

  • Construction on Trains 1 and 2 began in May 2015, and as of June 30, 2016, the overall project completion percentage for Trains 1 and 2 was approximately 36.6%, which is ahead of the contractual schedule. Engineering, procurement and construction were approximately 98.4%, 50.6% and 8.8% complete, respectively. Based on the current construction schedule, we expect Trains 1 and 2 to reach substantial completion in 2019.
  • Train 3 is under development, with all necessary regulatory approvals in place. We have entered into an LNG Sale and Purchase Agreement ("SPA") for approximately 0.8 mtpa of LNG volumes that commence with Train 3 and expect to commence construction upon entering into additional SPAs and obtaining adequate financing.

Additionally, we are developing Trains 4 and 5 adjacent to the CCL Project and have initiated the regulatory approval process with respect to those Trains.

 


Corpus Christi LNG Terminal

Liquefaction Train

Trains 1-2

Project Status

37% Overall Completion

Expected Substantial Completion

2019

 

Investor Conference Call and Webcast

We will host a conference call to discuss our financial and operating results for the second quarter on Tuesday, August 9, 2016, at 10 a.m. Eastern time / 9 a.m. Central time. A listen-only webcast of the call and an accompanying slide presentation may be accessed through our website at www.cheniere.com. Following the call, an archived recording will be made available on our website.

1

Reported as Net loss attributable to common stockholders on our Consolidated Statements of Operations.

2

Non-GAAP financial measure. See "Reconciliation of Non-GAAP Measures" for further details.

 

About Cheniere

Cheniere Energy, Inc., a Houston-based energy company primarily engaged in LNG-related businesses, owns and operates the Sabine Pass LNG terminal in Louisiana. Directly and through its subsidiary, Cheniere Energy Partners, L.P., Cheniere is constructing and developing liquefaction projects near Corpus Christi, Texas and at the Sabine Pass LNG terminal, respectively. Train 1 of the liquefaction project at the Sabine Pass LNG terminal has commenced commercial operations. Cheniere is also exploring a limited number of opportunities directly related to its existing LNG business.

For additional information, please refer to the Cheniere website at www.cheniere.com and Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission.

Forward-Looking Statements

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 development, 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.

Consolidated Statements of Operations

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

(unaudited)



Three Months Ended


Six Months Ended


June 30,


June 30,


2016


2015


2016


2015

Revenues








Regasification revenues

$

65,622



$

66,489



$

131,173



$

133,291


LNG revenues (losses)

110,735



(706)



113,439



(44)


Other revenues

470



2,242



1,296



3,147


Total revenues

176,827



68,025



245,908



136,394










Operating costs and expenses








Cost of sales (excluding depreciation and amortization expense shown separately below)

85,709



1,444



100,216



2,137


Operating and maintenance expense

45,562



17,727



81,879



53,433


Development expense

1,616



16,609



3,163



32,705


Marketing expense

26,225



20,379



51,203



33,425


General and administrative expense

61,409



87,477



109,333



132,448


Depreciation and amortization expense

32,781



20,154



56,870



37,923


Impairment expense (recovery)

(71)





10,095



176


Other

50



109



162



265


Total operating costs and expenses

253,281



163,899



412,921



292,512










Loss from operations

(76,454)



(95,874)



(167,013)



(156,118)










Other income (expense)








Interest expense, net of capitalized interest

(105,967)



(85,486)



(182,304)



(145,098)


Loss on early extinguishment of debt

(55,315)



(7,281)



(56,772)



(96,273)


Derivative gain (loss), net

(90,621)



46,049



(271,555)



(80,641)


Other income (expense)

(6,930)



283



(6,001)



655


Total other expense

(258,833)



(46,435)



(516,632)



(321,357)










Loss before income taxes and non-controlling interest

(335,287)



(142,309)



(683,645)



(477,475)


Income tax benefit (provision)

343



507



(273)



(171)


Net loss

(334,944)



(141,802)



(683,918)



(477,646)


Less: net loss attributable to non-controlling interest

(36,526)



(23,307)



(64,662)



(91,442)


Net loss attributable to common stockholders

$

(298,418)



$

(118,495)



$

(619,256)



$

(386,204)










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

$

(1.31)



$

(0.52)



$

(2.71)



$

(1.71)










Weighted average number of common shares outstanding—basic and diluted

228,323



226,481



228,231



226,405











(1)

Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission.

 

Cheniere Energy, Inc.

Consolidated Balance Sheets

(in thousands, except share data)(1)



June 30,


December 31,


2016


2015

ASSETS

(unaudited)



Current assets




Cash and cash equivalents

$

1,049,478



$

1,201,112


Restricted cash

724,458



503,397


Accounts and other receivables

74,283



5,749


Inventory

66,322



18,125


Other current assets

75,941



54,203


Total current assets

1,990,482



1,782,586






Non-current restricted cash

31,726



31,722


Property, plant and equipment, net

18,729,177



16,193,907


Debt issuance costs, net

336,474



378,677


Non-current derivative assets

20,715



30,887


Goodwill

76,819



76,819


Other non-current assets

251,458



314,455


Total assets

$

21,436,851



$

18,809,053






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$

48,676



$

22,820


Accrued liabilities

589,604



427,199


Current debt, net

1,677,476



1,673,379


Deferred revenue

26,709



26,669


Derivative liabilities

72,002



35,201


Other current liabilities

54




Total current liabilities

2,414,521



2,185,268






Long-term debt, net

17,789,074



14,920,427


Non-current deferred revenue

7,500



9,500


Non-current derivative liabilities

311,207



79,387


Other non-current liabilities

50,382



53,068






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, 2016 and December 31, 2015




Issued and outstanding: 235.7 million shares and 235.6 million shares at June 30, 2016 and December 31, 2015, respectively

707



708


Treasury stock: 11.8 million shares and 11.6 million shares at June 30, 2016 and December 31, 2015, respectively, at cost

(357,491)



(353,927)


Additional paid-in-capital

3,105,728



3,075,317


Accumulated deficit

(4,243,204)



(3,623,948)


Total stockholders' deficit

(1,494,260)



(901,850)


Non-controlling interest

2,358,427



2,463,253


Total equity

864,167



1,561,403


Total liabilities and equity

$

21,436,851



$

18,809,053









(1)

Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the Securities and Exchange Commission.

 

As of June 30, 2016, we had cash and cash equivalents of $1,049.5 million available to Cheniere. In addition, we had current and non-current restricted cash of $756.2 million (which included current and non-current restricted cash available to us and our subsidiaries) designated for the following purposes: $223.1 million for the CCL Project, $263.1 million for the Sabine Pass Liquefaction Project, $110.0 million for restricted purposes under the terms of Cheniere Partners' credit facilities, $91.1 million for interest payments related to the Sabine Pass LNG, L.P. senior secured notes and $68.9 million for other restricted purposes.

 

Reconciliation of Non-GAAP Measures

Regulation G Reconciliations

In addition to disclosing financial results in accordance with U.S. GAAP, the accompanying news release contains non-GAAP financial measures. Adjusted EBITDA, Net Loss, As Adjusted and Net Loss per share, As Adjusted are non-GAAP financial measures that we use to facilitate comparisons of operating performance across periods. These non-GAAP measures should be viewed as a supplement to and not a substitute for our U.S. GAAP measures of performance and the financial results calculated in accordance with U.S. GAAP and reconciliations from these results should be carefully evaluated.

Adjusted EBITDA represents net loss attributable to Cheniere before net loss attributable to the non-controlling interest, interest, taxes, depreciation and amortization, adjusted for certain non-cash items, other non-operating income or expense items, and items not otherwise predictive or indicative of ongoing operating performance, as detailed in the following reconciliation. Adjusted EBITDA is not intended to represent cash flows from operations or net loss as defined by U.S. GAAP and is not necessarily comparable to similarly titled measures reported by other companies.

We believe Adjusted EBITDA provides relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operating performance in a manner that is consistent with management's evaluation of business performance. We believe Adjusted EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, depreciation and amortization which vary substantially from company to company depending on capital structure, the method by which assets were acquired and depreciation policies. Further, the exclusion of certain non-cash items, other non-operating income or expense items, and items not otherwise predictive or indicative of ongoing operating performance, enables comparability to prior period performance and trend analysis.

Adjusted EBITDA is calculated by taking net loss attributable to common stockholders before net loss attributable to non-controlling interest, interest expense, net of capitalized interest, including changes in the fair value and settlement of our interest rate derivatives, taxes, depreciation and amortization, and adjusting for the effects of certain non-cash items, other non-operating income or expense items, and other items not otherwise predictive or indicative of ongoing operating performance, including the effects of modification or extinguishment of debt, impairment expense (recovery), changes in the fair value of our commodity and foreign currency exchange ("FX") derivatives and non-cash compensation expense. We believe the exclusion of these items enables investors and other users of our financial information to assess our sequential and year-over-year performance and operating trends on a more comparable basis and is consistent with management's own evaluation of performance.

Net Loss, As Adjusted represents net loss attributable to Cheniere common shareholders and Net Loss per share, As Adjusted represents Cheniere's basic and diluted earnings per share, in each case adjusted for certain non-recurring items or other items not predictive or indicative of ongoing operating performance, net of the portion attributable to non-controlling interests, including changes in the fair value of our interest rate, commodity and FX derivatives, the effects of modifications or extinguishments of debt, share-based compensation related to employee separations, impairment expense (recovery) and other adjustments. Net Loss, As Adjusted and Net Loss per share, As Adjusted are presented because we believe they are useful tools for assessing the operating performance of Cheniere. Net Loss, As Adjusted and Net Loss per share, As Adjusted are not intended to represent net loss attributable to common stockholders and net loss per share attributable to common stockholders, the most comparable U.S. GAAP measures, respectively, as indicators of operating performance, and are not necessarily comparable to measures reported by other companies.

Net Loss, As Adjusted and Net Loss per share, As Adjusted

The following tables reconcile our Net Loss, As Adjusted and Net Loss per share, As Adjusted to U.S. GAAP results for the three and six months ended June 30, 2016 and 2015 (in thousands, except per share data):


Three Months Ended


Six Months Ended


June 30,


June 30,


2016


2015


2016


2015

Net loss attributable to common stockholders

$

(298,418)



$

(118,495)



$

(619,256)



$

(386,204)


Add:








Impairment expense (recovery)

(71)





10,095



176


Loss on early extinguishment of debt

55,315



7,281



56,772



96,273


Loss (gain) from changes in fair value of interest rate derivatives, net

80,352



(98,407)



253,417



(9,199)


Loss (gain) from changes in fair value of commodity and FX derivatives, net

25,415



(144)



25,702



463


Share-based compensation related to employee separations

15,647





22,060




Less:








Adjustments attributable to non-controlling interest

18,404



1,471



27,053



35,390










Net Loss, As Adjusted

$

(140,164)



$

(211,236)



$

(278,263)



$

(333,881)










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

$

(1.31)



$

(0.52)



$

(2.71)



$

(1.71)


Add:








Impairment expense (recovery)





0.04




Loss on early extinguishment of debt

0.24



0.03



0.25



0.43


Loss (gain) from changes in fair value of interest rate derivatives, net

0.35



(0.43)



1.11



(0.04)


Loss (gain) from changes in fair value of commodity and FX derivatives, net

0.11





0.11




Share-based compensation related to employee separations

0.07





0.10




Less:








Adjustments attributable to non-controlling interest

0.08



0.01



0.12



0.16


Net Loss per share, As Adjusted—basic and diluted(1)

$

(0.61)



$

(0.93)



$

(1.22)



$

(1.47)










Weighted average number of common shares outstanding—basic and diluted

228,323



226,481



228,231



226,405







(1)

Numbers may not foot due to rounding.

 

Adjusted EBITDA

The following table reconciles our Adjusted EBITDA to U.S. GAAP results for the three and six months ended June 30, 2016 and 2015 (in thousands):


Three Months Ended


Six Months Ended


June 30,


June 30,


2016


2015


2016


2015

Net loss attributable to common stockholders

$

(298,418)



$

(118,495)



$

(619,256)



$

(386,204)


Net loss attributable to non-controlling interest

(36,526)



(23,307)



(64,662)



(91,442)


Income tax provision (benefit)

(343)



(507)



273



171


Interest expense, net of capitalized interest

105,967



85,486



182,304



145,098


Loss on early extinguishment of debt

55,315



7,281



56,772



96,273


Derivative loss (gain), net

90,621



(46,049)



271,555



80,641


Other expense (income)

6,930



(283)



6,001



(655)


Loss from operations

$

(76,454)



$

(95,874)



$

(167,013)



$

(156,118)


Adjustments to reconcile loss from operations to Adjusted EBITDA:








Depreciation and amortization expense

32,781



20,154



56,870



37,923


Loss (gain) from changes in fair value of commodity and FX derivatives, net

25,415



(144)



25,702



463


Total non-cash compensation expense

14,613



15,340



26,464



31,060


Impairment expense (recovery)

(71)





10,095



176


Adjusted EBITDA

$

(3,716)



$

(60,524)



$

(47,882)



$

(86,496)


 

Logo - https://photos.prnewswire.com/prnh/20090611/AQ31545LOGO

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cheniere-energy-inc-reports-second-quarter-2016-results-300311007.html

SOURCE Cheniere Energy, Inc.