EXHIBIT 99.1
 
CHENIERE ENERGY, INC. NEWS RELEASE
Cheniere Energy Reports First Quarter 2011 Results
Houston, Texas - May 6, 2011 - Cheniere Energy, Inc. (“Cheniere”) (NYSE Amex: LNG) reported a net loss of $39.8 million, or $0.60 per share (basic and diluted), for the quarter ended March 31, 2011, compared with a net loss of $35.2 million, or $0.64 per share (basic and diluted), for the comparable 2010 period. Results are reported on a consolidated basis and include our 90.5 percent ownership interest in Cheniere Energy Partners, L.P. (“Cheniere Partners”).
Overview of Significant 2011 Events
In January 2011, Sabine Pass Liquefaction, LLC ("Sabine Liquefaction") and Sabine Pass LNG, L.P. ("Sabine Pass"), both wholly owned subsidiaries of Cheniere Partners, submitted an application to the FERC requesting authorization to site, construct and operate liquefaction and export facilities at the Sabine Pass LNG terminal; and
In January and February 2011, Sabine Liquefaction signed memoranda of understanding ("MOUs") with a number of potential customers for bi-directional service at the Sabine Pass LNG terminal.
2011 Q1 Results
Cheniere reported income from operations of $23.6 million for the quarter ended March 31, 2011, compared to income of $31.0 million for the comparable period in 2010. Marketing and trading revenues decreased $3.7 million for the quarter ended March 31, 2011, compared to the same period in 2010, primarily due to lower derivative gains, partially offset by increased margins and fees associated with the arrangement entered into with JPMorgan LNG Co. ("LNGCo").
LNG terminal and pipeline development expenses increased $7.7 million for the quarter ended March 31, 2011, compared to the corresponding period in 2010 due to expenditures primarily related to the proposed liquefaction project being developed at the Sabine Pass LNG terminal. LNG terminal and pipeline operating expenses decreased $2.6 million for the quarter ended March 31, 2011, compared to the corresponding period in 2010 primarily due to lower net fuel costs used in operating the Sabine Pass LNG terminal. Included in general and administrative expenses were non-cash compensation expenses of $7.4 million for the quarter ended March 31, 2011, compared to $6.3 million for the comparable 2010 period.
Interest expense, net decreased $3.0 million for the quarter ended March 31, 2011, compared to the same period in 2010 primarily due to debt principal repayments made during the second quarter of 2010.
Liquefaction Project
In June 2010, Cheniere Partners initiated a project to add liquefaction services at the Sabine Pass LNG terminal that would transform the terminal into a bi-directional facility capable of liquefying natural gas and exporting LNG in addition to importing and regasifying foreign-sourced LNG. As currently contemplated, the liquefaction project would be designed and permitted for up to four LNG trains, each with a nominal production capacity of approximately 4.0 mtpa. It is anticipated that LNG export from the Sabine Pass LNG terminal could commence as early as 2015, and may be constructed in phases, with each LNG train commencing operations approximately six to nine months after the previous LNG train.
Sabine Liquefaction intends to enter into long-term, fixed-fee contracts for at least 3.5 mtpa (approximately 0.5 Bcf/d) of bi-directional LNG processing capacity per LNG Train, for a fee between $1.40 and $1.75 per MMBtu, before reaching a final investment decision regarding the development of the LNG trains. To date, Sabine Liquefaction has entered into eight non-binding MOUs with potential customers for the proposed bi-directional facility representing a total of up to 9.8 mtpa of capacity. Each MOU is subject to negotiation and execution of definitive agreements and certain other customary conditions and does not represent a final and binding agreement with respect to its subject matter. Sabine Liquefaction is negotiating definitive agreements with these and other potential customers.
In August 2010, Sabine Liquefaction received approval from the FERC to begin the pre-filing process required to seek authorization to commence construction of the liquefaction project. In January 2011, the pre-filing period was completed and

 

 

therefore Sabine Liquefaction submitted an application to the FERC requesting authorization to site, construct and operate liquefaction and export facilities at the Sabine Pass LNG terminal.
 
In September 2010, the DOE granted Sabine Liquefaction an order authorizing Sabine Liquefaction to export up to 16 mtpa (approximately 800 Bcf per year) of domestically produced LNG from the Sabine Pass LNG terminal to Free Trade Agreement ("FTA") countries for a 30-year term, beginning on the earlier of the date of first export or September 7, 2020. In September 2010, Sabine Liquefaction filed a second application requesting expansion of the order to include countries with which the U.S. does not have an FTA. This order is pending.
 
Sabine Liquefaction has engaged Bechtel Corporation ("Bechtel") to complete front-end engineering and design work and to negotiate a lump-sum, turnkey contract based on an open book cost estimate. Sabine Liquefaction currently estimates that total construction costs will be consistent with other recent liquefaction expansion projects constructed by Bechtel, or approximately $400 per metric ton, before financing costs. Additional work needs to be completed with Bechtel to be able to make an estimate specific to the site and project. Cost estimates are subject to change due to factors such as changes in design, increased component and material costs, escalation of labor costs, cost overruns and increased spending to maintain a construction schedule.
 
In December 2010, Sabine Liquefaction engaged SG Americas Securities, LLC, the U.S. broker-dealer subsidiary of Societe Generale Corporate & Investment Banking ("SG CIB") for general financial strategy and planning in connection with the development and financing of liquefaction facilities at the Sabine Pass LNG terminal.
 
Cheniere Partners will contemplate making a final investment decision to commence construction of the liquefaction project upon, among other things, entering into acceptable commercial arrangements, receiving regulatory authorization to construct and operate the liquefaction assets and obtaining adequate financing.
 
 
Summary Project Timeline
Milestone                Estimated Completion
DOE export authorization    Pending        
Enter into definitive agreements     Mid 2011
EPC contract    2H2011
Financing commitments    2H2011
FERC construction authorization    2012
Commence construction    2012
Commence operations    2015
 
 
 
Financial Update
As of March 31, 2011, we had unrestricted cash and cash equivalents of $24.5 million and accounts receivable from LNG and natural gas marketing activities of approximately $29.4 million that will be available to Cheniere, which excludes cash and cash equivalents and other working capital available to Cheniere Partners and Sabine Pass LNG. In addition, we had restricted cash and cash equivalents of $188.3 million, which were designated for the following purposes: $137.3 million for interest payments related to the Senior Notes described below; $5.0 million for Sabine Pass LNG's working capital; $41.9 million for Cheniere Partners' working capital; and $4.1 million for other restricted purposes
 
Our strategy to continue to restructure our finances and optimize our capital structure may include entering into long-term commercial agreements, refinancing our existing indebtedness and extending maturities, issuing equity or other securities, selling assets, or a combination of the foregoing. We believe that Cheniere (excluding the sources and uses of capital by Sabine Pass and Cheniere Partners) will have sufficient cash, other working capital and cash generated from its operations to fund its operating expenses and other cash requirements until at least the earliest date when principal payments may be required on its existing indebtedness, which will be in May 2012 (the maturity date of the 2007 Term Loan). Before that date, we expect to continue to restructure our finances and improve our capital structure.
 
 
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.  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 three-months ended March 31, 2011, 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 terminal and pipeline businesses, including liquefaction services. 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
March 31,
 
2011
 
2010
Revenues
 
 
 
LNG terminal revenues
$
70,001
 
 
$
66,827
 
Marketing and trading
8,449
 
 
12,142
 
Oil and gas sales
768
 
 
537
 
Other
13
 
 
11
 
Total revenues
79,231
 
 
79,517
 
 
 
 
 
Operating costs and expenses
 
 
 
General and administrative expenses
21,510
 
 
19,217
 
Depreciation, depletion and amortization
15,386
 
 
15,624
 
LNG terminal and pipeline operating expenses
10,194
 
 
12,813
 
LNG terminal and pipeline development expenses
8,437
 
 
718
 
Oil and gas production and exploration costs
138
 
 
99
 
Total operating costs and expenses
55,665
 
 
48,471
 
 
 
 
 
Income from operations
23,566
 
 
31,046
 
 
 
 
 
Interest expense, net
(64,154
)
 
(67,194
)
Derivative gain, net
 
 
505
 
Other income (expense)
109
 
 
(6
)
Non-controlling interest
641
 
 
482
 
Net loss
$
(39,838
)
 
$
(35,167
)
 
 
 
 
Net loss per common share—basic and diluted
$
(0.60
)
 
$
(0.64
)
 
 
 
 
Weighted average number of common shares outstanding—basic and diluted
66,950
 
 
54,870
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 

 
As of March 31,
 
As of December 31,
 
2011
 
2010
Cash and cash equivalents
$
24,473
 
 
$
74,161
 
Restricted cash and cash equivalents
105,439
 
 
73,062
 
LNG inventory
9,601
 
 
1,212
 
Accounts and interest receivable
33,186
 
 
4,699
 
Prepaid expenses and other
18,094
 
 
12,476
 
Non-current restricted cash and cash equivalents
82,892
 
 
82,892
 
Property, plant and equipment, net
2,144,810
 
 
2,157,597
 
Debt issuance costs, net
39,676
 
 
41,656
 
Goodwill
76,819
 
 
76,819
 
Other assets
29,443
 
 
28,933
 
Total assets
$
2,564,433
 
 
$
2,553,507
 
 
 
 
 
Current liabilities
$
103,350
 
 
$
66,334
 
Long-term debt (including related party debt), net of discount
2,940,121
 
 
2,927,509
 
Deferred revenue
28,500
 
 
29,994
 
Other liabilities
2,140
 
 
2,280
 
Non-controlling interest
183,842
 
 
189,021
 
Stockholders' deficit
(693,520
)
 
(661,631
)
Total liabilities and deficit
$
2,564,433
 
 
$
2,553,507
 
 
 
March 31, 2011
 
Sabine
Pass LNG, L.P.
 
Cheniere Energy
Partners, L.P.
 
Other Cheniere Energy, Inc.
 
Consolidated Cheniere Energy,
Inc.
Cash and cash equivalents
 
$
 
 
$
 
 
$
24,473
 
 
$
24,473
 
Restricted cash and cash equivalents
 
142,278
 
 
41,937
 
 
4,116
 
 
188,331
 
Total
 
$
142,278
 
 
$
41,937
 
 
$
28,589
 
 
$
212,804
 
 
 
 
 
 
(1)
Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the three months ended March 31, 2011, filed with the Securities and Exchange Commission.
 
 
 
CONTACTS:
Investors: Christina Cavarretta, 713-375-5100
Media: Diane Haggard, 713-375-5259