Cheniere Energy, Inc. Corporate Presentation August 2011
2
This presentation contains certain statements that are, or may be deemed to be, “forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended”. All statements, other than statements of historical facts, included herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things: statements relating to the construction or operation of each of our proposed liquefied natural gas, or LNG, terminals or our proposed pipelines or liquefaction facilities, or expansions or extensions thereof, including statements concerning the completion or expansion thereof by certain dates or at all, the costs related thereto and certain characteristics, including amounts of regasification, transportation, liquefaction and storage capacity, the number of storage tanks, LNG trains, docks, pipeline deliverability and the number of pipeline interconnections, if any; statements that we expect to receive an order from the Federal Energy Regulatory Commission, or FERC, authorizing us to construct and operate proposed LNG receiving terminals, liquefaction facilities or proposed pipelines by certain dates, or at all; statements regarding future levels of domestic natural gas production, supply or consumption; future levels of LNG imports into North America; sales of natural gas in North America or other markets; exports of LNG from North America; and the transportation, other infrastructure or prices related to natural gas, LNG or other energy sources or hydrocarbon products; statements regarding any financing or refinancing transactions or arrangements, or ability to enter into such transactions or arrangements, whether on the part of Cheniere Energy, Inc., or Cheniere, or any subsidiary or at the project level; statements regarding any commercial arrangements presently contracted, optioned or marketed, or potential arrangements, to be performed substantially in the future, including any cash distributions and revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total LNG regasification, liquefaction or storage capacity that are, or may become, subject to such commercial arrangements; statements regarding counterparties to our commercial contracts, construction contracts and other contracts; statements regarding any business strategy, any business plans or any other plans, forecasts, projections or objectives, including potential revenues and capital expenditures, any or all of which are subject to change; statements regarding legislative, governmental, regulatory, administrative or other public body actions, requirements, permits, investigations, proceedings or decisions; statements regarding our anticipated LNG and natural gas marketing activities; and any other statements that relate to non-historical or future information. These forward-looking statements are often identified by the use of terms and phrases such as “achieve,” “anticipate,” “believe,” “contemplate,” “develop,” “estimate,” “example,” “expect,” “forecast,” “opportunities,” “plan,” “potential,” “project,” “propose,” “subject to,” and similar terms and phrases. Although we believe 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. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Our 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 “Risk Factors” in the Cheniere Energy, Inc. Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 5, 2011, which are incorporated by reference into this presentation. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these ”Risk Factors”. These forward-looking statements are made as of the date of this presentation, and we undertake no obligation to publicly update or revise any forward-looking statements.
Forward Looking Statements
1
This presentation contains certain statements that are, or may be deemed to be, “forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended”. All statements, other than statements of historical facts, included herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things: statements relating to the construction or operation of each of our proposed liquefied natural gas, or LNG, terminals or our proposed pipelines or liquefaction facilities, or expansions or extensions thereof, including statements concerning the completion or expansion thereof by certain dates or at all, the costs related thereto and certain characteristics, including amounts of regasification, transportation, liquefaction and storage capacity, the number of storage tanks, LNG trains, docks, pipeline deliverability and the number of pipeline interconnections, if any; statements that we expect to receive an order from the Federal Energy Regulatory Commission, or FERC, authorizing us to construct and operate proposed LNG receiving terminals, liquefaction facilities or proposed pipelines by certain dates, or at all; statements regarding future levels of domestic natural gas production, supply or consumption; future levels of LNG imports into North America; sales of natural gas in North America or other markets; exports of LNG from North America; and the transportation, other infrastructure or prices related to natural gas, LNG or other energy sources or hydrocarbon products; statements regarding any financing or refinancing transactions or arrangements, or ability to enter into such transactions or arrangements, whether on the part of Cheniere Energy, Inc., or Cheniere, or any subsidiary or at the project level; statements regarding any commercial arrangements presently contracted, optioned or marketed, or potential arrangements, to be performed substantially in the future, including any cash distributions and revenues anticipated to be received and the anticipated timing thereof, and statements regarding the amounts of total LNG regasification, liquefaction or storage capacity that are, or may become, subject to such commercial arrangements; statements regarding counterparties to our commercial contracts, construction contracts and other contracts; statements regarding any business strategy, any business plans or any other plans, forecasts, projections or objectives, including potential revenues and capital expenditures, any or all of which are subject to change; statements regarding legislative, governmental, regulatory, administrative or other public body actions, requirements, permits, investigations, proceedings or decisions; statements regarding our anticipated LNG and natural gas marketing activities; and any other statements that relate to non-historical or future information. These forward-looking statements are often identified by the use of terms and phrases such as “achieve,” “anticipate,” “believe,” “contemplate,” “develop,” “estimate,” “example,” “expect,” “forecast,” “opportunities,” “plan,” “potential,” “project,” “propose,” “subject to,” and similar terms and phrases. Although we believe 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. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Our 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 “Risk Factors” in the Cheniere Energy, Inc. Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 5, 2011, which are incorporated by reference into this presentation. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these ”Risk Factors”. These forward-looking statements are made as of the date of this presentation, and we undertake no obligation to publicly update or revise any forward-looking statements.
Forward Looking Statements
1
3
Cheniere Operations
Cheniere is engaged in the development, construction and operation of LNG terminals and pipelines and marketing of LNG and natural gas Sabine Pass LNG became operational in 2008 and cost ~$1.6B, send-out capacity is 4.0 Bcf/d, storage capacity is 16.9 Bcfe Sabine Pass LNG is connected to the U.S. natural gas pipeline grid through the Creole Trail pipeline and other interconnecting pipelines Creole Trail Pipeline also became operational in 2008 and cost ~$560mm, transportation capacity is 2.0 Bcf/d, 42-inch diameter
Sabine Pass LNG
Creole Trail Pipeline
Cheniere Operations
Cheniere is engaged in the development, construction and operation of LNG terminals and pipelines and marketing of LNG and natural gas Sabine Pass LNG became operational in 2008 and cost ~$1.6B, send-out capacity is 4.0 Bcf/d, storage capacity is 16.9 Bcfe Sabine Pass LNG is connected to the U.S. natural gas pipeline grid through the Creole Trail pipeline and other interconnecting pipelines Creole Trail Pipeline also became operational in 2008 and cost ~$560mm, transportation capacity is 2.0 Bcf/d, 42-inch diameter
Sabine Pass LNG
Creole Trail Pipeline
4
Contracted Capacity at SPLNG
Fully contracted capacity under long-term terminal use agreements*
Total Gas & Power N.A.
Chevron USA
Cheniere Energy Investments
Capacity
1.0 Bcf/d
1.0 Bcf/d
2.0 Bcf/d
Fees
(1)
Reservation Fee
(2)
$0.28/MMBTU
$0.28/MMBTU
$0.28/MMBTU
Opex Fee
(3)
$0.04/MMBTU
$0.04/MMBTU
$0.04/MMBTU
2011 Full-Year Payments
$124 million
$129 million
$252 million
Term
20 years
20 years
20 years
Guarantor
Total S.A.
Chevron Corp.
Cheniere Energy Partners, L.P.
Guarantor Credit Rating
Aa1/AA
Aa1/AA
NR
Payment Start Date
April 1, 2009
July 1, 2009
January 1, 2009
(4)
(1) Fees do not vary with the actual quantity of LNG processed; tax reimbursement not included in the fees. (2) No inflation adjustments. (3) Subject to annual inflation adjustment. (4) Cheniere Marketing, a 100% subsidiary of Cheniere, assigned its TUA to Cheniere Energy Investments effective 7/1/2010.
Note: Termination Conditions – (a) force majeure of 18 months (b) unable to satisfy customer delivery requirements of ~192MMbtu in a 12-month period, 15 cargoes over 90 days or 50 cargoes in a 12-month period. In the case of force majeure, the customers are required to pay their capacity reservation fees for the initial 18 months. *Cheniere Energy Investments’ TUA is assignable to affiliates
Contracted Capacity at SPLNG
Fully contracted capacity under long-term terminal use agreements*
Total Gas & Power N.A.
Chevron USA
Cheniere Energy Investments
Capacity
1.0 Bcf/d
1.0 Bcf/d
2.0 Bcf/d
Fees
(1)
Reservation Fee
(2)
$0.28/MMBTU
$0.28/MMBTU
$0.28/MMBTU
Opex Fee
(3)
$0.04/MMBTU
$0.04/MMBTU
$0.04/MMBTU
2011 Full-Year Payments
$124 million
$129 million
$252 million
Term
20 years
20 years
20 years
Guarantor
Total S.A.
Chevron Corp.
Cheniere Energy Partners, L.P.
Guarantor Credit Rating
Aa1/AA
Aa1/AA
NR
Payment Start Date
April 1, 2009
July 1, 2009
January 1, 2009
(4)
(1) Fees do not vary with the actual quantity of LNG processed; tax reimbursement not included in the fees. (2) No inflation adjustments. (3) Subject to annual inflation adjustment. (4) Cheniere Marketing, a 100% subsidiary of Cheniere, assigned its TUA to Cheniere Energy Investments effective 7/1/2010.
Note: Termination Conditions – (a) force majeure of 18 months (b) unable to satisfy customer delivery requirements of ~192MMbtu in a 12-month period, 15 cargoes over 90 days or 50 cargoes in a 12-month period. In the case of force majeure, the customers are required to pay their capacity reservation fees for the initial 18 months. *Cheniere Energy Investments’ TUA is assignable to affiliates
Liquefaction Project
CHENIERE ENERGY
CHENIERE ENERGY
6
Bi-directional Service at Sabine Pass Provides Opportunity to Arbitrage Henry Hub vs. Oil
Low
High
Henry Hub
4.00
$
6.50
$
Capacity Charge
1.75
1.75
Shipping
1.00
1.00
Fuel
0.40
0.65
Delivered Cost
7.15
$
9.90
$
Low
High
4.00
$
6.50
$
1.75
1.75
2.80
2.80
0.40
0.65
8.95
$
11.70
$
Europe
Asia
($/MMBtu)
Cost to deliver gas from Sabine Pass to Europe & Asia = $7 - $12 / MMBtu
Worldwide LNG prices predominantly based on oil prices = $10 - $25 / MMBtu
Bi-directional Service at Sabine Pass Provides Opportunity to Arbitrage Henry Hub vs. Oil
Low
High
Henry Hub
4.00
$
6.50
$
Capacity Charge
1.75
1.75
Shipping
1.00
1.00
Fuel
0.40
0.65
Delivered Cost
7.15
$
9.90
$
Low
High
4.00
$
6.50
$
1.75
1.75
2.80
2.80
0.40
0.65
8.95
$
11.70
$
Europe
Asia
($/MMBtu)
Cost to deliver gas from Sabine Pass to Europe & Asia = $7 - $12 / MMBtu
Worldwide LNG prices predominantly based on oil prices = $10 - $25 / MMBtu
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Strategic Focus: Liquefaction Expansion Project
Cheniere is developing a project to add liquefaction trains, transforming the Sabine Pass LNG facility into the first bi-directional LNG terminal that can import & export LNG Proposing up to 4 liquefaction trains, 16 mtpa total nominal processing capacity Seeking to contract 14 mtpa under 20-yr fixed price, take-or-pay contracts Anticipate beginning construction 2012, beginning operations 2015 LNG value chain:
Field Development
Liquefaction
Shipping
Regasification
Pipeline
End Use
Current Operations
Expansion Project
LNG is natural gas cooled to -260ºF in order to be transported by ship to distant markets
Strategic Focus: Liquefaction Expansion Project
Cheniere is developing a project to add liquefaction trains, transforming the Sabine Pass LNG facility into the first bi-directional LNG terminal that can import & export LNG Proposing up to 4 liquefaction trains, 16 mtpa total nominal processing capacity Seeking to contract 14 mtpa under 20-yr fixed price, take-or-pay contracts Anticipate beginning construction 2012, beginning operations 2015 LNG value chain:
Field Development
Liquefaction
Shipping
Regasification
Pipeline
End Use
Current Operations
Expansion Project
LNG is natural gas cooled to -260ºF in order to be transported by ship to distant markets
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Proposed Liquefaction Project will Transform Sabine into Bi-directional Import / Export Facility
Current Facility 853 acres in Cameron Parish, LA 40 ft ship channel 3.7 miles from coast 2 berths; 4 dedicated tugs 5 LNG storage tanks (17 Bcf of storage) 4.3 Bcf/d peak regasification capacity 5.3 Bcf/d of pipeline interconnection to the U.S. pipeline network Liquefaction Expansion Up to four liquefaction trains designed with ConocoPhillips’ Optimized Cascade® Process technology Six GE LM2500+ G4 gas turbine driven refrigerant compressors per train Gas treating and environmental compliance Modifications to the Creole Trail P/L Sixth tank for fourth liquefaction train
Proposed Liquefaction Project will Transform Sabine into Bi-directional Import / Export Facility
Current Facility 853 acres in Cameron Parish, LA 40 ft ship channel 3.7 miles from coast 2 berths; 4 dedicated tugs 5 LNG storage tanks (17 Bcf of storage) 4.3 Bcf/d peak regasification capacity 5.3 Bcf/d of pipeline interconnection to the U.S. pipeline network Liquefaction Expansion Up to four liquefaction trains designed with ConocoPhillips’ Optimized Cascade® Process technology Six GE LM2500+ G4 gas turbine driven refrigerant compressors per train Gas treating and environmental compliance Modifications to the Creole Trail P/L Sixth tank for fourth liquefaction train
9
Sabine Pass Liquefaction Project - Brownfield Development, Lower Expected Capital Costs
Source: ConocoPhillips-Bechtel, Cheniere research. Project costs per ton are total project costs divided by mtpa capacity of LNG trains. Figures do not attempt to isolate, where applicable, the cost of the liquefaction facilities within a major LNG complex. Chart includes a representative sample of liquefaction facilities and does not include all liquefaction facilities existing or under construction. Note: Past results not a guarantee of future performance.
ConocoPhillips-Bechtel trains*
Cost: $/ton
Brownfield development – significant infrastructure already in place Storage, marine and pipeline interconnection facilities Upstream wells, gathering pipelines and treatment infrastructure not required Pipeline quality natural gas sourced from U.S. pipeline grid
Under construction
*
*
Range of liquefaction project costs: $200 - $2,000 per ton 1 Bcf/d of capacity = $1.5 B to $9 B Sabine Pass Liquefaction project estimated to be ~$400/ton
Sabine Pass Liquefaction Project - Brownfield Development, Lower Expected Capital Costs
Source: ConocoPhillips-Bechtel, Cheniere research. Project costs per ton are total project costs divided by mtpa capacity of LNG trains. Figures do not attempt to isolate, where applicable, the cost of the liquefaction facilities within a major LNG complex. Chart includes a representative sample of liquefaction facilities and does not include all liquefaction facilities existing or under construction. Note: Past results not a guarantee of future performance.
ConocoPhillips-Bechtel trains*
Cost: $/ton
Brownfield development – significant infrastructure already in place Storage, marine and pipeline interconnection facilities Upstream wells, gathering pipelines and treatment infrastructure not required Pipeline quality natural gas sourced from U.S. pipeline grid
Under construction
*
*
Range of liquefaction project costs: $200 - $2,000 per ton 1 Bcf/d of capacity = $1.5 B to $9 B Sabine Pass Liquefaction project estimated to be ~$400/ton
10
Engineering, Procurement & Construction Contract
Cheniere has engaged Bechtel Corporation (“Bechtel”) to complete front end engineering and design (“FEED”) work and negotiate a fixed price, lump-sum, turnkey EPC contract for the liquefaction project and interconnection with Sabine Pass’s existing facilities Negotiated terms expected to include: Contract price, customary warranties, liquidated damages, etc. Estimated construction time is approximately 36-42 months per train Bechtel is one of the largest contractors in the world and has successfully constructed LNG terminals using the ConocoPhillips Cascade technology Bechtel was the EPC contractor on the first phase of the Sabine Pass terminal, which was constructed with a lump-sum, turnkey contract, on time and within budget
Negotiating fixed price, lump-sum, turnkey EPC contract with Bechtel; Estimated completion of FEED and capital cost estimates by 2H11
Engineering, Procurement & Construction Contract
Cheniere has engaged Bechtel Corporation (“Bechtel”) to complete front end engineering and design (“FEED”) work and negotiate a fixed price, lump-sum, turnkey EPC contract for the liquefaction project and interconnection with Sabine Pass’s existing facilities Negotiated terms expected to include: Contract price, customary warranties, liquidated damages, etc. Estimated construction time is approximately 36-42 months per train Bechtel is one of the largest contractors in the world and has successfully constructed LNG terminals using the ConocoPhillips Cascade technology Bechtel was the EPC contractor on the first phase of the Sabine Pass terminal, which was constructed with a lump-sum, turnkey contract, on time and within budget
Negotiating fixed price, lump-sum, turnkey EPC contract with Bechtel; Estimated completion of FEED and capital cost estimates by 2H11
11
Base site permitted NEPA pre-filing 7/2010 for expansion Some agencies already in agreement Formal application filed 1/31/2011 FERC coordinates process and will receive concurrence for final EA Estimated approval early 2012
LNG Regulatory Process Update and Project Support
Very strong local support: Cameron Parish officials, Louisiana state and federal congressional delegations, parish & state agencies Strong support from most gas producing states Exporting natural gas will stimulate the economies through job creation; provide a boost to American global competitiveness; promote domestic production of U.S. energy, helping reduce reliance on foreign sources; further public initiatives, such as improving the U.S. balance of trade; and replacing environmentally damaging fuels with a cleaner source. Regulatory
FERC: Authorization to Construct
DOE: Authorization to Export
Filed two applications in 8/2010 & 9/2010 Approval to export 2 Bcf/d for 30 years to Free Trade nations received 9/2010 Public comment period to export to non-free trade nations closed 12/13/2010 Approval to export to non FT nations received 5/2011
Base site permitted NEPA pre-filing 7/2010 for expansion Some agencies already in agreement Formal application filed 1/31/2011 FERC coordinates process and will receive concurrence for final EA Estimated approval early 2012
LNG Regulatory Process Update and Project Support
Very strong local support: Cameron Parish officials, Louisiana state and federal congressional delegations, parish & state agencies Strong support from most gas producing states Exporting natural gas will stimulate the economies through job creation; provide a boost to American global competitiveness; promote domestic production of U.S. energy, helping reduce reliance on foreign sources; further public initiatives, such as improving the U.S. balance of trade; and replacing environmentally damaging fuels with a cleaner source. Regulatory
FERC: Authorization to Construct
DOE: Authorization to Export
Filed two applications in 8/2010 & 9/2010 Approval to export 2 Bcf/d for 30 years to Free Trade nations received 9/2010 Public comment period to export to non-free trade nations closed 12/13/2010 Approval to export to non FT nations received 5/2011
12
Fixed Fee: $2.00/MMBtu - $3.00/MMBtu Annual contract volumes are take-or-pay Cheniere procures natural gas, liquefies it and loads LNG onto the customer’s LNG vessel 115% of NYMEX Henry Hub 15% charge above Henry Hub predominantly to account for liquefaction process and basis differential
Commercial Structure: Estimated Terms of LNG SPA Contracts
Customers agree to purchase LNG on an FOB basis at the tailgate of the plant Customers must take (or pay) annual contract quantity under SPAs and pay fixed fee/MMBtu plus 115% of NYMEX Henry Hub 1 Bcf/d = ~$730mm - $1.1B of contracted annual revenues (100% SPAs) More traditional LNG purchase arrangement, simplifies process for customers Cheniere will secure feed gas sourced from pipeline interconnects Customers responsible for making shipping arrangements from the terminal
Summary of Estimated Terms for LNG SPA Contracts:
Fixed Fee: $2.00/MMBtu - $3.00/MMBtu Annual contract volumes are take-or-pay Cheniere procures natural gas, liquefies it and loads LNG onto the customer’s LNG vessel 115% of NYMEX Henry Hub 15% charge above Henry Hub predominantly to account for liquefaction process and basis differential
Commercial Structure: Estimated Terms of LNG SPA Contracts
Customers agree to purchase LNG on an FOB basis at the tailgate of the plant Customers must take (or pay) annual contract quantity under SPAs and pay fixed fee/MMBtu plus 115% of NYMEX Henry Hub 1 Bcf/d = ~$730mm - $1.1B of contracted annual revenues (100% SPAs) More traditional LNG purchase arrangement, simplifies process for customers Cheniere will secure feed gas sourced from pipeline interconnects Customers responsible for making shipping arrangements from the terminal
Summary of Estimated Terms for LNG SPA Contracts:
13
Expected Timeline
Sign MOUs with interested parties Completed DOE export authorization Received Definitive commercial agreements 2H2011 EPC contract 2H2011 Financing commitments 2H2011 FERC construction authorization 2012 Commence construction 2012 Commence operations 2015
Milestone
Target Date
Note: Past results not a guarantee of future performance.
Project teams in place with the same key people who delivered the Sabine Pass LNG terminal and Creole Trail P/L on time and on budget
Expected Timeline
Sign MOUs with interested parties Completed DOE export authorization Received Definitive commercial agreements 2H2011 EPC contract 2H2011 Financing commitments 2H2011 FERC construction authorization 2012 Commence construction 2012 Commence operations 2015
Milestone
Target Date
Note: Past results not a guarantee of future performance.
Project teams in place with the same key people who delivered the Sabine Pass LNG terminal and Creole Trail P/L on time and on budget
14
Summary Proposed Structure
Sabine Pass LNG, L.P.
88.5% through LP Interest 2% through GP Interest
NYSE Amex US Stock Symbol: LNG
NYSE Amex US Stock Symbol: CQP 9.5% LP Interest
Public Unitholders
Sabine Pass Liquefaction, LLC
Vaporization assets Storage Berthing capacity Total TUA (1 Bcf/d) Chevron TUA (1 Bcf/d) Liquefaction TUA (2 Bcf/d)
100%
Liquefaction assets New LNG SPA Agreements TUA w. Sabine Pass LNG Pipeline Transport w. Creole Trail Pipeline
2 Bcf/d TUA
DEBT FINANCING
NEW EQUITY
Summary Proposed Structure
Sabine Pass LNG, L.P.
88.5% through LP Interest 2% through GP Interest
NYSE Amex US Stock Symbol: LNG
NYSE Amex US Stock Symbol: CQP 9.5% LP Interest
Public Unitholders
Sabine Pass Liquefaction, LLC
Vaporization assets Storage Berthing capacity Total TUA (1 Bcf/d) Chevron TUA (1 Bcf/d) Liquefaction TUA (2 Bcf/d)
100%
Liquefaction assets New LNG SPA Agreements TUA w. Sabine Pass LNG Pipeline Transport w. Creole Trail Pipeline
2 Bcf/d TUA
DEBT FINANCING
NEW EQUITY
15
Key Investment Highlights
20-year fixed price contracts with investment grade counterparties – stable contracted cash flows expected to begin 2015 Brownfield site minimizes construction costs – expansion economics Lump-Sum, Turnkey EPC contract with Bechtel ConocoPhillips Optimized Cascade Process – efficient operations and proven technology Favorable market dynamics provide incentive for global LNG buyers to seek access to U.S. natural gas markets Experienced management team - developed and operating Sabine Pass LNG terminal and Creole Trail Pipeline Strong local, state and federal support
Key Investment Highlights
20-year fixed price contracts with investment grade counterparties – stable contracted cash flows expected to begin 2015 Brownfield site minimizes construction costs – expansion economics Lump-Sum, Turnkey EPC contract with Bechtel ConocoPhillips Optimized Cascade Process – efficient operations and proven technology Favorable market dynamics provide incentive for global LNG buyers to seek access to U.S. natural gas markets Experienced management team - developed and operating Sabine Pass LNG terminal and Creole Trail Pipeline Strong local, state and federal support
Financial Overview (All numbers reflect pre-Liquefaction financials)
CHENIERE ENERGY
CHENIERE ENERGY
17
Disbursements G&A, net marketing Pipeline & tug services Other, incl adv tax payments Debt service
Receipts Distributions from CQP (Common/GP) Management fees from CQP
45 - 55
*Estimates represent a summary of internal forecasts for 2011, are based on current assumptions and are subject to change. Estimates do not include any impacts for the Offering. Actual performance may differ materially from, and there is no plan to update, the forecast. See “Forward Looking Statements” cautions. Estimates exclude earnings forecasts from operating activities. **Approximately $11 million is fees for management services provided by Cheniere to CQP payable on a quarterly basis, equal to the lesser of 1) $2.5 million (subject to inflation) or 2) such amount of CQP’s unrestricted cash and cash equivalents as remains after CQP has distributed in respect of each quarter for each common unit then outstanding an amount equal to the IQD and the related GP distribution and adjusting for any cash needed to provide for the proper conduct of the business of CQP, other than Sabine Pass operating cash flows reserved for distributions in respect of the next four quarters.
Net cash outflow
Marketing activity / subordinated unit dist.
?
20 8-19
25 – 35 10 3 – 5 35
$
$
Cash receipts expected to increase from CQP driven by Liquefaction Project - unit distributions, management fees and Creole Trail P/L tariffs
Estimated LNG Net Cash Flows* Annualized estimates pre-Liquefaction Project
**
Disbursements G&A, net marketing Pipeline & tug services Other, incl adv tax payments Debt service
Receipts Distributions from CQP (Common/GP) Management fees from CQP
45 - 55
*Estimates represent a summary of internal forecasts for 2011, are based on current assumptions and are subject to change. Estimates do not include any impacts for the Offering. Actual performance may differ materially from, and there is no plan to update, the forecast. See “Forward Looking Statements” cautions. Estimates exclude earnings forecasts from operating activities. **Approximately $11 million is fees for management services provided by Cheniere to CQP payable on a quarterly basis, equal to the lesser of 1) $2.5 million (subject to inflation) or 2) such amount of CQP’s unrestricted cash and cash equivalents as remains after CQP has distributed in respect of each quarter for each common unit then outstanding an amount equal to the IQD and the related GP distribution and adjusting for any cash needed to provide for the proper conduct of the business of CQP, other than Sabine Pass operating cash flows reserved for distributions in respect of the next four quarters.
Net cash outflow
Marketing activity / subordinated unit dist.
?
20 8-19
25 – 35 10 3 – 5 35
$
$
Cash receipts expected to increase from CQP driven by Liquefaction Project - unit distributions, management fees and Creole Trail P/L tariffs
Estimated LNG Net Cash Flows* Annualized estimates pre-Liquefaction Project
**
18
$
$
$ 0 – 250
Estimated CQP Distributable Cash Flows Annualized estimates pre-Liquefaction Project
Receipts TUAs – Chevron and Total Other Services Total Cash Receipts
Note: Estimates represent a summary of internal forecasts, are based on current assumptions and are subject to change. Actual performance may differ materially from, and there is no plan to update, the forecast. See “Forward Looking Statements” cautions.
Available for Distributions to Common and G.P.
Not included in disbursements above is an estimate of up to approximately $11 million of fees payable to Cheniere for services provided under a mgmt svcs. agreement. Such fees are payable on a quarterly basis equal to the lesser of 1) $2.5 million (subject to inflation) or 2) such amount of CQP’s unrestricted cash and cash equivalents as remains after CQP has distributed in respect of each qtr. for each common unit then outstanding an amount equal to the IQD and the related GP distribution and adjusting for any cash needed to provide for the proper conduct of the business of CQP, other than Sabine Pass operating cash flows reserved for distributions in respect of the next four quarters. Assumes one million common units sold per ATM offering. As of March 31, 2011 approximately 0.1 million were sold.
Available for Management Fees(1) & Sub Units
253 7 260
1 47 0 48
Potential Future Cash Flows Regas Capacity (from VCRA)
49
$
$ 0 – 250
General Partner Common Units(2) Subordinated Units Total Distributions Paid from Available
Distributions Paid Based on IQD and Available Cash(Above)
Costs Operating, G&A, Maintenance CapEx Debt Service Total Costs
46 165 211
$
$
$
$ 0 – 250
Estimated CQP Distributable Cash Flows Annualized estimates pre-Liquefaction Project
Receipts TUAs – Chevron and Total Other Services Total Cash Receipts
Note: Estimates represent a summary of internal forecasts, are based on current assumptions and are subject to change. Actual performance may differ materially from, and there is no plan to update, the forecast. See “Forward Looking Statements” cautions.
Available for Distributions to Common and G.P.
Not included in disbursements above is an estimate of up to approximately $11 million of fees payable to Cheniere for services provided under a mgmt svcs. agreement. Such fees are payable on a quarterly basis equal to the lesser of 1) $2.5 million (subject to inflation) or 2) such amount of CQP’s unrestricted cash and cash equivalents as remains after CQP has distributed in respect of each qtr. for each common unit then outstanding an amount equal to the IQD and the related GP distribution and adjusting for any cash needed to provide for the proper conduct of the business of CQP, other than Sabine Pass operating cash flows reserved for distributions in respect of the next four quarters. Assumes one million common units sold per ATM offering. As of March 31, 2011 approximately 0.1 million were sold.
Available for Management Fees(1) & Sub Units
253 7 260
1 47 0 48
Potential Future Cash Flows Regas Capacity (from VCRA)
49
$
$ 0 – 250
General Partner Common Units(2) Subordinated Units Total Distributions Paid from Available
Distributions Paid Based on IQD and Available Cash(Above)
Costs Operating, G&A, Maintenance CapEx Debt Service Total Costs
46 165 211
$
19
CQP Ownership
Common Units Subordinated Units General Partner @ 2%
15.6
10.9 135.4 3.3
Public
Cheniere, Inc.
15.6
149.6
(in mm)
26.5 135.4 3.3
165.2
Total
90.5%
9.5%
100%
Percent of total
*CQP Ownership as of March 31, 2011. Does not reflect additional common units sold after March 31, 2011 through the up to 1MM of Common Units proposed to be issued through an at-the-market program.
-
-
Currently, CQP generates distributable cash flows (DCF) sufficient to pay the IQD and applicable 2% to the GP and common units only (net cash from Chevron and Total TUAs) Prior to the development of the liquefaction project, the subordinated units may receive distributions from new business at CQP or from fees received from the VCRA with Cheniere Marketing Upon commencement of DCF being generated from the liquefaction project, CQP will first pay distributions to the subordinated units up to the IQD in accordance with the cash waterfall in the partnership agreement
CQP Ownership
Common Units Subordinated Units General Partner @ 2%
15.6
10.9 135.4 3.3
Public
Cheniere, Inc.
15.6
149.6
(in mm)
26.5 135.4 3.3
165.2
Total
90.5%
9.5%
100%
Percent of total
*CQP Ownership as of March 31, 2011. Does not reflect additional common units sold after March 31, 2011 through the up to 1MM of Common Units proposed to be issued through an at-the-market program.
-
-
Currently, CQP generates distributable cash flows (DCF) sufficient to pay the IQD and applicable 2% to the GP and common units only (net cash from Chevron and Total TUAs) Prior to the development of the liquefaction project, the subordinated units may receive distributions from new business at CQP or from fees received from the VCRA with Cheniere Marketing Upon commencement of DCF being generated from the liquefaction project, CQP will first pay distributions to the subordinated units up to the IQD in accordance with the cash waterfall in the partnership agreement
20
Condensed Balance Sheets As of March 31, 2011
Cheniere Energy
Other Cheniere
Consolidated
Partners, L.P.
Energy, Inc. (1)
Cheniere Energy, Inc. (3)
Unrestricted cash and equivalents
$
-
24
$
24
$
Restricted cash and securities (2)
184
4
188
Property, plant and equipment, net
1,542
603
2,145
Goodwill and other assets
50
157
207
Total assets
1,776
$
788
$
2,564
$
Deferred revenue and other liabilities
135
$
(1)
$
134
$
Current & Long-term debt
2,189
751
2,940
Non-Controlling interest
-
184
184
Deficit
(548)
(146)
(694)
1,776
$
788
$
2,564
$
Includes intercompany eliminations and reclassifications. Restricted cash includes debt service reserves as required per indenture. Cash is presented as restricted at the consolidated level. For a complete balance sheet see the Cheniere Energy, Inc. and Cheniere Energy Partners, L.P. Form 10-Qs for the period ended March 31, 2011 filed with the SEC.
-
Accounts and interest receivable
1
32
33
Total liabilities and deficit
Cash available for Cheniere’s operations is ~$53.9 mm including unrestricted cash and equivalents of ~$24.5 mm and ~$29.4 mm of the A/R balance (due to timing of cash receipts)
($ in MM)
Condensed Balance Sheets As of March 31, 2011
Cheniere Energy
Other Cheniere
Consolidated
Partners, L.P.
Energy, Inc. (1)
Cheniere Energy, Inc. (3)
Unrestricted cash and equivalents
$
-
24
$
24
$
Restricted cash and securities (2)
184
4
188
Property, plant and equipment, net
1,542
603
2,145
Goodwill and other assets
50
157
207
Total assets
1,776
$
788
$
2,564
$
Deferred revenue and other liabilities
135
$
(1)
$
134
$
Current & Long-term debt
2,189
751
2,940
Non-Controlling interest
-
184
184
Deficit
(548)
(146)
(694)
1,776
$
788
$
2,564
$
Includes intercompany eliminations and reclassifications. Restricted cash includes debt service reserves as required per indenture. Cash is presented as restricted at the consolidated level. For a complete balance sheet see the Cheniere Energy, Inc. and Cheniere Energy Partners, L.P. Form 10-Qs for the period ended March 31, 2011 filed with the SEC.
-
Accounts and interest receivable
1
32
33
Total liabilities and deficit
Cash available for Cheniere’s operations is ~$53.9 mm including unrestricted cash and equivalents of ~$24.5 mm and ~$29.4 mm of the A/R balance (due to timing of cash receipts)
($ in MM)
21
Organizational Structure
9.5% LP Interest
100% Ownership Interest
$205 mm 2.25% Convertible Senior Unsecured Notes due 2012
NYSE Amex US: LNG
NYSE Amex US: CQP
$298 mm 9.75% Term Loan due 2012 $270 mm 12.0% Senior Secured Loans due 2018
Note: Abridged version of organization structure. Balances as of March 31, 2011.
Sabine Pass LNG, L.P.
Sabine Pass Liquefaction, LLC
Cheniere LNG, Inc.
Creole Trail Pipeline Other Pipeline Projects
100% Ownership Interest
88.5% thru LP Interest 2% thru GP Interest
$550 mm 7.25% Senior Secured Notes due 2013 $1,666 mm 7.50% Senior Secured Notes due 2016
Cheniere Marketing Other LNG Terminal Projects
Public Unitholders
100% Ownership Interest
100% Ownership Interest
Cheniere LNG Holding, LLC
100% Ownership Interest
Customer Annual TUA Pmt Total $124MM Chevron $129MM Investments $252MM
Organizational Structure
9.5% LP Interest
100% Ownership Interest
$205 mm 2.25% Convertible Senior Unsecured Notes due 2012
NYSE Amex US: LNG
NYSE Amex US: CQP
$298 mm 9.75% Term Loan due 2012 $270 mm 12.0% Senior Secured Loans due 2018
Note: Abridged version of organization structure. Balances as of March 31, 2011.
Sabine Pass LNG, L.P.
Sabine Pass Liquefaction, LLC
Cheniere LNG, Inc.
Creole Trail Pipeline Other Pipeline Projects
100% Ownership Interest
88.5% thru LP Interest 2% thru GP Interest
$550 mm 7.25% Senior Secured Notes due 2013 $1,666 mm 7.50% Senior Secured Notes due 2016
Cheniere Marketing Other LNG Terminal Projects
Public Unitholders
100% Ownership Interest
100% Ownership Interest
Cheniere LNG Holding, LLC
100% Ownership Interest
Customer Annual TUA Pmt Total $124MM Chevron $129MM Investments $252MM
CHENIERE ENERGY
Appendix
Appendix
23
Cheniere Overview
Cheniere Energy, Inc. NYSE Amex US: LNG
Cheniere Marketing, LLC VCRA to monetize 2 Bcf/d capacity at SPLNG
Cheniere LNG Holdings, LLC 90.5% Ownership of CQP
Cheniere Energy Partners, L.P. NYSE Amex US: CQP
Cheniere Creole Trail Pipeline L.P. 2 Bcf/d Takeaway Capacity for SPLNG
Sabine Pass LNG, L.P. 4 Bcf/d Regasification Terminal, Fully Contracted
Proposed Project - Liquefaction Add Liquefaction Capabilities at SPLNG
88.5% (LP interest) 2.0% (GP interest)
Other Terminal Sites Corpus Christi LNG Creole Trail LNG…
Cheniere Overview
Cheniere Energy, Inc. NYSE Amex US: LNG
Cheniere Marketing, LLC VCRA to monetize 2 Bcf/d capacity at SPLNG
Cheniere LNG Holdings, LLC 90.5% Ownership of CQP
Cheniere Energy Partners, L.P. NYSE Amex US: CQP
Cheniere Creole Trail Pipeline L.P. 2 Bcf/d Takeaway Capacity for SPLNG
Sabine Pass LNG, L.P. 4 Bcf/d Regasification Terminal, Fully Contracted
Proposed Project - Liquefaction Add Liquefaction Capabilities at SPLNG
88.5% (LP interest) 2.0% (GP interest)
Other Terminal Sites Corpus Christi LNG Creole Trail LNG…
24
Strategically Located – Extensive Market Access to Gas
Montana Thrust Belt
Cody
Gammon
Hilliard Baxter- Mancos
Greater Green River Basin
Forest City Basin
Pierre
Illinois Basin
Piceance Basin
Lewis
San Juan Basin
Raton Basin
Anadarko Basin
PaloDuro Basin
Permian Basin
Barnett Woodford
Pearsall
Eagle Ford
Rio Grande Embayment
Barnett
Woodford
Michigan Basin
Antrim
New Albany
Chattanooga
Texas Louisiana Mississippi Salt Basin
Fayetteville
Ft. Worth Basin
Arkoma Basin
Conasauga
Black Warrior Basin
Marfa Basin
Paradox Basin
Maverick Sub-Basin
Hermosa
Mancos
Cherokee Platform
Excello- Mulky
Appalachian Basin
Marcellus/Utica
Shale Gas Plays Basins
366
1,373
Lower 48 Recoverable Unconventional Reserves (Tcf)
0
700
1400
1996
2009
Shale
CBM
Tight Gas
Total US Proved Reserves
Sabine Pass LNG
Haynesville Bossier
Granite Wash
Williston Basin
Bakken
Primary Gas Sources for Sabine Pass Liquefaction Conventional Gulf Coast Onshore; Barnett; Haynesville; Bossier; Eagle Ford
Sources: EIA (US map graphic, pipelines and LNG terminals placed by Cheniere) Advanced Resources Intl (Lower 48 Unconventional Recoverable Reserves), ARI shale estimates updated April 2010 Depicted Pipelines: Rockies Express, Texas Eastern, Trunkline, Transco, FGT, C/P/SESH/Gulf Crossing (as a single route)
Rig Count
Production Bcf/d
Marcellus
105
2.0
Source: Lippman Consulting, as of April 2011.
Strategically Located – Extensive Market Access to Gas
Montana Thrust Belt
Cody
Gammon
Hilliard Baxter- Mancos
Greater Green River Basin
Forest City Basin
Pierre
Illinois Basin
Piceance Basin
Lewis
San Juan Basin
Raton Basin
Anadarko Basin
PaloDuro Basin
Permian Basin
Barnett Woodford
Pearsall
Eagle Ford
Rio Grande Embayment
Barnett
Woodford
Michigan Basin
Antrim
New Albany
Chattanooga
Texas Louisiana Mississippi Salt Basin
Fayetteville
Ft. Worth Basin
Arkoma Basin
Conasauga
Black Warrior Basin
Marfa Basin
Paradox Basin
Maverick Sub-Basin
Hermosa
Mancos
Cherokee Platform
Excello- Mulky
Appalachian Basin
Marcellus/Utica
Shale Gas Plays Basins
366
1,373
Lower 48 Recoverable Unconventional Reserves (Tcf)
0
700
1400
1996
2009
Shale
CBM
Tight Gas
Total US Proved Reserves
Sabine Pass LNG
Haynesville Bossier
Granite Wash
Williston Basin
Bakken
Primary Gas Sources for Sabine Pass Liquefaction Conventional Gulf Coast Onshore; Barnett; Haynesville; Bossier; Eagle Ford
Sources: EIA (US map graphic, pipelines and LNG terminals placed by Cheniere) Advanced Resources Intl (Lower 48 Unconventional Recoverable Reserves), ARI shale estimates updated April 2010 Depicted Pipelines: Rockies Express, Texas Eastern, Trunkline, Transco, FGT, C/P/SESH/Gulf Crossing (as a single route)
Rig Count
Production Bcf/d
Marcellus
105
2.0
Source: Lippman Consulting, as of April 2011.
25
Unconventional Plays – Comparative Rates of Return
Source: Bentek Energy
Unconventional Plays – Comparative Rates of Return
Source: Bentek Energy
26
ConocoPhillips-Bechtel – Global LNG Collaboration
Source: ConocoPhillips, Bechtel Note: Past results not a guarantee of future performance.
Proven Designs
Collaboration projects onstream ahead of schedule and exceeded expectations
1969
1999
2007
2012
2006
ConocoPhillips-Bechtel – Global LNG Collaboration
Source: ConocoPhillips, Bechtel Note: Past results not a guarantee of future performance.
Proven Designs
Collaboration projects onstream ahead of schedule and exceeded expectations
1969
1999
2007
2012
2006
27
Strategically Located – Multiple Pipeline Interconnects
Cheniere Creole Trail Pipeline 2.0 Bcf/d Kinder Morgan Louisiana Pipeline 3.2 Bcf/d Total Pipeline Capacity 5.2 Bcf/d
Transco Z3
Texas Eastern
Trunkline
Transco Z3
Pine Prairie Energy Center
Egan Storage
Jefferson Island Storage
Hackberry Storage
NGPL Transco Florida Gas Z1 Tennessee Bridgeline
Texas Gas ANR Florida Gas Z2 Cypress TETCO
Tennessee
Trunkline
Columbia
NGPL
Sabine Pass LNG
Liquidity Points Storage
Henry Hub
Strategically Located – Multiple Pipeline Interconnects
Cheniere Creole Trail Pipeline 2.0 Bcf/d Kinder Morgan Louisiana Pipeline 3.2 Bcf/d Total Pipeline Capacity 5.2 Bcf/d
Transco Z3
Texas Eastern
Trunkline
Transco Z3
Pine Prairie Energy Center
Egan Storage
Jefferson Island Storage
Hackberry Storage
NGPL Transco Florida Gas Z1 Tennessee Bridgeline
Texas Gas ANR Florida Gas Z2 Cypress TETCO
Tennessee
Trunkline
Columbia
NGPL
Sabine Pass LNG
Liquidity Points Storage
Henry Hub
28
Everett
Cove Point
Elba Island
Lake Charles
Sabine Pass
Freeport
Golden Pass
Cameron
Costa Azúl
Canaport
Existing Under Construction
Altamira
Source: Websites of Terminal Owners
North America Onshore Receiving Terminals
Gulf LNG
Everett
Cove Point
Elba Island
Lake Charles
Sabine Pass
Freeport
Golden Pass
Cameron
Costa Azúl
Canaport
Existing Under Construction
Altamira
Source: Websites of Terminal Owners
North America Onshore Receiving Terminals
Gulf LNG
Cheniere Energy Contacts Katie Pipkin, Vice President Finance & Investor Relations (713) 375-5110 – katie.pipkin@cheniere.com Christina Burke, Manager Investor Relations (713) 375-5104 – christina.burke@cheniere.com
CHENIERE ENERGY
CHENIERE ENERGY