As filed with the Securities and Exchange Commission on February 12, 1999 Registration No. 333-70195 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 CHENIERE ENERGY, INC. (Exact Name of Registrant as specified in its charter) Delaware 95-4352386 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1200 Smith Street, Suite 1740 Houston, Texas 77002-4313 (713) 659-1361 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Walter L. Williams President and Chief Executive Officer Cheniere Energy, Inc. 1200 Smith Street, Suite 1740 Houston, Texas 77002-4312 (713) 659-1361 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: John B. Clutterbuck Mayor, Day, Caldwell & Keeton, L.L.P. 700 Louisiana, Suite 1900 Houston, Texas 77002-2778 (713) 225-7000 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are to be offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. The information in this Prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Prospectus Subject to Completion - ---------- February __, 1999 CHENIERE ENERGY, INC. 5,663,917 SHARES OF COMMON STOCK This Prospectus relates to the offer and sale of up to 5,663,917 shares of common stock of Cheniere Energy, Inc. Of these shares, 2,701,417 are held by certain of our stockholders and the other 2,962,500 are issuable upon the exercise of warrants held by certain of our warrantholders. One or more of the selling stockholders may offer to sell these shares from time to time. We will not receive any proceeds of these sales, but if any of the warrants are exercised, we will receive payment for the exercise price of the warrants. Our common stock is traded on The Nasdaq SmallCap Market under the symbol "CHEX." The last reported sales price of the common stock on The Nasdaq SmallCap Market on February 9, 1998 was $1.44 per share. -------------------------------------- SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. -------------------------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ---------------------------------------- The date of this Prospectus is February __, 1999 WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any of these documents at the public reference rooms maintained by the Securities and Exchange Commission at 450 Fifth Street, NW, Washington, D.C. 20549, and at the following regional offices of the Securities and Exchange Commission: New York Regional Office, Seven World Trade Center, New York, New York 10048, and Central Regional Office, 1801 California Street, Suite 4800, Denver, Colorado 80202. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms. Our filings are also available to the public from commercial documents retrieval services and at the Internet website maintained by the Securities and Exchange Commission at http://www.sec.gov. Our common stock is quoted on The Nasdaq SmallCap Market. You may also read our reports, proxy and information statements and other information at The Nasdaq Stock Market at 1735 K Street, NW, Washington, D.C. 20006. This Prospectus is part of the Registration Statement that we filed with the Securities and Exchange Commission to register the shares of common stock referred to above. This Prospectus does not contain important information that you can find in our Registration Statement and in the annual, quarterly and special reports, proxy statements and other documents that we file with the Securities and Exchange Commission. The Securities and Exchange Commission allows us to "incorporate by reference" the information we file with it, which means that we can disclose in this Prospectus important information to you by referring you to those documents. The information below is incorporated in this Prospectus by reference and is an important part of this Prospectus, except where any of the information has been modified or superceded by the information in this Prospectus or in information incorporated by reference in this Prospectus. Also, certain information that we file after the date of this Prospectus with the Securities and Exchange Commission will automatically be incorporated in this Prospectus and update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until all of the securities offered by this Prospectus are sold: - Our Proxy Statement dated October 10, 1997; - Our Transition Report on Form 10-K for the transition period from September 1, 1997 to December 31, 1997 - Our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998; - Our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1998; and - Our Current Report on Form 8-K dated December 9, 1998 (filed December 14, 1998). 2 We will provide, without charge, a copy of the documents incorporated by reference (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents). You may obtain documents incorporated by reference in this Prospectus by requesting them in writing or by telephone from: Cheniere Energy, Inc. 1200 Smith Street, Suite 1740 Houston, Texas 77002-4312 Attn: Don A. Turkleson, Chief Financial Officer (713) 659-1361 You should rely only on the information provided or incorporated by reference in this Prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of the shares in any state where the offer is not permitted. You should not assume that the information in this Prospectus, in any Prospectus Supplement or in any document incorporated by reference herein is accurate as of any date other than the date on the front of those documents. CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. We and our representatives may from time to time make written or verbal forward-looking statements, including statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our stockholders. All statements, other than statements of historical facts, included in this Prospectus that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. These statements include, among others: - statements regarding our business strategy, plans and objectives; - statements expressing beliefs and expectations regarding our ability to successfully raise the additional capital necessary to meet our obligations under our current exploration agreements; - statements expressing beliefs and expectations regarding our ability to secure the leases necessary to facilitate anticipated drilling activities; - statements expressing beliefs and expectations regarding our ability to attract additional working interest owners to participate in the exploration and development of our exploration areas; and - statements about non-historical Year 2000 information. These forward-looking statements are, and will be, based on management's then current views and assumptions regarding future events. Actual results could differ materially from estimates and other forward- looking statements. Important factors that could affect us and cause 3 materially different results are discussed under the heading "Risk Factors" below. THE COMPANY Cheniere Energy, Inc. is a Houston-based company formed for the purpose of oil and gas exploration and, if warranted, development and exploitation. We commenced our oil and gas activities in April of 1996. It is important for you to know that we have not yet established any oil and gas production, and we do not currently have any proven oil and gas reserves. We are currently a development stage enterprise with no operating revenues to date. Our common stock has been publicly traded since July 3, 1996 under the name Cheniere Energy, Inc. Our principal executive offices are located at 1200 Smith Street, Suite 1740, Houston, Texas 77002, and our telephone number is (713) 659- 1361. The Louisiana Joint Exploration Program We are involved with one major project: a 3-D seismic joint exploration project in southern Louisiana. The 3-D seismic survey covers 228 square miles within a 310 square-mile area running three to five miles north and generally eight miles south of the coastline in the most westerly portion of Cameron Parish, Louisiana. Acquisition of the seismic data in the field was completed in July 1997, and area-wide processing was completed in December 1997. Leasing activities were begun in March 1998, and further interpretation of the seismic data continues. Drilling of prospects identified within the area of the Louisiana joint exploration project began in February 1999. The Louisiana joint exploration program is governed by an Exploration Agreement between Cheniere Energy Operating Co., Inc. (our wholly owned subsidiary) and Zydeco Exploration, Inc. (an operating subsidiary of Zydeco Energy, Inc.). Arbitration Proceedings We have received the binding award of an independent panel of arbitrators reviewing a dispute related to certain rights and obligations pursuant to the Exploration Agreement. We have discussed the rulings of the panel in our Current Report on Form 8-K dated December 9, 1998 that is "incorporated by reference" as discussed under the heading "Where You Can Find More Information" above. 4 RISK FACTORS We Have a Limited Operating History We have a limited operating history with respect to our oil and gas exploration activities, which were commenced through the Louisiana joint exploration program in April 1996 by Cheniere Energy Operating Co., Inc. This company became our wholly-owned subsidiary on July 3, 1996 following a reorganization with Bexy Communications, Inc. From inception (February 21, 1996) to September 30, 1998, we incurred a net loss of $3,334,105. For the nine-month period ended September 30, 1998, we incurred a net loss of $1,147,429. We continued to incur losses during the remainder of 1998 and may continue to incur losses in 1999, depending on whether we generate sufficient revenue from producing reserves acquired either through acquisitions or drilling activities. We Have Limited Assets and No Proved Reserves or Current Production We have not yet established oil and gas production. In addition, we have not yet established any "proved reserves," which means that we have not yet identified any oil and gas reserves that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Currently, our primary asset is our interest in the Louisiana joint exploration program. Because almost all of our assets are represented by the investment to date in the Louisiana joint exploration program, and we anticipate investing additional amounts in the program, we are highly dependent on the success of the Louisiana joint exploration program. We May Not Be Able to Obtain Sufficient Additional Financing We presently have no operating revenues. As of September 30, 1998, we had only $233,841 of current assets. Despite our low level of current assets, we may need additional capital for a number of purposes, including the following: - Additional capital will be required to pay for our share of costs relating to the development of prospects we may wish to pursue, to exercise lease options, to acquire additional oil and gas leases and to drill wells on potential prospects. The total amount of our capital needs will be determined in part by the number of prospects generated within the Louisiana joint exploration program and by the working interest that we retain in those prospects. - We may need funds for the repayment of a portion of the $4.0 million (plus interest) in short-term senior notes payable that were outstanding as of September 30, 1998. We have received commitments from the holders of $2,025,020 of short-term senior term notes payable to exchange their notes for 2,812,528 shares of common stock at a price of $0.72 per share. The exchanges will 5 occur on or before March 15, 1999, the date on which the remainder of the notes will mature. - Should we choose to make an acquisition of producing oil and gas properties, it is likely that such an acquisition would require that some portion of the purchase price be paid in cash and thus would create the need for additional capital. Our future capital needs might be especially urgent in connection with the Louisiana Exploration Agreement. Under the terms of the Exploration Agreement, we have made seismic fund payments totaling $16.4 million and have earned a 50% interest in the seismic data. Zydeco is obligated under the terms of the Exploration Agreement to develop prospects from its analysis of the seismic data and to present those prospects to us for our election as to participation. Should we elect to participate in a prospect proposed by Zydeco, we must make payment to Zydeco as a reimbursement of prospect expenses within 45 days of the date such expenses are billed by Zydeco. We currently do not have sufficient capital to meet our future payment obligations under the Exploration Agreement were we to elect to participate in prospects proposed under the Exploration Agreement. Further, there can be no assurance that we will successfully secure the necessary funds to do so. Additional capital may be secured from a combination of funding sources. These funding sources may include: - borrowings from financial institutions, - debt offerings (which would increase our leverage and add to our need for cash to service such debt), - additional offerings of our equity securities (which could cause substantial dilution of our common stock), or - sales of portions of our working interest in the prospects within the Louisiana joint exploration program (which would reduce any future revenues from the Louisiana joint exploration program). Our ability to raise additional capital will depend on the results of our operations and the status of various capital and industry markets at the time such additional capital is sought. Accordingly, there can be no assurances that capital will be available to us from any source or that, if available, it will be on terms acceptable to us. Because of Our Lack of Diversification, We Are Especially Subject to Oil and Gas Industry Conditions, Including Volatility of Prices for Oil and Gas As an independent energy company, our revenues and profits will be substantially dependent on the oil and gas industry in general and the prevailing prices for oil and gas in particular. Oil and gas prices have been and are likely to continue to be volatile and subject to wide fluctuations in response to any of the following factors: 6 - relatively minor changes in the supply of and demand for oil and gas; - political conditions in international oil producing regions; - the extent of domestic production and importation of oil in certain relevant markets; - the level of consumer demand; - weather conditions; - the competitive position of oil or gas as a source of energy as compared with other energy sources; - the refining capacity of oil purchasers; and - the effect of federal and state regulation on the production, transportation and sale of oil. It is likely that adverse changes in the oil market or the regulatory environment would have an adverse effect on our ability to obtain capital from lending institutions, industry participants, private or public investors or other sources. There is Intense Competition in the Oil and Gas Industry The oil and gas industry is highly competitive. Most of our current and potential competitors have significantly greater financial resources and a significantly greater number of experienced and trained managerial and technical personnel than we do. There can be no assurance that we or the Louisiana joint exploration program will be able to compete effectively with such firms. We Are Subject to Significant Operating Hazards and Uninsured Risks Our oil and gas operations are subject to all of the risks and hazards typically associated with the exploration for, and the development and production of, oil and gas. Risks in drilling operations include cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution and other environmental risks. Our activities are also subject to perils specific to marine operations, such as capsizing, collision and damage or loss from severe weather. These hazards can cause personal injury and loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage and suspension of operations. In accordance with customary industry practices, we intend to maintain insurance against some, but not all, of these risks and losses. The occurrence of a significant event not fully insured or indemnified against could seriously harm us. Moreover, no assurance can be given that we will be able to maintain adequate insurance in the future at rates we consider reasonable. 7 We Are Subject to Significant Exploration Risks Our exploration activities involve significant risks. There can be no assurance that the use of technical expertise as applied to geophysical or geological data will ensure that any well we drill will discover oil or gas. Further, there is no way to know in advance of drilling and testing whether any prospect under the Louisiana joint exploration program will yield oil or gas in sufficient quantities to make money for us. In addition, we are highly dependent on seismic activity and the related application of new technology as a primary exploration methodology. There can be no assurance that our efforts under the Louisiana joint exploration program will be successful. We Have a High Dependence on Lease Acquisition Activities Both the United States Department of the Interior and the State of Louisiana award oil and gas leases on a competitive bidding basis. Further, non-governmental owners of the onshore mineral interests within the area covered by the Louisiana joint exploration program are not obligated to lease their mineral rights to the Louisiana joint exploration program except to the extent they have granted lease options to the Louisiana joint exploration program. Other major and independent oil and gas companies with financial resources significantly greater than those of the Louisiana joint exploration program may bid against us for the purchase of oil and gas leases. Accordingly, there can be no assurance that the Louisiana joint exploration program or any other oil and gas venture we are involved with will be successful in acquiring farmouts, seismic permits, lease options, leases or other rights to explore or recover oil and gas. Consequently, the proportion of the area covered by the Louisiana joint exploration program that could be subsequently explored through drilling would be reduced to the extent that the Louisiana joint exploration program is not successful at such acquisitions. There are Risks of Not Having Turnkey Contracts We anticipate that any wells to be drilled in which we will have an interest will be drilled by established industry contractors under turnkey contracts that limit our financial and legal exposure. Under a turnkey drilling contract, a negotiated price is agreed upon and the money placed in escrow. The contractor then assumes all of the risk and expense, including any cost overruns, of drilling a well to contract depth and completing any agreed upon evaluation of the wellbore. Upon performance of all these items, the escrowed money is released to the contractor. On a non-turnkey basis, all risk and expense, including cost overruns, of drilling a well to total depths lies with the operator. Circumstances may arise where a turnkey contract is not economically beneficial to us or is otherwise unobtainable from proven industry contractors. In such instances, we may decide to drill wells subject to the usual drilling hazards such as cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution and other environmental risks. We would also be liable for any cost overruns attributable to drilling problems that otherwise would have been covered by a turnkey contract had one been negotiated. 8 Existing and Future United States Governmental Regulation, Taxation and Price Control Could Seriously Harm Us Oil and gas production and exploration are subject to comprehensive federal, state and local laws and regulations controlling the exploration for and production and sale of oil and gas and the possible effects of such activities on the environment. Failure to comply with such rules and regulations can result in substantial penalties and may harm us. Present, as well as future, legislation and regulations could cause additional expenditures, restrictions and delays in our business, the extent of which cannot be predicted and which may require us to limit substantially, delay or cease operations in some circumstances. In most, if not all, areas where we may conduct activities, there may be statutory provisions regulating the production of oil and natural gas which may restrict the rate of production and adversely affect revenues. We plan to acquire oil and gas leases in the Gulf of Mexico, which will be granted by the federal government and administered by the U.S. Department of Interior Minerals Management Service. The Department strictly regulates the exploration, development and production of oil and gas reserves in the Gulf of Mexico. Such regulations could seriously harm our operations in the Gulf of Mexico. The federal government regulates the interstate transportation of oil and natural gas, through the Federal Energy and Regulatory Commission. The FERC has in the past regulated the prices at which oil and gas could be sold. Federal reenactment of price controls or increased regulation of the transport of oil and natural gas could seriously harm us. In addition, our operations are subject to numerous laws and regulations governing the discharge of oil and hazardous materials into the environment or otherwise relating to environmental protection, including the Oil Pollution Act of 1990. These laws and regulations have continually imposed increasingly strict requirements for water and air pollution control, solid waste management, and strict financial responsibility and remedial response obligations relating to oil spill protection. The cost of complying with such environmental legislation could have a general harmful effect on our operations. We May Experience Year 2000 Problems The Year 2000 presents significant issues for many computer systems. Much of the software in use today may not be able to accurately process data beyond the year 1999. Most computer systems process transactions using two digits for the year of the transaction, rather than the full four digits, making such systems unable to distinguish January 1, 2000 from January 1, 1900. Such systems may encounter significant processing inaccuracies or become inoperable when Year 2000 transactions are processed. Such matters could impact not only our day-to-day operations but also our financial institutions, customers and vendors as well as state, provincial and federal governments with jurisdictions where we maintains operations. We are currently addressing Year 2000 issues and are focussing on our internal business systems and processes. To the extent necessary, we will assess the readiness of any key business partners (financial institutions, customers, vendors, oil and gas operators, etc.). 9 It has been our strategy to use, wherever possible, industry-prevalent products and processes with minimal customization. As a result, we do not expect any extensive in-house hardware, software or process conversions in an effort to be Year 2000 compliant nor do we expect our Year 2000 compliance related costs to be material to our operations. Our goal is to be Year 2000 compliant by June 30, 1999 wherever possible and to have contingency plans in place where compliance is not possible in a timely manner. While it is our goal to be Year 2000 compliant, there can be no assurance that we will not be seriously harmed as a result of a Year 2000 related issue. Additionally, there are many variables and uncertainties associated with judgments regarding any contingency plans developed by us. Our business partners may present the area of greatest risk to us, in part because of our limited ability to influence actions of third parties, and in part because of our inability to estimate the level and impact of noncompliance of third parties. There is Only Limited Trading in Our Common Stock During 1998, the average daily trading volume of our common stock on The Nasdaq SmallCap Market was approximately 36,000 shares. The completion of this offering of the common stock provides no assurance that the trading market for the common stock will become more active. We Have Not Paid Dividends We have not paid any dividends since our inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our Board of Directors and will depend on, among other things, future earnings, our operating and financial condition, our capital requirements and general business conditions. Our Stockholders Could Experience Dilution Because of Additional Issuances of Shares We have 45,000,000 authorized shares of stock, consisting of (a) 40,000,000 shares of the common stock, and (b) 5,000,000 shares of preferred stock. As of February 9, 1999, approximately 45.5% of the shares of the common stock remained unissued. The Board of Directors has the power to issue any and all of such shares without shareholder approval. It is likely that we will issue shares of the common stock, among other reasons, in order to raise capital to sustain operations, to exchange for or to repay our $4.0 million in senior short-term notes payable and/or to finance future oil and gas exploration projects. In addition, we have reserved 4,703,334 and 2/3 shares of the common stock for issuance upon the exercise of outstanding warrants and 950,000 shares of the common stock for issuance upon the exercise of stock options. As of February 9, 1999, there are 686,444 and 2/3 issued and outstanding options to purchase common stock. Any issuance of common stock by us may result in a reduction in the book value per share or market 10 price per share of the outstanding shares of common stock and will reduce the proportionate ownership and voting power of such shares. We Depend on Key Personnel We depend on our executive officers for our various activities. We do not maintain "key person" life insurance policies on any of our personnel nor do we have employment agreements with any of our personnel. The loss of the services of any of these individuals could seriously harm us. In addition, our future success will depend in part upon our ability to attract and retain additional qualified personnel. We currently have eight full-time employees. We Depend on Industry Partners Because we have few employees and limited operating revenues, we will be largely dependent upon industry partners for the success of our oil and gas exploration projects for the foreseeable future. We are Controlled by a Small Number of Principal Stockholders William D. Forster and Charif Souki are the Co-Chairmen of the Board of Directors. BSR Investments, Ltd. ("BSR") is an entity under the control of a member of the immediate family of Charif Souki. Together, Mr. Forster and BSR own approximately 29.8% of the outstanding common stock. Accordingly, it is likely that Mr. Forster and BSR will effectively be able to elect all of our directors and to control our management, operations and affairs, including the ability to prevent or cause a change in control of the company. Anti-Takeover Provisions of the Certificate of Incorporation, Bylaws and Delaware Law Could Adversely Impact a Potential Acquisition by Third Parties Our Certificate of Incorporation and Bylaws and the Delaware General Corporation Law contain provisions that may discourage unsolicited takeover proposals. These provisions, among other things, authorize the Board of Directors to designate the terms of and issue new series of preferred stock, limit the personal liability of directors, require us to indemnify directors and officers to the fullest extent permitted by applicable law and impose restrictions on business combinations with certain interested parties. USE OF PROCEEDS We will not receive any proceeds from the sale of the shares offered by this Prospectus. Based on the current exercise price of the warrants that can be exercised for some of the shares offered by this Prospectus, we will not receive any proceeds from the exercise of the warrants unless and until the market value of our common stock increases beyond $1.50 per share. We expect to use any such proceeds for ongoing activities related to the Louisiana joint exploration project, working capital and/or general corporate purposes. 11 SELLING STOCKHOLDERS The following table sets forth certain information known to us with respect to beneficial ownership of our common stock as of February 9, 1999 by each Selling Stockholder.