| Business Segment Information |
BUSINESS SEGMENT INFORMATION
We have two operating business segments: LNG terminal business and LNG and natural gas marketing business. We determine our reporting units by identifying each unit that engaged in business activities from which it may earn revenues and incur expenses, had operating results regularly reviewed by the entities' chief operating decision makers for purposes of resource allocation and performance assessment, and had discrete financial information.
Our LNG terminal business segment consists of the operational Sabine Pass LNG terminal, approximately 59.5% owned (at December 31, 2012), located on the Sabine Pass deep water shipping channel less than four miles from the Gulf Coast, and two other LNG terminals that are in various stages of development at the following locations: Corpus Christi LNG, 100% owned, near Corpus Christi, Texas; and Creole Trail LNG, 100% owned, at the mouth of the Calcasieu Channel in central Cameron Parish, Louisiana. The Sabine Pass LNG terminal includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 Bcfe, two docks that can accommodate vessels of up to 265,000 cubic meters and vaporizers with regasification capacity of approximately 4.0 Bcf/d and pipeline facilities interconnecting the Sabine Pass LNG terminal with a number of large interstate pipelines. Cheniere Partners is currently developing the Liquefaction Project at the Sabine Pass LNG terminal adjacent to the existing regasification facilities. During the fourth quarter of 2012, we merged our natural gas pipeline business segment into our LNG terminal business segment because we were no longer developing or making resource allocation decisions on other pipeline projects not primarily related to our LNG terminals. We have adjusted the corresponding items of segment information for 2011 and 2010 to reflect this change.
Our LNG and natural gas marketing business segment consists of Cheniere Marketing marketing LNG and natural gas on its own behalf and assisting Cheniere Investments in an effort to monetize the other half of the LNG receiving capacity at the Sabine Pass LNG terminal during construction of the Liquefaction Project on behalf of Cheniere Partners.
The following table summarizes revenues, net income (loss) from operations and total assets for each of our operating segments (in thousands):
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Segments |
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LNG Terminal |
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LNG & Natural Gas Marketing |
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Corporate and Other (1) |
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Total
Consolidation
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As of or for the Year Ended December 31, 2012 |
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Revenues (2) |
$ |
274,037 |
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$ |
4,182 |
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$ |
(11,999 |
) |
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$ |
266,220 |
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Intersegment revenues (losses) (3) (4) |
8,137 |
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|
5,354 |
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(13,491 |
) |
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— |
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Depreciation, depletion and amortization |
62,547 |
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|
2,067 |
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|
1,793 |
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66,407 |
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Non-cash compensation |
7,539 |
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|
11,485 |
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|
42,023 |
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|
61,047 |
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Income (loss) from operations |
5,176 |
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(35,988 |
) |
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(45,020 |
) |
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(75,832 |
) |
Interest expense, net |
(218,143 |
) |
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12 |
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17,320 |
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(200,811 |
) |
Goodwill |
76,819 |
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— |
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— |
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76,819 |
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Total assets |
4,411,396 |
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62,797 |
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164,892 |
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4,639,085 |
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Expenditures for additions to long-lived assets |
1,233,577 |
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(374 |
) |
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1,512 |
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1,234,715 |
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As of or for the Year Ended December 31, 2011 |
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Revenues |
$ |
274,322 |
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$ |
13,554 |
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$ |
2,568 |
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$ |
290,444 |
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Intersegment revenues (losses) (3) (4) |
14,655 |
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(13,731 |
) |
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(924 |
) |
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— |
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Depreciation, depletion and amortization |
60,062 |
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|
1,105 |
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2,238 |
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|
63,405 |
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Non-cash compensation |
2,646 |
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|
9,258 |
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|
14,460 |
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26,364 |
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Income (loss) from operations |
119,337 |
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(28,380 |
) |
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(32,811 |
) |
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58,146 |
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Interest expense, net |
(219,323 |
) |
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— |
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(40,070 |
) |
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(259,393 |
) |
Goodwill |
76,819 |
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— |
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— |
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76,819 |
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Total assets |
2,413,284 |
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67,792 |
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434,249 |
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2,915,325 |
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Expenditures for additions to long-lived assets |
9,875 |
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16 |
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|
732 |
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10,623 |
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As of or for the Year Ended December 31, 2010 |
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Revenues |
$ |
269,633 |
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$ |
19,022 |
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$ |
2,858 |
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$ |
291,513 |
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Intersegment revenues (losses) (5) (6) (7) |
131,209 |
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(129,137 |
) |
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(2,072 |
) |
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— |
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Depreciation, depletion and amortization |
57,746 |
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|
1,087 |
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4,418 |
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63,251 |
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Non-cash compensation |
2,317 |
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|
5,791 |
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9,770 |
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|
17,878 |
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Income (loss) from operations |
251,796 |
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(131,891 |
) |
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(15,282 |
) |
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104,623 |
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Interest expense, net |
(244,633 |
) |
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— |
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(17,413 |
) |
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(262,046 |
) |
Goodwill |
76,819 |
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— |
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— |
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|
76,819 |
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Total assets |
2,453,179 |
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|
96,781 |
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3,548 |
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2,553,508 |
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Expenditures for additions to long-lived assets |
4,583 |
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(349 |
) |
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1,543 |
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5,777 |
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(1) |
Includes corporate activities, oil and gas exploration, development and exploitation activities and certain intercompany eliminations. Our oil and gas exploration, development and exploitation operating activities have been included in the corporate and other column due to the lack of a material impact that these activities have on our consolidated financial statements. |
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(2) |
Substantially all of the LNG terminal revenues relate to regasification capacity reservation fee payments made by Total and Chevron. |
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(3) |
Intersegment revenues related to our LNG terminal segment are primarily from tug revenues from Cheniere Marketing and the receipt of 80% of gross margins earned by Cheniere Marketing in an effort to monetize the TUA capacity of Cheniere Energy Investments, LLC ("Cheniere Investments") at the Sabine Pass LNG terminal in the year ended December 31, 2012 and 2011. These LNG terminal segment intersegment revenues are eliminated with intersegment expenses in our Consolidated Statements of Operations.
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(4) |
Intersegment revenues (losses) related to our LNG and natural gas marketing segment are primarily from Cheniere Marketing's tug costs and the payment of 80% of gross margins earned by Cheniere Marketing in an effort to monetize the TUA capacity of Cheniere Investments at the Sabine Pass LNG terminal in the year ended December 31, 2012 and 2011. These LNG terminal segment intersegment costs are eliminated with intersegment revenues in our Consolidated Statements of Operations.
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(5) |
Intersegment revenues related to our LNG terminal segment are primarily from TUA capacity reservation fee revenues and tug revenues of $125.5 million that were received from our LNG and natural gas marketing segment for the year ended December 31, 2010. These LNG terminal segment intersegment revenues are eliminated with intersegment expenses in our Consolidated Statements of Operations.
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(6) |
Intersegment losses related to our LNG and natural gas marketing segment are primarily from TUA capacity reservation fee expenses and tug costs of $125.5 million that were incurred from our LNG terminal segment for the year ended December 31, 2010. These costs and expenses are classified as marketing trading gains (losses) as they are considered capacity contracts related to our energy trading and risk management activities. These LNG and natural gas marketing segment intersegment costs and expenses are eliminated with intersegment revenues in our Consolidated Statements of Operations.
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(7) |
Intersegment losses related to corporate and other are from various transactions between our LNG terminal and LNG and natural gas marketing segments in which revenue recorded by one operating segment is eliminated with a non-revenue line item (i.e., operating expense or is capitalized) by the other operating segment. |
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