| 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 57.9% owned (at September 30, 2013), 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 with capacity 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 2012 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 on behalf of Cheniere Partners in an effort to utilize the receiving capacity held at the Sabine Pass LNG terminal during construction of the Liquefaction Project.
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 Three Months Ended September 30, 2013 |
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Revenues (2) |
$ |
67,558 |
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$ |
16,470 |
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$ |
(16,318 |
) |
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$ |
67,710 |
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Intersegment revenues (losses) (3) (4) |
820 |
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15,880 |
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(16,700 |
) |
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— |
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Depreciation, depletion and amortization |
14,581 |
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|
251 |
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|
414 |
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|
15,246 |
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Non-cash compensation |
3,148 |
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4,594 |
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|
20,197 |
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|
27,939 |
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Income (loss) from operations |
(49,600 |
) |
|
2,919 |
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|
805 |
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(45,876 |
) |
Interest expense, net |
(55,378 |
) |
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— |
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2,850 |
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(52,528 |
) |
Income (loss) before income taxes and non-controlling interest |
(127,202 |
) |
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2,515 |
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|
4,013 |
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(120,674 |
) |
Goodwill |
76,819 |
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— |
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— |
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76,819 |
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Total assets |
7,719,551 |
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63,756 |
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342,546 |
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8,125,853 |
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Expenditures for additions to long-lived assets |
852,847 |
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|
61 |
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389 |
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853,297 |
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As of or for the Three Months Ended September 30, 2012 |
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Revenues (2) |
$ |
69,868 |
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$ |
2,661 |
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— |
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$ |
(6,531 |
) |
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$ |
65,998 |
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Intersegment revenues (losses) (3) (4) |
3,929 |
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|
2,953 |
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(6,882 |
) |
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— |
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Depreciation, depletion and amortization |
14,566 |
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|
256 |
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|
411 |
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15,233 |
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Non-cash compensation |
6,505 |
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9,256 |
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36,104 |
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51,865 |
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Loss from operations |
(16,446 |
) |
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(16,462 |
) |
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(21,609 |
) |
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(54,517 |
) |
Interest expense, net |
(55,333 |
) |
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12 |
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9,817 |
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(45,504 |
) |
Income (loss) before income taxes and non-controlling interest |
(71,335 |
) |
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418,655 |
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(459,135 |
) |
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(111,815 |
) |
Goodwill |
76,819 |
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— |
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— |
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76,819 |
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Total assets |
4,136,574 |
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42,308 |
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204,843 |
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4,383,725 |
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Expenditures for additions to long-lived assets |
883,798 |
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(6 |
) |
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696 |
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884,488 |
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For the Nine Months Ended September 30, 2013 |
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Revenues (2) |
$ |
201,408 |
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$ |
27,627 |
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$ |
(28,242 |
) |
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$ |
200,793 |
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Intersegment revenues (losses) (3) (4) |
2,184 |
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27,186 |
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(29,370 |
) |
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— |
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Depreciation, depletion and amortization |
43,405 |
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|
751 |
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|
1,377 |
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|
45,533 |
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Non-cash compensation |
22,477 |
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36,234 |
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|
152,635 |
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|
211,346 |
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Loss from operations |
(103,655 |
) |
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(39,543 |
) |
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(106,410 |
) |
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(249,608 |
) |
Interest expense, net |
(156,644 |
) |
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— |
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21,838 |
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|
(134,806 |
) |
Income (loss) before income taxes and non-controlling interest |
128,441 |
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(40,092 |
) |
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(496,613 |
) |
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(408,264 |
) |
Expenditures for additions to long-lived assets |
2,467,210 |
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57 |
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1,293 |
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2,468,560 |
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For the Nine Months Ended September 30, 2012 |
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Revenues (2) |
$ |
206,249 |
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$ |
977 |
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$ |
(8,427 |
) |
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$ |
198,799 |
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Intersegment revenues (losses) (3) (4) |
6,973 |
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2,618 |
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(9,591 |
) |
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— |
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Depreciation, depletion and amortization |
43,810 |
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1,815 |
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1,376 |
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47,001 |
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Non-cash compensation |
6,964 |
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10,657 |
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38,492 |
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56,113 |
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Income (loss) from operations |
7,237 |
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(31,788 |
) |
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(35,366 |
) |
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(59,917 |
) |
Interest expense, net |
(165,251 |
) |
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12 |
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5,520 |
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(159,719 |
) |
Loss before income taxes and non-controlling interest |
(158,016 |
) |
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403,369 |
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(491,875 |
) |
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(246,522 |
) |
Expenditures for additions to long-lived assets |
931,542 |
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1,659 |
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1,192 |
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934,393 |
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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 Gas & Power North America, Inc. and Chevron U.S.A. Inc. LNG and natural gas marketing and trading revenue consists primarily of the domestic marketing of natural gas imported into the Sabine Pass LNG terminal and international revenue allocations using a cost plus transfer pricing methodology. |
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(3) |
Intersegment revenues related to our LNG terminal business 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 utilize the reserved capacity at the Sabine Pass LNG terminal of Cheniere Investments under its terminal use rights assignment and agreement ("TURA") pursuant to which Cheniere Investments has the right to use Sabine Pass Liquefaction's reserved capacity at the Sabine Pass LNG terminal under Sabine Pass Liquefaction's TUA in the three and nine months ended September 30, 2013 and 2012. These LNG terminal business 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 business 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 utilize the reserved capacity at the Sabine Pass LNG terminal of Cheniere Investments under its TURA in the three and nine months ended September 30, 2013 and 2012. These LNG and natural gas marketing business segment intersegment costs are eliminated with intersegment revenues in our Consolidated Statements of Operations.
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