USA: Cheniere Logs Net Loss in Q3
For the three and nine months ended September 30, 2011, Cheniere Energy Partners, L.P. reported a net loss of $14.5 million and $23.6 million, respectively, compared with a net loss of $7.0 million and net income of $110.2 million for the same periods in 2010, respectively.
For the nine months ended September 30, 2011, affiliate revenues decreased $115.9 million primarily as a result of the assignment of the terminal use agreement (TUA) from Cheniere Marketing, LLC to Cheniere Energy Investments, LLC, the company’s wholly owned subsidiary, which required us to eliminate for consolidated reporting purposes the TUA revenues under this contract to Sabine Pass LNG, L.P. , the company’s wholly owned subsidiary. The assignment is not expected to have an impact on distributable cash flows available for common unitholders.
Overview of Significant 2011 Events
- In January 2011, Sabine Pass Liquefaction, LLC and Sabine Pass LNG, the company’s wholly owned subsidiaries, submitted an application to the FERC requesting authorization to site, construct and operate liquefaction and export facilities at the Sabine Pass LNG terminal;
- In May 2011, Sabine Liquefaction received an order from the U.S. Department of Energy (DOE) with authorization to export domestically produced natural gas from the Sabine Pass LNG terminal as LNG to any country that has, or in the future develops, the capacity to import LNG and with which trade is permissible;
- In September 2011, the company sold 3,000,000 common units in an underwritten public offering and 1,072,131 common units to Cheniere Common Units Holding, LLC, for net proceeds of approximately $60 million, which the company intends to use for general business purposes, including development costs of the expansion project to add liquefaction capacity at the Sabine Pass LNG terminal; and
- In October 2011, Sabine Liquefaction entered into its first liquefied natural gas (LNG) sale and purchase agreement (SPA) with BG Gulf Coast, LLC (BG) under which BG has agreed to purchase approximately 3.5 million tonnes per annum (mtpa) of LNG for twenty years, with an extension option of up to an additional ten years.
Cheniere Partners reported income from operations of $29.5 million and $107.6 million for the three and nine months ended September 30, 2011, respectively, compared to income from operations of $36.4 million and $240.1 million for the comparable periods in 2010.
Total revenues for the three and nine months ended September 30, 2011, were $64.9 million and $213.0 million, respectively, compared to total revenues of $66.6 million and $327.2 million for the comparable periods in 2010. Total revenues primarily include capacity payments received from customers in accordance with their TUAs and incremental revenues from tug services and re-export fees. Revenues from affiliates for the nine months ended September 30, 2011, decreased by $115.9 million when compared to the comparable period in 2010 due to the assignment of Cheniere Marketing’s TUA to Cheniere Investments, partially offset by revenues from the variable capacity rights agreement (VCRA) with Cheniere Marketing.
Total operating costs and expenses for the three and nine months ended September 30, 2011, were $35.4 million and $105.4 million, respectively, compared to $30.2 million and $87.1 million for the comparable periods in 2010. Development expense (including affiliate) increased $5.3 million and $23.8 million for the three and nine months ended September 30, 2011, respectively, compared to the comparable periods in 2010, primarily due to expenses related to the proposed liquefaction project. Operating and maintenance expenses (including affiliate) decreased $4.7 million for the nine months ended September 30, 2011, compared to the comparable period in 2010, primarily due to decreased fuel costs as a result of efficiencies in our LNG inventory management.
Cheniere continues to make progress on its project to add liquefaction services at the Sabine Pass LNG terminal. The project is being designed and permitted for up to four LNG trains, each with a nominal production capacity of approximately 4.5 mtpa. Cheniere anticipates LNG export from the Sabine Pass LNG terminal could commence as early as 2015, and may be constructed in phases, with each LNG train commencing operations approximately six to nine months after the previous LNG train.
The Company intends to enter into long-term contracts for at least 3.5 mtpa (approximately 0.5 Bcf/d) per LNG train, before reaching a final investment decision regarding the development of the LNG trains.
In October 2011, Sabine Liquefaction entered into its first LNG SPA with BG, under which BG has agreed to purchase approximately 3.5 mtpa of LNG. BG will pay Sabine Liquefaction a set charge for the full annual contract quantity of 182,500,000 MMBtu and will also pay a contract sales price based on the applicable Henry Hub index traded on the New York Mercantile Exchange. The SPA is subject to certain conditions precedent, including but not limited to Sabine Liquefaction’s receiving regulatory approvals, securing necessary financing arrangements and making a final investment decision to construct the liquefaction facilities.
The company will continue to negotiate definitive agreements with additional potential customers and contemplate making a final investment decision to commence construction of the liquefaction project upon, among other things, entering into acceptable commercial arrangements, receiving regulatory authorization to construct and operate the liquefaction assets and obtaining adequate financing.
Source: Cheniere Energy Partners, November 7, 2011