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8-K - CHENIERE ENERGY, INC. FORM 8-K - Cheniere Energy, Inc. | form_8-k.htm |
Exhibit
99.1
CHENIERE
ENERGY, INC. NEWS RELEASE
Cheniere
Energy Reports Fourth Quarter and YE 2009 Results
§
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Sabine
Pass LNG Receiving Terminal
Complete
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§
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2009
Marks Start of Commercial
Operations
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Houston, Texas – February 25,
2010 – Cheniere Energy, Inc. (“Cheniere”) (NYSE Amex: LNG) reported a net
loss of $23.2 million, or $0.44 per share (basic and diluted), for the
fourth quarter 2009 compared with a net loss of $111.1 million, or $2.32 per
share (basic and diluted), during the corresponding 2008 period. For
the year ended December 31, 2009, Cheniere reported a net loss of
$161.5 million, or $3.13 per share (basic and diluted), compared with a net
loss of $373.0 million, or $7.87 per share (basic and diluted), during the
corresponding 2008 period. Included in the year ended December 31,
2009 results is a gain on the early extinguishment of debt of $45.4 million, or
$0.88 per share (basic and diluted). Included in the year ended
December 31, 2008 results is a loss on the early extinguishment of debt of $10.7
million, or $0.23 per share (basic and diluted), and restructuring charges of
$78.7 million, or $1.66 per share (basic and diluted). Results are
reported on a consolidated basis and include our 90.6 percent ownership interest
in Cheniere Energy Partners, L.P. (“Cheniere Partners”).
Significant events during
the year ended December 31, 2009 include the following:
·
|
the
receipt of capacity reservation fee payments at Sabine Pass LNG from
Cheniere Marketing, LLC (“Cheniere Marketing”), our wholly owned
subsidiary, Total Gas & Power North America, Inc. (“Total”) and
Chevron U.S.A., Inc. (“Chevron”), which became effective in October 2008,
April 2009 and July 2009 from Cheniere Marketing, Total and Chevron,
respectively;
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·
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the
completion of construction and achievement of full operability of the
Sabine Pass LNG receiving terminal;
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·
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a
reduction of $120.4 million of our convertible
debt;
|
·
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the
receipt of limited partner distributions from Freeport LNG Development,
L.P.; and
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·
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the
purchase of LNG inventory held at the Sabine Pass LNG receiving terminal
and sale of natural gas by Cheniere
Marketing.
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Results
Cheniere
reported income from operations of $42.3 million and $23.5 million for the
fourth quarter and year ended December 31, 2009, respectively, compared to a
loss from operations of $63.2 million and $244.2 million for the corresponding
periods in 2008. Included in the year ended December 31, 2008 results
were restructuring costs of $78.7 million.
For the
fourth quarter and year ended December 31, 2009, total revenues increased $85.0
million and $174.0 million, respectively, as compared to the comparable 2008
periods. LNG receiving terminal revenues increased $66.8 million and
$170.1 million for the quarter and year ended December 31, 2009, as compared to
the comparable 2008 periods largely as a result of the commencement of capacity
payments under two third-party terminal use agreements (“TUAs”) that became
effective on April 1, 2009 and July 1, 2009. Marketing and trading
revenues for the fourth quarter of 2009 increased by $18.3 million compared to
fourth quarter of 2008 due to recovery of $14.2 million of inventory write-downs
recognized in the second and third quarters of 2009 and gains on derivative
instruments and physical natural gas sales. Marketing and trading
revenues for the year ended December 31, 2009 increased $5.2 million compared to
the same period in 2008 due to $8.6 million in derivative gains and $2.3 million
of net revenues from physical natural gas sales that were partially offset by a
$3.3 million inventory write-down.
LNG
receiving terminal and pipeline operating expenses increased $0.9 million and
$22.3 million, respectively, for the quarter and year ended December 31, 2009 as
compared to the comparable 2008 periods and depreciation, depletion and
amortization expense increased $3.6 million and $29.9 million, respectively, for
the fourth quarter and year ended December 31, 2009 from the comparable 2008
periods due to the placement into service of the Sabine Pass LNG receiving
terminal and the Creole Trail pipeline during the second half of
2008. General and administrative expenses decreased $25.6 million and
$56.8 million for the fourth quarter and year ended December 31, 2009 from the
comparable 2008 periods primarily due to the restructuring initiatives
implemented during 2008. General and administrative expenses included
non-cash compensation expenses of approximately $5.5 million and $18.2 million
for the fourth quarter and year ended December 31, 2009, and $28.5 million and
$52.2 million in the corresponding 2008 periods.
Interest
expense increased $9.6 million in the fourth quarter 2009 compared to the fourth
quarter 2008 and increased $96.2 million for the year ended December 31, 2009
compared to the corresponding 2008 period due to less interest subject to
capitalization related to decrease in construction for both periods and an
increase in the average debt balances outstanding for the year ended December
31, 2009 compared to 2008. Interest income decreased $2.3 million in
the fourth quarter 2009 compared to the fourth quarter 2008 and $18.9 million
for the year ended December 31, 2009 compared to the corresponding 2008 period
due to lower interest rates during 2009 and a decrease in the average cash
outstanding year over year.
Unrestricted
cash and cash equivalents held by Cheniere at December 31, 2009 were $88.4
million. In addition, working capital used in trading activities by
Cheniere Marketing for inventory and hedges was approximately $50
million.
Restricted
cash and cash equivalents at December 31, 2009 were $221.2 million of which
$213.7 million were held at Cheniere Partners and $7.5 million were held at
Cheniere. Restricted cash held by Cheniere Partners included approximately $82.4
million in a permanent debt service reserve and $13.7 million for one month of
interest as required by the Sabine Pass senior notes indenture, and $117.6
million for working capital and general purposes at Sabine Pass
LNG.
LNG Marketing and
Trading
During
2009, Cheniere Marketing began successfully trading in the LNG spot
market. It purchased, transported and unloaded LNG at the Sabine Pass
receiving terminal and subsequently sold natural gas into the U.S.
markets. Cheniere Marketing purchases LNG and enters into derivative
contracts to hedge the cash flows from the future sales of the LNG
inventory. Due to the nature of the hedging strategy, earnings are
recognized in operating results as physical sales occur, derivatives are settled
or the fair value of the derivatives change due to changes in natural gas
prices. In the interim, the LNG held in the storage tanks at the
Sabine Pass LNG receiving terminal is recorded at the lower of cost or market
based on the NYMEX natural gas index price for the last day of the period less
basis differentials.
Net
revenues for the year ended December 31, 2009 were $8.1
million. These results included $11.4 million of net earnings related
to physical sales of inventory and roll off of hedges offset by a $3.3 million
write-down of inventory due to the lower of cost or market adjustment made at
year end December 31, 2009. As of December 31, 2009, Cheniere
Marketing and Sabine Pass LNG had approximately 7,778,000 MMBtu of LNG inventory
and had entered into a total of approximately 7,465,000 MMBtu of natural gas
swaps through January 31, 2011 for which it will receive fixed prices of $4.90
to $7.15 per MMBtu.
Strategic
Outlook
Our
strategic focus is to safely manage and operate the Sabine Pass LNG receiving
terminal and Creole Trail pipeline, serve our customers and monetize the 2.0
Bcf/d regasification capacity we have reserved through Cheniere Marketing at the
Sabine Pass LNG receiving terminal. We also continue to develop our other
projects and consider investments in the energy business.
Our
strategy to monetize our TUA capacity includes entering into long-term TUAs with
third parties, developing a portfolio of long-term, short-term and spot LNG
purchase agreements and entering into business relationships for the domestic
marketing of natural gas that is imported by Cheniere Marketing into the Sabine
Pass LNG receiving terminal. Our strategy to improve our capital structure and
address maturities of our existing indebtedness may include entering into
long-term TUAs or LNG purchase and sales agreements that allow us to refinance
debt, issuing equity or other securities or selling assets.
Cheniere
Energy, Inc. is a Houston-based energy company primarily engaged in LNG related
businesses, and owns and operates the Sabine Pass LNG receiving terminal and
Creole Trail pipeline in Louisiana. Cheniere is pursuing related
business opportunities both upstream and downstream of the Sabine Pass LNG
receiving terminal. Cheniere is also the founder and holds a 30% limited partner
interest in another LNG receiving terminal. Additional information about
Cheniere Energy, Inc. may be found on its web site at www.cheniere.com.
For
additional information, please refer to the Cheniere Energy, Inc. Annual Report
on Form 10-K for the year ended December 31, 2009, filed with the Securities and
Exchange Commission.
This
press release contains certain statements that may include “forward-looking
statements” within the meanings of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements, other than
statements of historical facts, included herein are "forward-looking
statements." Included among "forward-looking statements" are, among other
things, (i) statements regarding Cheniere’s business strategy, plans and
objectives and (ii) statements expressing beliefs and expectations regarding the
development of Cheniere’s LNG receiving terminal and pipeline businesses.
Although Cheniere believes 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. Cheniere’s 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 Cheniere’s periodic reports that are
filed with and available from the Securities and Exchange Commission. You should
not place undue reliance on these forward-looking statements, which speak only
as of the date of this press release. Other than as required under the
securities laws, Cheniere does not assume a duty to update these forward-looking
statements.
(Financial
Table Follows)
Cheniere
Energy, Inc.
Selected
Financial Information
(in thousands) (1)
Three
Months Ended
December 31,
|
Year
Ended
December 31,
|
|||||||||||||||
2009
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2008
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2009
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2008
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|||||||||||||
(As adjusted) (2)
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(As adjusted) (2)
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|||||||||||||||
Revenues
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||||||||||||||||
LNG
receiving terminal revenues
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$ | 66,751 | $ | — | $ | 170,071 | $ | — | ||||||||
Oil
and gas sales
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496 | 549 | 2,866 | 4,215 | ||||||||||||
Marketing
and trading
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18,351 | 90 | 8,087 | 2,914 | ||||||||||||
Other
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3 | 13 | 102 | 15 | ||||||||||||
Total
revenues
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85,601 | 652 | 181,126 | 7,144 | ||||||||||||
Operating
costs and expenses
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||||||||||||||||
LNG
receiving terminal and pipeline development expenses
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100 | (248 | ) | 223 | 10,556 | |||||||||||
LNG
receiving terminal and pipeline operating expenses
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10,824 | 9,942 | 36,857 | 14,522 | ||||||||||||
Exploration
costs
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— | 30 | — | 128 | ||||||||||||
Oil
and gas production and exploration costs
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182 | 75 | 471 | 398 | ||||||||||||
Depreciation,
depletion and amortization
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15,103 | 11,510 | 54,229 | 24,346 | ||||||||||||
General
and administrative expenses
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17,054 | 42,702 | 65,830 | 122,678 | ||||||||||||
Restructuring
charges
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19 | (147 | ) | 20 | 78,704 | |||||||||||
Total
operating costs and expenses
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43,282 | 63,864 | 157,630 | 251,332 | ||||||||||||
Income
(loss) from operations
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42,319 | (63,212 | ) | 23,496 | (244,188 | ) | ||||||||||
Derivative
gain
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795 | 2,328 | 5,277 | 4,652 | ||||||||||||
Loss
from equity method investments
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— | — | — | (4,800 | ) | |||||||||||
Gain
(loss) on early extinguishment of debt
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— | 24 | 45,363 | (10,691 | ) | |||||||||||
Interest
expense, net
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(66,528 | ) | (56,887 | ) | (243,295 | ) | (147,136 | ) | ||||||||
Interest
income
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92 | 2,396 | 1,405 | 20,337 | ||||||||||||
Other
income (expense)
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(9 | ) | 193 | 99 | 90 | |||||||||||
Income
tax benefit
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— | — | — | — | ||||||||||||
Non-controlling
interest
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131 | 4,083 | 6,165 | 8,777 | ||||||||||||
Net
loss
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$ | (23,200 | ) | $ | (111,075 | ) | $ | (161,490 | ) | $ | (372,959 | ) | ||||
Net
loss per common share—basic and diluted
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$ | (0.44 | ) | $ | (2.32 | ) | $ | (3.13 | ) | $ | (7.87 | ) | ||||
Weighted
average number of common shares outstanding—basic and
diluted
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53,158 | 47,856 | 51,598 | 47,365 |
December
31,
2009
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December
31,
2008
(As adjusted) (2)
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|||||||
Cash
and cash equivalents
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$ | 88,372 | $ | 102,192 | ||||
Restricted
cash and cash equivalents
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138,309 | 301,550 | ||||||
LNG
inventory
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32,602 | — | ||||||
Other
current assets
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26,992 | 12,850 | ||||||
Non-current
restricted cash, cash equivalents and treasury securities
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82,892 | 159,312 | ||||||
Property,
plant and equipment, net
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2,216,855 | 2,170,158 | ||||||
Debt
issuance costs, net
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47,043 | 55,688 | ||||||
Goodwill
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76,819 | 76,844 | ||||||
Other
assets
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22,738 | 41,488 | ||||||
Total
assets
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$ | 2,732,622 | $ | 2,920,082 | ||||
Current
liabilities
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$ | 66,212 | $ | 66,133 | ||||
Long-term
debt, net of discount
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3,041,875 | 3,082,362 | ||||||
Deferred
revenue
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33,500 | 37,500 | ||||||
Other
liabilities
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23,162 | 8,141 | ||||||
Non-controlling
interest
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217,605 | 250,162 | ||||||
Stockholders’
(deficit) equity
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(649,732 | ) | (524,216 | ) | ||||
Total
liabilities and stockholders’ (deficit) equity
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$ | 2,732,622 | $ | 2,920,082 |
December
31, 2009
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Sabine
Pass
LNG, L.P.
|
Cheniere
Energy
Partners,
L.P.
|
Other
Cheniere Energy, Inc.
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Consolidated
Cheniere Energy,
Inc.
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||||||||||||
Cash
and cash equivalents
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$ | — | $ | — | $ | 88,372 | $ | 88,372 | ||||||||
Restricted
cash, cash equivalents
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213,538 | 130 | 7,533 | 221,201 | ||||||||||||
Total
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$ | 213,538 | $ | 130 | $ | 95,905 | $ | 309,573 |
(1)
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Please
refer to the Cheniere Energy, Inc. Annual Report on Form 10-K for the
period ended December 31, 2009, filed with the Securities and Exchange
Commission.
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(2)
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Effective
January 1, 2009, Cheniere adopted Financial Accounting Standards Board
Staff Position Accounting Principles Board No. 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion. As such, the Balance Sheet as of December 31, 2008
and Cheniere’s Consolidated Statements of Operations for the three months
and year ended December 31, 2008 have been adjusted to reflect this
adoption.
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CONTACTS:
Investors:
Christina Cavarretta, 713-375-5100
Media:
Diane Haggard, 713-375-5259