Cheniere announces quarterly loss

Cheniere Energy Inc. has reported a net loss attributable to common stockholders of US$ 97.8 million for the three months ended 31 March compared to a net loss attributable to common stockholders of US$ 117.1 million for the comparable 2013 period.

These results include significant items for the three months ended 31 March 2014 of US$ 46.8 million compared to US$ 34.6 million for the comparable 2013 period. The significant items related to LNG terminal development expenses and derivative losses. LNG terminal development expenses were primarily for the liquefaction facilities being developed near Corpus Christi, Texas and for the liquefaction facilities Cheniere Energy Partners, L.P. is developing through Sabine Pass Liquefaction LLC at the Sabine Pass LNG terminal adjacent to the existing regasification facilities.

Recent events

In April 2014, Corpus Christi Liquefaction LLC entered into two sale and purchase agreements (SPAs) with Endesa S.A. under which Endesa has agreed to purchase a total of 117.3 million million Btu of LNG per year (approximately 2.25 million tpa upon the commencement of operations of Train 1 of the Corpus Christi Liquefaction Project.

In the same month, Sabine Pass Liquefaction entered into a US$ 325 million senior letter of credit and reimbursement agreement that it intends to use for the issuance of letters of credit on behalf of Sabine Pass Liquefaction for certain working capital requirements related to the Sabine Pass Liquefaction Project.

Liquefaction projects update

Sabine Pass Liquefaction Project

Through Cheniere Partners, the company is developing up to six natural gas liquefaction trains, each with an expected nominal production capacity of approximately 4.5 million tpy at the Sabine Pass LNG terminal adjacent to the existing regasification facilities. Cheniere Partners has received Federal Energy Regulatory Commission (FERC) and Department of Energy (DOE) approvals for Trains 1 through 4, and it has filed all required regulatory applications with the FERC and DOE to develop Trains 5 and 6.

The trains are in various stages of development:

Construction on Trains 1 and 2 began in August 2012, and as of 31 March 31 2014, the overall project for Trains 1 and 2 was approximately 63% complete, which is ahead of the contractual schedule. Based on our current construction schedule, the company anticipates that Train 1 will produce LNG as early as late 2015.

Construction on Trains 3 and 4 began in May 2013, and as of 31 March 2014 the overall project for Trains 3 and 4 was approximately 27% complete, which is ahead of the contractual schedule. To date, soil stabilisation has been completed and pile driving, the next critical path item, is underway. The company expects Trains 3 and 4 to become operational in late 2016 and 2017, respectively.

The company continues to make progress with the development of Trains 5 and 6. To date, it has completed two LNG SPAs for approximately 3.75 million tpa in aggregate of LNG volumes that commence with the date of first commercial delivery for Train 5. In September 2013, the company filed a complete application with the FERC. It has received authorisations from the DOE to export 503 billion ft³ of LNG volumes from Trains 5 and 6 to FTA) countries. Non-FTA authorisation is pending.

Corpus Christi Liquefaction Project

Cheniere Energy continues to make progress on the commercialisation and development of the Corpus Christi Liquefaction Project, which is being designed for up to three Trains with expected aggregate nominal production capacity of approximately 13.5 million tpy of LNG.

In February 2014, the company received a scheduling notice from the FERC under which the FERC has scheduled the issuance of the FERC staff's final Environmental Impact Statement (FEIS) for no later than 8 October 2014. In addition, this notice from the FERC alerted all other agencies issuing federal authorisations of the requirement to complete all necessary reviews and to reach a final decision on the request for a federal authorisation within 90 days following issuance of the FEIS or no later than 6 January 2015.

Cheniere Energy has received authorisation from the DOE to export up to 767 billion ft³/year of domestically produced LNG to FTA countries from the Corpus Christi Liquefaction Project. Authorisation to export LNG to non-FTA countries is pending.

The company announced that it will contemplate making a final investment decision to commence construction of the Corpus Christi Liquefaction Project based upon, among other things, entering into acceptable commercial arrangements, receiving all regulatory approvals and obtaining financing.

Quarter results

Cheniere has reported loss from operations of US$ 47.6 million for the quarter ended 31 March 2014,, as compared to US$ 67.5 million during the three months ended 31 March 2013. The US$ 19.9 million decrease in net operating loss was primarily a result of decreased general and administrative expenses and decreased LNG terminal development expenses.

LNG terminal development expense decreased US$ 5 million in the three months compared to the same period last year, and were primarily related to the development of the Corpus Christi Liquefaction Project being.

Adapted from press release by Callum O'Reilly

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