Cheniere Energy Inc. reported a net loss attributable to common stockholders of US$ 100.8 million, or US$ 0.46 per share (basic and diluted), for the three months ended September 30, 2013, compared to a net loss attributable to common stockholders of US$ 109.0 million, or US$ 0.52 per share (basic and diluted), for the comparable 2012 period.
Significant items for the quarter related to liquefied natural gas (LNG) terminal development expenses and derivative gains/losses, and for the nine months ended September 30, 2013.
Significant items also included loss on early extinguishment of debt. LNG terminal development expenses were primarily for the liquefaction facilities Cheniere Energy Partners, L.P. (Cheniere Partners) is developing through Sabine Pass Liquefaction, LLC at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the Sabine Pass Liquefaction Project) and the proposed liquefaction facilities being developed by the company near Corpus Christi, Texas (the Corpus Christi Liquefaction Project).
Derivative gains/losses were primarily the result of the change in fair value of Sabine Pass Liquefaction's interest rate derivatives to hedge the exposure to volatility in a portion of the floating-rate interest payments under the four credit facilities. Loss on early extinguishment of debt was related to Sabine Pass Liquefaction amending and replacing its US$ 3.6 billion credit facility with four credit facilities aggregating US$ 5.9 billion in May 2013.
Results are reported on a consolidated basis and include the company’s ownership interest in Cheniere Partners, which was 57.9% as of September 30, 2013.
Sabine Pass Liquefaction Project
Cheniere Partners is developing up to six natural gas liquefaction trains (Trains), each with a design production capacity of approximately 4.5 million tpa, at the Sabine Pass LNG terminal adjacent to the existing regasification facilities. Cheniere has received Federal Energy Regulatory Commission (FERC) and Department of Energy (DOE) approvals for Trains 1 through 4, and they have 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 September 30, 2013, the overall project for Trains 1 and 2 was approximately 45% complete, which is ahead of the contracted schedule. Based on our current construction, we anticipate that Train 1 will produce LNG by late 2015.
Construction on Trains 3 and 4 began in May 2013, and as of September 30, 2013, the overall project for Trains 3 and 4 was approximately 10% complete. To date, soil stabilisation has been completed and pile driving, the next critical path item, is underway. Trains 3 and 4 are expected to become operational in late 2016 and 2017, respectively.
The company continues to make progress with the commercialisation and development of Trains 5 and 6. To date, it has completed two LNG sale and purchase agreements (SPAs) for approximately 3.75 million tpa, in aggregate, of LNG volumes that will commence with the start of Train 5 operations. Annual fixed fee revenues associated with these SPAs are approximately US$ 0.6 billion. Bechtel has begun the front-end engineering design (FEED) on Trains 5 and 6, and Cheniere has commenced the regulatory approval process.
In September 2013, Cheniere filed the complete application with the FERC. In February 2013 and in April 2013, the company filed Free Trade Agreement (FTA) and non-FTA export applications for LNG volumes under the SPAs withTotal Gas & Power North America, Inc. (Total) and Centrica plc (Centrica), respectively.
Also in September, the company filed FTA and non-FTA export applications for LNG volumes for the un-contracted volumes from Train 5 and for all volumes from Train 6. To date, Cheniere have received authorisation from the DOE to export LNG volumes to FTA countries under the Total SPA and Centrica SPA. FTA authorisation for the remaining volumes from Train 5 and all volumes from Train 6 as well as non-FTA authorisations for both Trains 5 and 6 are pending.
Corpus Christi Liquefaction Project
Cheniere is also continuing to make progress on the commercialisation and development of the Corpus Christi Liquefaction Project, which is being designed for up to three Trains with aggregate design production capacity of 13.5 million tpa of LNG.
To date, the Corpus Christi Liquefaction Project is one of the top three projects under review at the FERC, and is fifth on the DOE's Order of Precedence list, which lists the order in which the DOE will be processing non-FTA LNG export applications.
n August 2012, the company filed applications with the FERC for authorisation to site, construct and operate the Corpus Christi Liquefaction Project and with the DOE requesting multi-contract authorisation to export up to 767 billion ft3 per year of domestically produced LNG from the Corpus Christi Liquefaction Project to FTA and non-FTA countries. Authorisation has been received from the DOE for the company to export up to 767 billion ft3 per year of domestically produced LNG to FTA countries from the Corpus Christi Liquefaction Project.
In September 2013, Cheniere received the lump-sum turnkey contract price for the Corpus Christi Liquefaction Project from Bechtel, which has allowed the company to commence commercialisation of theCorpus Christi Liquefaction Project.
Cheniere will contemplate making a final investment (FID) decision to commence construction of the Corpus Christi Liquefaction Project based, among other things, upon entering into acceptable commercial arrangements, receiving all regulatory approvals and obtaining financing.
Adapted from press release by Ted Monroe
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