Cheniere Energy Partners, L.P. Reports Third Quarter 2014 Results

HOUSTON, Oct. 30, 2014 /PRNewswire/ -- Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE MKT: CQP) reported a net loss of $43.2 million and $339.2 million for the three and nine months ended September 30, 2014, compared to a net loss of $98.1 million and $196.9 million for the same periods in 2013, respectively. 

Significant items for the three and nine months ended September 30, 2014 were a gain of $3.9 million and a loss of $213.0 million, respectively, compared to losses of $23.8 million and $34.2 million for the comparable 2013 periods, respectively. Significant items for the three and nine months ended September 30, 2014 related to development expenses primarily for the liquefaction facilities we are developing through Sabine Pass Liquefaction, LLC ("Sabine Pass Liquefaction") at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the "Liquefaction Project"), loss on early extinguishment of debt related to the write-off of debt issuance costs in connection with the early extinguishment in May 2014 of $2.1 billion of the four credit facilities entered into by Sabine Pass Liquefaction in 2013, as compared to the write-off of debt issuance costs in connection with the early extinguishment in April 2013 of $1.4 billion of Sabine Pass Liquefaction's 2012 construction/term loan facility, and derivative (gain) loss due primarily to changes in long-term LIBOR during the respective periods.

General and administrative expense (including affiliate) decreased by $18.1 million and $25.9 million for the three and nine months ended September 30, 2014, compared to the corresponding 2013 periods, respectively, primarily due to costs incurred under certain management service agreements with wholly owned subsidiaries of Cheniere Energy, Inc. ("Cheniere").  Sabine Pass Liquefaction and Cheniere Creole Trail Pipeline, L.P. are required to pay monthly fees to an affiliate of Cheniere based upon the capital expenditures incurred in the previous month for construction of the first four natural gas liquefaction trains ("Trains") at the Liquefaction Project, and construction of certain modifications to the Creole Trail Pipeline, which interconnects the Sabine Pass LNG terminal with a number of large interstate pipelines.

Recent Significant Event

  • In August 2014, Sabine Pass Liquefaction and Cheniere Marketing, LLC ("Cheniere Marketing"), a wholly owned subsidiary of Cheniere, entered into an amended and restated Sale and Purchase Agreement ("SPA") pursuant to which Cheniere Marketing may purchase, at its option, any liquefied natural gas ("LNG") produced by Sabine Pass Liquefaction in excess of that required for other customers.

Liquefaction Project Update

We continue to make progress on the Liquefaction Project, which is being developed for up to six Trains, each with an expected nominal production capacity of approximately 4.5 mtpa.

The Trains are in various stages of development.

  • Construction on Trains 1 and 2 began in August 2012, and as of September 30, 2014, the overall project for Trains 1 and 2 was approximately 76% complete, which is ahead of the contractual schedule. Based on our current construction schedule, we anticipate that Train 1 will produce LNG as early as late 2015.
  • Construction on Trains 3 and 4 began in May 2013, and as of September 30, 2014, the overall project for Trains 3 and 4 was approximately 43% complete, which is ahead of the contractual schedule. We expect Trains 3 and 4 to become operational in late 2016 and 2017, respectively.
  • Trains 5 and 6 are under development. We have entered into SPAs for approximately 3.75 mtpa in aggregate that commence with the date of first commercial delivery for Train 5. We have received authorizations from the U.S. Department of Energy ("DOE") to export 503 Bcf per year of LNG volumes from Trains 5 and 6 to free trade agreement ("FTA") countries. Authorization to export LNG to non-FTA countries is pending. Federal Energy Regulatory Commission ("FERC") authorization is also pending. We will contemplate making a final investment decision to commence construction on Trains 5 and 6 based upon, among other things, entering into acceptable commercial arrangements, receiving all regulatory approvals and obtaining financing.

Liquefaction Project Timeline



Target Date

Milestone


Trains

1 & 2


Trains

3 & 4


Trains

5 & 6

DOE export authorization


Received


Received


Received FTA

Pending Non-FTA

Definitive commercial agreements


Completed 7.7 mtpa


Completed 8.3 mtpa


T5: Completed

T6: 2014/2015

- BG Gulf Coast LNG, LLC


4.2 mtpa


1.3 mtpa



- Gas Natural Fenosa


3.5 mtpa





- KOGAS




3.5 mtpa



- GAIL (India) Ltd.




3.5 mtpa



- Total Gas & Power N.A.






2.0 mtpa

- Centrica plc






1.75 mtpa

EPC contract


Completed


Completed


2014/2015

Financing






2015

- Equity


Completed


Completed



- Debt commitments


Received


 Received



FERC authorization







- FERC Order


Received


Received


2014/2015

- Certificate to commence construction


Received


Received



Issue Notice to Proceed


Completed


Completed


2015

Commence operations


2015/2016


2016/2017


2018/2019

 

Distributions to Unitholders

We estimate that the annualized distribution to common unitholders for fiscal year 2014 will be $1.70 per unit.

We will pay a cash distribution per common unit of $0.425 to unitholders of record as of November 3, 2014, and the related general partner distribution on November 14, 2014.

Cheniere Partners owns 100 percent of the Sabine Pass LNG terminal located on the Sabine Pass deep water shipping channel less than four miles from the Gulf Coast. The Sabine Pass LNG terminal includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 billion cubic feet equivalent (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.

Cheniere Partners is developing natural gas liquefaction facilities at the Sabine Pass LNG terminal adjacent to the existing regasification facilities. Cheniere Partners plans to construct over time up to six natural gas Trains, which are in various stages of development. Each Train is expected to have a nominal production capacity of approximately 4.5 mtpa. The overall project completion of Trains 1 and 2 is approximately 76% as of September 30, 2014. The overall project completion of Trains 3 and 4 is approximately 43% as of September 30, 2014. Sabine Pass Liquefaction recently began the development of Trains 5 and 6 and commenced the regulatory process in February 2013. Sabine Pass Liquefaction has entered into six third-party LNG SPAs that in the aggregate equate to 19.75 mtpa and commence with the date of first commercial delivery of Trains 1 through 5 as specified in the respective SPAs. Cheniere Partners has placed documentation pertaining to the Liquefaction Project, including the applications and supporting studies, on its website located at http://www.cheniere.com.

For additional information, please refer to the Cheniere Energy Partners, L.P. website at www.cheniere.com and Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the Securities and Exchange Commission.

This press release contains certain statements that may include "forward-looking statements." 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 Partners' business strategy, plans and objectives, including the construction and operation of liquefaction facilities, (ii) statements regarding expectations regarding regulatory authorizations and approvals, (iii) statements expressing beliefs and expectations regarding the development of Cheniere Partners' LNG terminal and liquefaction business, (iv) statements regarding the business operations and prospects of third parties, (v) statements regarding potential financing arrangements, and (vi) statements regarding future discussions and entry into contracts. Although Cheniere Partners 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 Partners' 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 Partners' 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 Partners does not assume a duty to update these forward-looking statements.

(Financial Table Follows)

Cheniere Energy Partners, L.P.

Selected Financial Information

(in thousands, except per unit data) (1)

(unaudited)



Three Months Ended


Nine Months Ended


September 30,


September 30,


2014


2013


2014


2013

Revenues








Revenues

$

66,890


$

66,646


$

199,933


$

199,052

Revenues—affiliate

700


800


2,206


2,140

Total revenues

67,590


67,446


202,139


201,192









Operating costs and expenses








Operating and maintenance expense

21,235


23,553


54,686


52,751

Operating and maintenance expense—affiliate

5,016


6,314


14,307


23,534

Depreciation expense

14,781


14,491


43,821


43,150

Development expense

1,383


1,355


8,671


8,157

Development expense—affiliate

329


133


723


1,195

General and administrative expense

2,448


2,718


10,048


8,521

General and administrative expense—affiliate

24,454


42,239


74,579


101,998

Total operating costs and expenses

69,646


90,803


206,835


239,306









Loss from operations

(2,056)


(23,357)


(4,696)


(38,114)









Other income (expense)








Interest expense, net

(46,884)


(52,528)


(130,943)


(134,806)

Loss on early extinguishment of debt



(114,335)


(80,510)

Derivative gain (loss), net

5,573


(22,335)


(89,286)


55,706

Other income

127


111


63


873

Total other expense

(41,184)


(74,752)


(334,501)


(158,737)









Net loss

$

(43,240)


$

(98,109)


$

(339,197)


$

(196,851)









Net income (loss) attributable to the Creole Trail Pipeline Business


244



(18,150)

Net loss attributable to partners

$

(43,240)


$

(98,353)


$

(339,197)


$

(178,701)









Basic and diluted net income (loss) per common unit

$

0.08


$

(0.20)


$

(0.83)


$

(0.01)









Weighted average number of common units outstanding used for basic and diluted net income (loss) per common unit calculation

57,079


57,079


57,079


53,277

 


September 30, 2014


December 31, 2013

Cash and cash equivalents

$

252,648


$

351,032

Restricted cash and cash equivalents

393,276


227,652

Accounts receivable

19,669


40

LNG inventory

13,239


10,430

Other current assets (2)

24,128


23,974

Non-current restricted cash and cash equivalents

1,132,759


1,025,056

Property, plant and equipment, net

8,463,022


6,383,939

Debt issuance costs, net

251,101


313,944

Non-current derivative assets

32,161


98,123

Other assets

91,139


82,593

Total assets

$

10,673,142


$

8,516,783





Current liabilities (2)

408,337


265,887

Long-term debt, net

8,989,760


6,576,273

Deferred revenue

14,500


17,500

Other liabilities (2)

34,234


17,379

Total partners' capital

1,226,311


1,639,744

Total liabilities and partners' capital

$

10,673,142


$

8,516,783

_______________________

(1)

Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the Securities and Exchange Commission.

(2)

Amounts include transactions between Cheniere Energy Partners, L.P. and Cheniere Energy, Inc. or subsidiaries of Cheniere Energy, Inc.

 

SOURCE Cheniere Energy Partners, L.P.