Cheniere Energy Partners Reports First Quarter 2012 Results

HOUSTON, May 4, 2012 /PRNewswire/ -- For the quarter ended March 31, 2012, Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE Amex: CQP) reported a net loss of $19.3 million compared with a net loss of $2.2 million for the same period in 2011.  Results include development expenses for the Sabine Pass Liquefaction Project ("Liquefaction Project") of $17.9 million for the quarter ended March 31, 2012 and $7.5 million for the comparable 2011 period.

Overview of Significant 2012 Events

  • In January 2012, Sabine Pass Liquefaction, LLC ("Sabine Pass Liquefaction"), a wholly owned subsidiary of Cheniere Partners, entered into an amended and restated LNG Sale and Purchase Agreement ("SPA") with BG Gulf Coast LNG, LLC ("BG"), a subsidiary of BG Group plc, under which BG has agreed to purchase an additional 2.0 million tonnes per annum ("mtpa") of LNG, bringing BG's total annual contract quantity to 5.5 mtpa of LNG.  BG will purchase 3.5 mtpa of LNG with the commencement of train one operations and will purchase a portion of the additional 2.0 mtpa of LNG as each of trains two, three and four commences operations.
  • In January 2012, Sabine Pass Liquefaction entered into an SPA with Korea Gas Corporation ("KOGAS"), under which KOGAS agreed to purchase 182.5 million MMBtu of LNG per year (approximately 3.5 mtpa).
  • In February 2012, we entered into discussions with Blackstone Energy Partners L.P., Blackstone Capital Partners VI L.P., and certain affiliates (collectively, "Blackstone"), whereby Blackstone would fund an equity portion of the financing to develop, construct and place into service the Liquefaction Project.
  • In April 2012, Sabine Pass Liquefaction and Sabine Pass LNG  received authorization under Section 3 of the Natural Gas Act (the "Order") from the Federal Energy Regulatory Commission ("FERC") to site, construct and operate facilities for the liquefaction and export of domestically produced natural gas at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana.  The Order authorizes the development of up to four modular LNG trains.
  • In April 2012, we engaged eight financial institutions to act as Joint Lead Arrangers to assist in the structuring and arranging of up to $4 billion of debt facilities. The proceeds will be used to pay for costs of development and construction of the Liquefaction Project, to fund the acquisition of the Creole Trail Pipeline from Cheniere and for general business purposes.

Q1 2012 Results
Cheniere Partners reported income from operations of $24.9 million for the quarter ended March 31, 2012, compared to income from operations of $41.1 million for the comparable 2011 period. The decrease in income from operations of $16.2 million quarter over quarter was primarily due to an increase in development expenses of $10.4 million and a decrease in revenues of $5.1 million.  Development expenses include costs incurred to develop the Liquefaction Project. 

Liquefaction Project
We continue to make progress on the Liquefaction Project, which is being developed for up to four liquefaction trains, each with a nominal production capability of approximately 4.5 mtpa. We anticipate LNG exports from the Sabine Pass LNG terminal could commence as early as 2015, with each liquefaction train commencing operations approximately six to nine months after the previous train.

We are advancing towards commencing construction on the first two liquefaction trains.  The Liquefaction Project recently received approval from the FERC.  One of the last steps needed to proceed with construction is to obtain financing.  We expect to fund the first two liquefaction trains with a combination of debt and equity and are actively pursuing financing for the first two liquefaction trains.  Construction of the first two liquefaction trains is expected to commence in the first half of 2012.

Commencement of construction for LNG trains three and four is subject, but not limited to, entering into an engineering procurement and construction agreement, obtaining financing and reaching a positive final investment decision. We have engaged Bechtel Oil, Gas and Chemicals, Inc. to complete front-end engineering and design work and to negotiate a lump sum turnkey contract.  Construction for liquefaction trains three and four is targeted to begin early 2013.

Summary Project Timeline




Target Date


Milestone


Trains 1 & 2


Trains 3 & 4


DOE export authorization


Received


Received


Definitive commercial agreements


Completed 7.7 mtpa


Completed 8.3 mtpa


- 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


EPC Contract


Complete


4Q12


Financing commitments




1Q13


- Equity


1H12




- Debt


1H12




FERC authorization


Received


Received


- Certificate to commence construction


1H12


2013


Commence construction


1H12


2013


Commence operations


2015/2016


2017/2018

2012 Distributions
We estimate that the annualized distribution to common unitholders for fiscal year 2012 will be $1.70 per unit.  We will pay a cash distribution per common unit of $0.425 to unitholders of record as of May 1, 2012, and the related general partner distribution on May 15, 2012. 

Cheniere Partners owns 100 percent of the Sabine Pass LNG terminal located in western Cameron Parish, Louisiana on the Sabine Pass Channel. The terminal has sendout capacity of 4.0 Bcf/d and storage capacity of 16.9 Bcfe.  Additional information about Cheniere Partners may be found on its website:  www.cheniereenergypartners.com.

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 Partners' business strategy, plans and objectives and (ii) statements expressing beliefs and expectations regarding the development of Cheniere Partners' LNG terminal business and liquefaction project. 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)




Three Months Ended

March 31,


2012 (2)


2011 (2)

Revenues




Revenues

$

66,958


$

69,668

Revenues—affiliate


2,365


4,782

Total revenues

$

69,323


$

74,450





Expenses




Operating and maintenance expense

6,112


5,685

Operating and maintenance expense—affiliate

2,998


2,592

Depreciation expense

10,629


10,737

Development expense

16,669


6,617

Development expense—affiliate

1,231


865

General and administrative expense

1,681


1,771

General and administrative expense—affiliate

5,112


5,056

Total expenses

44,432


33,323

Income from operations

24,891


41,127





Interest expense, net (4)

(43,458)


(43,397)

Other

71


61

Derivative loss

(836)


Net loss

$

(19,332)


$

(2,209)





Basic and diluted net income per common unit

$

0.23


$

0.35





Weighted average number of common units outstanding used for basic and diluted

 net income per unit calculation:

31,017


26,429










As of March 31,


As of December 31,


2012 (3)


2011 (3)

Cash and cash equivalents

$

59,444


$

81,415

Restricted cash and cash equivalents

54,929


13,732

LNG Inventory

536


473

Other current assets (4)

20,909


13,890

Non-current restricted cash and cash equivalents

82,394


82,394

Property, plant and equipment, net

1,504,813


1,514,416

Debt issuance costs, net

16,530


17,622

Other assets

22,787


13,358

Total assets

$

1,762,342


$

1,737,300





Current liabilities (4)

$

104,110


$

51,818

Long-term debt, net of discount

2,193,592


2,192,418

Deferred revenue, including affiliate

39,220


37,766

Other liabilities (4)

313


317

Total partners' deficit

(574,893)


(545,019)

Total liabilities and partners' deficit

$

1,762,342


$

1,737,300



(1)

Please refer to Cheniere Energy Partners, L.P. Annual Report on Form 10-Q for the period ended March 31, 2012, filed with the Securities and Exchange Commission.

(2)

Consolidated operating results of Cheniere Energy Partners, L.P. and its consolidated subsidiaries for the three months ended March 31, 2012 and 2011.

(3)

Consolidated balance sheets of Cheniere Energy Partners, L.P. and its consolidated subsidiaries.

(4)

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

SOURCE Cheniere Energy Partners, L.P.