Press Releases

Cheniere Energy Partners, L.P. NYSE American: CQP

Cheniere Energy Partners Reports Second Quarter 2011 Results

HOUSTON, Aug. 5, 2011 /PRNewswire/ -- For the three and six months ended June 30, 2011, Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE Amex: CQP) reported a net loss of $6.9 million and $9.1 million, respectively, compared with net income of $58.4 million and $117.2 million for the same periods in 2010, respectively.  For the three and six months ended June 30, 2011, affiliate revenues decreased $57.3 million and $116.5 million, respectively, primarily as a result of the assignment of the terminal use agreement ("TUA") from Cheniere Marketing, LLC ("Cheniere Marketing") to Cheniere Energy Investments, LLC ("Cheniere Investments"), our wholly owned subsidiary, which required us to eliminate for consolidated reporting purposes the TUA revenues under this contract to Sabine Pass LNG, L.P. ("Sabine Pass"), our wholly owned subsidiary.  The assignment is not expected to have an impact on distributable cash flows available for common unitholders.      

Overview of Significant 2011 Events

  • In January 2011, Sabine Pass Liquefaction, LLC ("Sabine Liquefaction") and Sabine Pass, our wholly owned subsidiaries, submitted an application to the FERC requesting authorization to site, construct and operate liquefaction and export facilities at the Sabine Pass LNG terminal; and
  • In May 2011, Sabine Liquefaction received an order from the U.S. Department of Energy ("DOE") with authorization to export domestically produced natural gas from the Sabine Pass LNG terminal as LNG to any country that has, or in the future develops, the capacity to import LNG and with which trade is permissible.

2011 Results

Cheniere Partners reported income from operations of $36.9 million and $78.1 million for the three and six months ended June 30, 2011, compared to income from operations of $102.0 million and $203.7 million for the comparable periods in 2010.

Total revenues for the three and six months ended June 30, 2011, were $73.6 million and $148.1 million, respectively, compared to total revenues of $129.8 million and $260.5 million for the comparable periods in 2010. Revenues primarily include capacity payments received from customers in accordance with their TUAs and incremental revenues from tug services and re-export fees.  Revenues from affiliates for the three and six months ended June 30, 2011, decreased by $57.3 million and $116.5 million, respectively, when compared to the comparable periods in 2010 due to the assignment of Cheniere Marketing's TUA to Cheniere Investments, partially offset by revenues from the variable capacity rights agreement ("VCRA") with Cheniere Marketing.

Total operating costs and expenses for the three and six months ended June 30, 2011, were $36.7 million and $70.0 million, respectively, compared to $27.8 million and $56.8 million for the comparable periods in 2010. Development expense (including affiliate) increased $11.3 million and $18.5 million for the three and six months ended June 30, 2011, respectively,  compared to the comparable periods in 2010, primarily due to expenses related to the proposed liquefaction project.  Operating and maintenance expenses (including affiliate) decreased $1.9 million and $4.7 million for the three and six months ended June 30, 2011, respectively, compared to the comparable periods in 2010, primarily due to decreased fuel costs as a result of efficiencies in our LNG inventory management.  

Liquefaction Project

We continue to make progress on our project to add liquefaction services at the Sabine Pass LNG terminal.  The project is being designed and permitted for up to four LNG trains, each with a nominal production capacity of approximately 4.0 mtpa.  We anticipate LNG export from the Sabine Pass LNG terminal could commence as early as 2015, and may be constructed in phases, with each LNG train commencing operations approximately six to nine months after the previous LNG train.

We intend for Sabine Liquefaction to enter into long-term contracts for at least 3.5 mtpa (approximately 0.5 Bcf/d) per LNG train, before reaching a final investment decision regarding the development of the LNG trains.  We are in the process of negotiating definitive agreements with a number of potential customers.

We will contemplate making a final investment decision to commence construction of the liquefaction project upon, among other things, entering into acceptable commercial arrangements, receiving regulatory authorization to construct and operate the liquefaction assets and obtaining adequate financing.

Summary Liquefaction Project Timeline

Milestone


Estimated Completion


Enter into definitive agreements


2H2011


EPC contract


2H2011


Financing commitments


2H2011


FERC construction authorization


2012


Commence construction


2012


Commence operations


2015





Distributions

For the quarters ended on and after June 30, 2010, Cheniere Partners paid the initial quarterly distribution of $0.425 to all common unitholders and 2% of the distributions to the general partner but did not make any distributions to the subordinated unitholders.  Cash available for distributions to the common unitholders and the general partner is supported by payments made by Total and Chevron for their capacity under their TUAs.  

The subordinated units will receive distributions only to the extent we have available cash above the minimum quarterly distributions required for our common unitholders and general partner along with certain reserves.  Such available cash could be generated through new business development or fees received from Cheniere Marketing under the VCRA whereby Cheniere Marketing will pay Cheniere Investments 80% of the gross margin for each cargo it delivers to the Sabine Pass LNG terminal.  

2011 Distributions

Cheniere Partners estimates that its annualized distribution to common unitholders for fiscal year 2011 will be $1.70 per unit.  Cheniere Partners will pay a cash distribution per common unit of $0.425 to unitholders of record as of August 1, 2011, and the related general partner distribution on August 12, 2011.

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.  Cheniere Partners is developing a project to add liquefaction and export capabilities to the existing infrastructure at the Sabine Pass LNG terminal.  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


Six Months Ended


June 30,


June 30,


2011 (2)


2010 (2)


2011 (2)


2010 (2)

Revenues








Revenues

$

67,177



$

66,004



$

136,845



$

132,831


Revenues—affiliate

6,432



63,760



11,213



127,711


Total revenues

73,609



129,764



148,058



260,542










Expenses








Operating and maintenance expense

3,904



6,168



9,590



14,242


Operating and maintenance expense—affiliate

3,519



3,085



6,111



6,150


Depreciation expense

10,743



10,561



21,480



21,124


Development expense

11,163



407



17,780



613


Development expense—affiliate

958



365



1,823



485


General and administrative expense

1,430



2,059



3,201



3,799


General and administrative expense—affiliate

4,960



5,142



10,015



10,415


Total expenses

36,677



27,787



70,000



56,828


Income from operations

36,932



101,977



78,058



203,714










Other income (expense)








Interest expense, net

(43,399)



(43,648)



(86,796)



(87,125)


Derivative gain (loss), net

(448)



(44)



(448)



461


Other

47



86



108



145


Total other expense

(43,800)



(43,606)



(87,136)



(86,519)


Net income (loss)

$

(6,868)



$

58,371



$

(9,078)



$

117,195










Basic and diluted net income per common unit

$

0.32



$

0.43



$

0.66



$

0.85










Basic and diluted net income (loss) per subordinated unit

$

(0.11)



$

0.34



$

(0.20)



$

0.68










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

26,754



26,416



26,592



26,416


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

135,384



135,384



135,384



135,384







As of June 30,


As of December 31,


2011 (3)


2010 (3)

Cash and cash equivalents

$

55,327



$

53,349


Restricted cash and cash equivalents

13,732



13,732


LNG Inventory

437



1,212


Other current assets (4)

8,657



10,360


Non-current restricted cash and cash equivalents

82,394



82,394


Property, plant and equipment, net

1,533,799



1,550,465


Debt issuance costs, net

19,831



22,004


Other assets

12,468



9,976


Total assets

$

1,726,645



$

1,743,492






Current liabilities (4)

$

55,444



$

52,134


Long-term debt, net of discount

2,190,071



2,187,724


Deferred revenue, including affiliate

39,766



39,313


Other liabilities (4)

322



329


Total partners' deficit

(558,958)



(536,008)


Total liabilities and partners' deficit

$

1,726,645



$

1,743,492






(1)

Please refer to Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the period ended June 30, 2011, filed with the Securities and Exchange Commission.

(2)

Consolidated operating results of Cheniere Energy Partners, L.P. and its consolidated subsidiaries for the three and six months ended June 30, 2011 and 2010.

(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.