Cheniere Energy Inc (LNG) filed Quarterly Report for the period ended 2009-09-30.
CHENIERE ENERGY is engaged in exploration for oil and gas reserves. They are currently involved in a joint exploration program which is engaged in the exploration for oil and natural gas along the Gulf Coast of Louisiana onshore and in the shallow waters of the Gulf of Mexico. Their exploration program combines the use of regional seismic data in shallow water areas of the Gulf of Mexico advanced analytical technologies a methodology that integrates geoscience and engineering disciplines and a core of experienced staff. Cheniere Energy Inc has a market cap of $123.8 million; its shares were traded at around $2.19 with and P/S ratio of 17.3. Cheniere Energy Inc had an annual average earning growth of 81.6% over the past 5 years.
Highlight of Business Operations:
Although results are consolidated for financial reporting, we and Cheniere Energy Partners, L.P. (“Cheniere Partners”) operate with independent capital structures. As such, cash flow available to us from Cheniere Partners is primarily in the form of cash distributions declared and paid to us on our limited and general partner interests and management fees. We received cash distributions and management fees from Cheniere Partners of $198.5 million in the nine months ended September 30, 2009 and $14.6 million for the same period of 2008. These cash distributions from Cheniere Partners were primarily used by Cheniere Marketing, LLC (“Cheniere Marketing”), our wholly owned subsidiary, to make its TUA payments to Sabine Pass LNG, L.P. (“Sabine Pass LNG”) and to fund operations.
As of September 30, 2009, we had unrestricted cash and cash equivalents of $87.4 million. In addition, we had restricted cash and cash equivalents of $266.2 million, which were designated for the following purposes: $121.4 million for Sabine Pass LNG s working capital; $137.3 million for interest payments related to the Senior Notes described below; and $7.5 million for other restricted purposes.
For each calendar year, Cheniere Partners is expected to make annual distributions of $1.70 per unit on all outstanding common units, subordinated units and general partner units. We anticipate receiving $18.5 million per year out of the total $44.9 million of annual common unit distributions. We anticipate receiving $235.8 million per year from distributions on the subordinated and general partner units, of which we own 100%.
Cheniere Partners relies on the receipt of operating revenues from Sabine Pass LNG s TUAs to fund quarterly cash distributions to us and other unitholders. Sabine Pass LNG is not permitted under the Sabine Pass Indenture to make cash distributions to Cheniere Partners if it does not satisfy a fixed charge coverage ratio test of 2:1, calculated as required in the Sabine Pass Indenture, as well as other conditions. If the coverage test is not met, we may not receive distributions. The fixed charge coverage ratio test was met for the periods through September 30, 2009 and distributions in the amount of $222.5 million have been made during the first nine months of 2009, from Sabine Pass LNG to Cheniere Partners. Cheniere Partners utilized the cash received from Sabine Pass LNG to pay expenses and make distributions. Cheniere Partners has made distributions of $210.5 million in the aggregate to us and its other unitholders during the first nine months of 2009.
For the nine months ended September 30, 2009, Cheniere Marketing had a $17.0 million loss as a result of LCM adjustments to its LNG inventory. This loss was offset by $6.9 million in gains from regasified LNG sales, derivative settlements, and changes in fair value of our derivatives. The reasons for the LCM losses being greater than the sales and derivative earnings are that the prompt month prices used to adjust LNG inventory value declined more than the derivative contract month prices used to determine fair value of the derivatives; in addition, Cheniere Marketing did not sell the majority of its LNG inventory as of September 30, 2009.
In November 2006, Sabine Pass LNG issued an aggregate principal amount of $2,032.0 million of Senior Secured Notes consisting of $550.0 million of 7¼% Senior Secured Notes due 2013 (the “2013 Notes”) and $1,482.0 million of 7½% Senior Secured Notes due 2016 (the “2016 Notes” and collectively with the 2013 Notes, the “Senior Notes”). In September 2008, Sabine Pass LNG issued an additional $183.5 million, before discount, of 2016 Notes whose terms were identical to the previously outstanding 2016 Notes. The net proceeds from the additional issuance of the 2016 Notes were $145.0 million. Under the indenture governing the Senior Notes, a portion of the proceeds from the Senior Notes is required to be used for scheduled interest payments and to fund the cost to complete construction of the Sabine Pass LNG receiving terminal. Due to these restrictions imposed by the indenture, the proceeds are not presented as cash and cash equivalents, and therefore, when proceeds from the Senior Notes are used they are presented as a source of cash and cash equivalents. For the nine months ended September 30, 2009, the $219.7 million use of restricted cash and cash equivalents was the result of obtaining access to use the restricted cash and cash equivalents in the TUA reserve account and using restricted cash and cash equivalents to pay for scheduled interest payments and construction activities at the Sabine Pass LNG receiving terminal. For the nine months ended September 30, 2008, the $391.4 million of restricted cash and ca
LNG is in the portfolios of John Paulson of Paulson & Co..
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