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Cheniere Energy, Inc. Reports First Quarter 2016 Results

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May 05, 2016
Cheniere Energy, Inc. Reports First Quarter 2016 Results
- First LNG commissioning cargo exported in February marking transition towards operations

HOUSTON, May 5, 2016 /PRNewswire/ -- Cheniere Energy, Inc. ("Cheniere") (NYSE MKT: LNG) reported a net loss attributable to common stockholders of $320.8 million, or $1.41 per share (basic and diluted), for the three months ended March 31, 2016, compared to a net loss attributable to common stockholders of $267.7 million, or $1.18 per share (basic and diluted), for the comparable 2015 period.

Significant items for the three months ended March 31, 2016 totaled a loss of $192.6 million, compared to a loss of $215.9 million for the comparable 2015 period. Significant items for the three months ended March 31, 2016 related to derivative loss primarily as a result of a decrease in the forward LIBOR curve over the period, impairment expense, and loss on early extinguishment of debt associated with the write-off of debt issuance costs by Cheniere Creole Trail Pipeline, L.P. ("CTPL") as a result of the prepayment of its outstanding term loan. Significant items for the three months ended March 31, 2015 related to derivative loss due primarily to contingent interest rate derivatives entered into and changes in long-term LIBOR during the period, loss on early extinguishment of debt related to the write-off of debt issuance costs by Sabine Pass Liquefaction, LLC in connection with the refinancing of a portion of its credit facilities, and impairment expense.

Included in general and administrative expense and marketing expense were non-cash compensation expenses of $10.5 million for the three months ended March 31, 2016, compared to $14.8 million for the comparable 2015 period.

Results are reported on a consolidated basis and include our ownership interest in Cheniere Energy Partners, L.P. ("Cheniere Partners") (NYSE MKT: CQP), which is based on our 100% ownership of the general partner of Cheniere Partners and 80.1% ownership interest in Cheniere Energy Partners LP Holdings, LLC (NYSE MKT: CQH) which owns a 55.9% limited partner interest in Cheniere Partners.

2016 Highlights

  • In February, the first commissioning cargo with LNG produced at the Sabine Pass Liquefaction Project (defined below) was successfully loaded and exported. A total of four LNG commissioning cargoes were loaded and exported during the three months ended March 31, 2016, and a total of seven LNG commissioning cargoes have been loaded and exported to date.
  • In February, Cheniere Partners closed on up to approximately $2.8 billion of senior secured credit facilities (the "CQP Credit Facilities"). The four-year credit facilities consist of a $450 million CTPL tranche term loan, an approximately $2.1 billionSabine Pass LNG, L.P. ("SPLNG") tranche term loan, a $125 million debt service reserve credit facility, and a $115 million revolving credit facility. The CTPL tranche term loan was used to prepay the $400 million senior secured term loan at CTPL subsequent to closing of the facilities. Remaining proceeds from the facilities will be used by Cheniere Partners (i) to redeem or repay the approximately $1.7 billion senior secured notes due 2016 and the $420 million senior secured notes due 2020 that were issued by SPLNG, (ii) to pay associated transaction costs and make-whole amounts, if any, and (iii) for general business purposes of Cheniere Partners and its subsidiaries.

"The first quarter of 2016 was a very significant period for Cheniere, marking our transition from a development company into an operating one.  We commenced LNG production and exports from Train 1 at Sabine Pass as part of commissioning activities, and to date we have exported seven cargoes of LNG to multiple destinations. Commissioning activities at Train 2 are underway and our remaining Trains under construction continue ahead of their respective contractual schedules and on budget," said Neal Shear, Cheniere's Interim President and CEO. "On the financial front, we took a significant step in improving our consolidated debt maturity profile, as the CQP Credit Facilities ensure there will be no debt maturities at Cheniere until 2020."

Liquefaction Projects Update

Sabine Pass Liquefaction Project

Through Cheniere Partners, we are developing up to six Trains, each with an expected nominal production capacity of approximately 4.5 million tonnes per annum ("mtpa") of LNG, at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the "Sabine Pass Liquefaction Project").

The Trains are in various stages of construction and development. Train 1 is expected to reach substantial completion imminently, after which Cheniere Partners expects to take over care, custody and control. Train 2 is undergoing the commissioning process. A Train is expected to achieve substantial completion upon the completion of construction, commissioning and successfully satisfying certain tests. Once a Train achieves substantial completion, results from LNG sales will be reflected in the statement of operations.

  • Construction on Trains 1 and 2 began in August 2012, and as of March 31, 2016, the overall project completion percentage for Trains 1 and 2 was approximately 98.3%, which is ahead of the contractual schedule. Cheniere Partners expects substantial completion of Train 1 to be achieved in May 2016. The commissioning process on Train 2 has commenced, and Cheniere Partners expects substantial completion of Train 2 to be achieved in September 2016.
  • Construction on Trains 3 and 4 began in May 2013, and as of March 31, 2016, the overall project completion percentage for Trains 3 and 4 was approximately 83.8%, which is ahead of the contractual schedule. Cheniere Partners expects Trains 3 and 4 to reach substantial completion in 2017.
  • Construction on Train 5 began in June 2015, and as of March 31, 2016, the overall project completion percentage for Train 5 was approximately 28.8%, which is ahead of the contractual schedule. Engineering, procurement, subcontract work and Bechtel direct hire construction were approximately 59.1%, 45.1%, 24.2% and 0.4% complete, respectively. Cheniere Partners expects Train 5 to reach substantial completion in 2019.
  • Train 6 is currently under development, with all necessary regulatory approvals in place. Cheniere Partners expects to make a final investment decision and commence construction on Train 6 upon, among other things, entering into an EPC contract, entering into acceptable commercial arrangements, and obtaining adequate financing.

 

 

Sabine Pass Liquefaction Project

Liquefaction Train

Train 1

Train 2

Trains 3-4

Train 5

Project Status

Commissioning / Producing LNG

Commissioning

84% Overall Completion

29% Overall Completion

Expected Substantial Completion

1H 2016

2H 2016

2017

2019

 

Corpus Christi LNG Terminal

We are developing up to three Trains, each with an expected nominal production capacity of approximately 4.5 mtpa of LNG, near Corpus Christi, Texas (the "CCL Project").

The Trains are in various stages of construction and development:

  • Construction on Trains 1 and 2 began in May 2015, and as of March 31, 2016, the overall project completion percentage for Trains 1 and 2 was approximately 32.5%, which is ahead of the contractual schedule.   Engineering, procurement and construction were approximately 97.1%, 46.0% and 4.6% complete, respectively. We expect Trains 1 and 2 to reach substantial completion in 2019.
  • Train 3 is under development, with all necessary regulatory approvals in place. We have entered into an LNG Sale and Purchase Agreement ("SPA") for approximately 0.8 mtpa of LNG volumes that commence with Train 3 and expect to commence construction upon entering into additional SPAs and obtaining adequate financing.

Additionally, we are developing Trains 4 and 5 adjacent to the CCL Project and have initiated the regulatory approval process with respect to those Trains.

 

Corpus Christi LNG Terminal

Liquefaction Train

Trains 1-2

Project Status

33% Overall Completion

Expected Substantial Completion

2019

 

Cheniere Energy, Inc., a Houston-based energy company primarily engaged in LNG-related businesses, owns and operates the Sabine Pass LNG terminal in Louisiana. Directly and through its subsidiary, Cheniere Energy Partners, L.P., Cheniere is constructing and developing liquefaction projects near Corpus Christi, Texas and at the Sabine Pass LNG terminal, respectively. Cheniere is also exploring a limited number of opportunities directly related to its existing LNG business.

For additional information, please refer to the Cheniere website at www.cheniere.com and Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the Securities and Exchange Commission.

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 fact, included herein are "forward-looking statements." Included among "forward-looking statements" are, among other things, (i) statements regarding Cheniere's business strategy, plans and objectives, including the development, 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's LNG terminal and pipeline businesses, including liquefaction facilities, (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 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's 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's 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 does not assume a duty to update these forward-looking statements.

 (Financial Table Follows)

 

 

Cheniere Energy, Inc.

Consolidated Statements of Operations

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

(unaudited)

   
 

Three Months Ended

 

March 31,

Revenues

2016

 

2015

    Regasification revenues

$

65,551

 

$

66,802

LNG revenues

2,704

 

662

Other revenues

826

 

905

Total revenues

69,081

 

68,369

     

Operating costs and expenses

   

Cost of sales (excluding depreciation and amortization expense shown separately below)

14,507

 

693

Operating and maintenance expense

36,317

 

35,706

Development expense

1,547

 

16,096

Marketing expense

24,978

 

13,046

General and administrative expense

47,924

 

44,971

Depreciation and amortization expense

24,089

 

17,769

Impairment expense

10,166

 

176

Other

112

 

156

Total operating costs and expenses

159,640

 

128,613

       

Loss from operations

(90,559)

 

(60,244)

       

Other income (expense)

     

Interest expense, net of capitalized interest

(76,337)

 

(59,612)

Loss on early extinguishment of debt

(1,457)

 

(88,992)

Derivative loss, net

(180,934)

 

(126,690)

Other income

929

 

372

Total other expense

(257,799)

 

(274,922)

       

Loss before income taxes and non-controlling interest

(348,358)

 

(335,166)

Income tax provision

(616)

 

(678)

Net loss

(348,974)

 

(335,844)

Less: net loss attributable to non-controlling interest

(28,136

 

(68,135

Net loss attributable to common stockholders

$

(320,838)

 

$

(267,709)

       

Net loss per share attributable to common stockholders—basic and diluted

$

(1.41)

 

$

(1.18)

       

Weighted average number of common shares outstanding—basic and diluted

228,138

 

226,328

         

___________________

(1)

Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the Securities and Exchange Commission.

 

Cheniere Energy, Inc.

Consolidated Balance Sheets

(in thousands, except share data)(1)

       
 

March 31,

 

December 31,

ASSETS

2016

 

2015

 

(unaudited)

     

Current assets

         

    Cash and cash equivalents

$

1,094,833

 

$

1,201,112

Restricted cash

732,551

 

503,397

Accounts and interest receivable

23,979

 

5,749

Inventory

31,243

 

18,125

Other current assets

63,509

 

54,203

Total current assets

1,946,115

 

1,782,586

       

Non-current restricted cash

31,724

 

31,722

Property, plant and equipment, net

17,674,548

 

16,193,907

Debt issuance costs, net

409,894

 

378,677

Non-current derivative assets

29,361

 

30,887

Goodwill

76,819

 

76,819

Other non-current assets

262,486

 

314,455

Total assets

$

20,430,947

 

$

18,809,053

       

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities

     

Accounts payable

$

35,398

 

$

22,820

Accrued liabilities

670,584

 

427,199

Current debt, net

1,785,318

 

1,673,379

Deferred revenue

26,669

 

26,669

Derivative liabilities

50,561

 

35,201

Other current liabilities

93

 

Total current liabilities

2,568,623

 

2,185,268

       

Long-term debt, net

16,348,099

 

14,920,427

Non-current deferred revenue

8,500

 

9,500

Non-current derivative liabilities

239,372

 

79,387

Other non-current liabilities

61,668

 

53,068

       

Commitments and contingencies

     
       

Stockholders' equity

     

Preferred stock, $0.0001 par value, 5.0 million shares authorized, none issued

 

Common stock, $0.003 par value

     

Authorized: 480.0 million shares at March 31, 2016 and December 31, 2015

     

Issued and outstanding: 235.5 million shares and 235.6 million shares at March 31, 2016 and December 31, 2015, respectively

707

 

708

Treasury stock: 11.7 million shares and 11.6 million shares at March 31, 2016 and December 31, 2015, respectively, at cost

(354,903)

 

(353,927)

Additional paid-in-capital

3,088,648

 

3,075,317

Accumulated deficit

(3,944,786)

 

(3,623,948)

Total stockholders' deficit

(1,210,334)

 

(901,850)

Non-controlling interest

2,415,019

 

2,463,253

Total equity

1,204,685

 

1,561,403

Total liabilities and equity

$

20,430,947

 

$

18,809,053

           

___________________

(1)

Please refer to the Cheniere Energy, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the Securities and Exchange Commission.

   

 

As of March 31, 2016, we had cash and cash equivalents of $1,094.8 million available to Cheniere. In addition, we had current and non-current restricted cash of $764.3 million (which included current and non-current restricted cash available to us and our subsidiaries) designated for the following purposes: $295.3 million for the CCL Project, $177.6 million for the Sabine Pass Liquefaction Project, $108.9 million for the 2016 CQP Credit Facilities, $129.1 million for interest payments related to the SPLNG senior secured notes and $53.4 million for other restricted purposes.

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SOURCE Cheniere Energy, Inc.

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