01—Abstract
Summary
Summary of the 10-K filed February 19, 2016. Cited figures are marked; the original filing is the authoritative source.
Cheniere Energy Partners, L.P.
(NYSE MKT: CQP) reported a 2015 net loss of $318.9 milliona, compared with $410.0 million in 2014, as it continues to build the Liquefaction Project at the Sabine Pass LNG terminal. Total revenues were $270.0 million in 2015 and operating income was $3.0 million. The partnership's current revenue base comes from regasification capacity under two third-party terminal use agreements (about $125 million annually each from Total and Chevron) and SPL's $250 million annual capacity payments to SPLNG.
Total long-term debt stood at $11.8 billionb before discounts and premiums as of December 31, 2015, with $1.7 billion maturing in 2016. The Liquefaction Project is advancing ahead of schedule. Trains 1 and 2 were 97.4% and 79.5% complete for Trains 3 and 4 as of year-end, and Train 5 was 14.9% complete.
The filing states that first LNG from Train 1 was produced in February 2016, and Train 2 is expected to produce LNG as early as mid-2016. Fixed-price, 20-year SPAs covering about 19.75 mtpa for Trains 1 through 5 carry aggregate annual fixed fees of approximately $2.9 billionc. Train 6 remains uncontracted and subject to a future final investment decision.
Investors should weigh the partnership's heavy leverage, its history of net losses, and its dependence on a single facility and on Cheniere-affiliated service providers. Common unit distributions remained at $0.425d per quarter, but distributions on subordinated units have not been paid since the quarter ended March 31, 2010. In January 2016 the partnership engaged 13 financial institutions to arrange up to approximately $2.8 billion of senior secured credit facilities to refinance SPLNG and CTPL debt.
02—Key points
Key Highlights
- Net loss of $318.9 million in 2015, down from $410.0 million in 2014; total revenues of $270.0 million.
- Total debt of $11.8 billion (before discounts and premiums) at December 31, 2015, with $1.7 billion maturing in 2016 and $400.0 million in 2017.
- Trains 1 and 2 were 97.4% complete and Trains 3 and 4 were 79.5% complete at year-end 2015; first LNG from Train 1 was produced in February 2016.
- Six fixed-price, 20-year SPAs cover approximately 19.75 mtpa (about 88% of Trains 1 through 5 nominal capacity), with aggregate annual fixed fees of approximately $2.9 billion.
- Estimated total capital costs for Trains 1 through 5 are $12.5 billion to $13.5 billion before financing costs and $17.0 billion to $18.0 billion after financing costs.
- Cash and cash equivalents of $146.2 million plus $288.3 million of current and non-current restricted cash at December 31, 2015.
- Subordinated units have received no distributions since the quarter ended March 31, 2010; the common unit distribution remains $0.425 per quarter.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2015, Cheniere Energy Partners lost $1.18.
- Revenue$270.0M100.0%
- Cost of revenue$31.0M11.5%
- Gross profit$301.0M111.5%
- Operating costs−$298.0M110.4%
- Operating income$3.0M1.1%
- Interest, other & tax−$322.0M119.3%
- Net income−$319.0M118.1%
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 19, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $270.00M$268.70M | +0.5% |
| Cost of Revenue | -$31.00M-$342K | −8964.3% |
| Gross Profit | $301.00M$269.04M | +11.9% |
| R&D Expenses | $3.00M$9.32M | −67.8% |
| Operating Expenses | $267.00M$268.18M | −0.4% |
| Operating Income | $3.00M$515K | +482.5% |
| Interest Expense | $185.00M$177.03M | +4.5% |
| Net Income | -$319.00M-$410.04M | +22.2% |
| EPS (Basic) | $-0.43$-0.89 | +51.7% |
| Shares Outstanding (Basic) | 57.10M57.08M | 0.0% |
05—Questions
Frequently Asked Questions
Is the partnership profitable, and when is it expected to generate operating cash flow from the Liquefaction Project?
No. The partnership reported net losses of $318.9 million, $410.0 million and $258.1 million for 2015, 2014 and 2013. It states that it does not expect to receive cash flows from operations under any SPA until early 2016 at the earliest, and it projects generating cash flow from the Liquefaction Project by early 2016.
How much debt does the partnership carry and when does it mature?
Total consolidated debt was $11.8 billion before debt discounts and premiums at December 31, 2015. Approximately $1.7 billion matures in 2016, $400.0 million in 2017, $420.0 million in 2020, $2.0 billion in 2021, $1.0 billion in 2022, $1.5 billion in 2023, $2.0 billion in 2024 and $2.0 billion in 2025, with $8.5 billion due thereafter in the schedule.
What supports the partnership's current cash flows and distributions?
Current operating cash flows depend mainly on TUAs with Total and Chevron, each paying SPLNG approximately $125 million annually, and on SPL's TUA payments of approximately $250 million annually. Distributions of $0.425 per common unit were paid in 2015, costing about $99 million per year, and the filing notes that the partnership is not currently generating sufficient operating surplus to cover the initial quarterly distribution on all units.
What are the main risks to construction and contracted revenue?
The filing cites cost overruns and delays under the Bechtel EPC contracts, dependence on customer performance under long-term contracts, Train 6 funding that is not yet secured, hurricanes and other operating hazards, regulatory approvals, and the fact that substantially all anticipated 2016 revenue depends on the single Sabine Pass LNG terminal. It also states that it does not maintain insurance against all risks.
What is the status of the Train 6 expansion?
Train 6 has not been contracted to date and no final investment decision has been made. The partnership says it will contemplate an FID based on entering into an EPC contract, acceptable commercial arrangements and adequate financing. FERC authorization for Trains 5 and 6 was granted in April 2015, and the partnership has an option for firm pipeline capacity for Train 6.
06—Continue