10-KPeriod: FY2009

Cheniere Energy, Inc. Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:LNG

Summary

Cheniere Energy, Inc.'s 2009 10-K filing highlights a pivotal year, marked by the substantial completion and full operability of its Sabine Pass LNG receiving terminal. This facility is fully contracted under long-term Terminal Use Agreements (TUAs) with major energy companies Total and Chevron, providing significant, albeit fixed, revenue streams. The company also operates the Creole Trail Pipeline, connecting Sabine Pass to downstream markets. Despite the operational milestone of Sabine Pass, Cheniere Energy faces considerable financial challenges, primarily stemming from a substantial debt load. The company generated net losses in 2009, reflecting ongoing development costs and financing expenses. Liquidity remains a key concern, with a significant portion of debt maturing in August 2011, necessitating a proactive approach to financial restructuring through potential debt refinancing, equity issuance, or asset sales. The company's strategy also involves monetizing the remaining capacity at Sabine Pass through its marketing arm, Cheniere Marketing, though this segment faces its own market risks.

Financial Highlights

28 data points
Beta

Revenue

$181.13M

Net Income

-$161.49M

-89.2% Net Margin

EPS (Diluted)

$-3.13

Total Assets

$2.73B

Cash & Equivalents

$88.37M

Free Cash Flow

-$97.86M

Financial Statements
Beta
Revenue$181.13M
R&D Expenses$223K
Operating Expenses$157.63M
Operating Income$23.50M
Interest Expense$243.29M
Net Income-$161.49M
EPS (Basic)$-3.13

Key Highlights

  • 1Completion of Sabine Pass LNG receiving terminal: The facility achieved full operability in Q3 2009 with a regasification capacity of 4.0 Bcf/d and storage capacity of 16.9 Bcf.
  • 2Full TUA reservation: The entire 4.0 Bcf/d regasification capacity at Sabine Pass is contracted under long-term TUAs with Total and Chevron, providing stable revenue.
  • 3Significant debt burden: As of December 31, 2009, total consolidated debt stood at $3.1 billion, with the earliest maturity in August 2011.
  • 4Continued net losses: The company reported a net loss of $161.5 million for 2009, although this was an improvement from the prior year.
  • 5Operating cash flow deficit: Net cash used in operating activities was $97.9 million for 2009.
  • 6Development of other projects: Cheniere continues to develop other LNG receiving terminal and pipeline projects, with final investment decisions contingent on commercial and financing arrangements.
  • 7Creole Trail Pipeline operational: Phase 1 of the pipeline, connecting Sabine Pass to downstream markets, is in service.

Frequently Asked Questions

Cheniere Energy completed construction and achieved full operability of its Sabine Pass LNG receiving terminal. The terminal has a total sendout capacity of approximately 4.0 Bcf/d and five LNG storage tanks with an aggregate storage capacity of approximately 16.9 Bcf.

The entire 4.0 Bcf/d of regasification capacity at the Sabine Pass LNG receiving terminal is fully reserved under three long-term Terminal Use Agreements (TUAs). Total Gas and Power North America, Inc. (Total) and Chevron U.S.A., Inc. (Chevron) have each reserved 1.0 Bcf/d, paying approximately $125 million annually per customer for 20 years. Cheniere Marketing, a wholly-owned subsidiary, has reserved the remaining 2.0 Bcf/d.

Cheniere Energy has a substantial debt load, totaling $3.1 billion as of December 31, 2009. The company's earliest debt maturity is in August 2011, and it anticipates needing to restructure its finances to meet these obligations, potentially through refinancing, equity issuance, or asset sales. Despite operating the Sabine Pass terminal, the company continued to experience net losses and negative operating cash flow in 2009.

Cheniere is in various stages of developing other LNG receiving terminal and pipeline projects, including the Corpus Christi LNG receiving terminal and the Creole Trail LNG receiving terminal. Final investment decisions for these projects are contingent on securing acceptable commercial and financing arrangements.