01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
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.
02—Key points
Key Highlights
- Completion 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.
- Full 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.
- Significant debt burden: As of December 31, 2009, total consolidated debt stood at $3.1 billion, with the earliest maturity in August 2011.
- Continued net losses: The company reported a net loss of $161.5 million for 2009, although this was an improvement from the prior year.
- Operating cash flow deficit: Net cash used in operating activities was $97.9 million for 2009.
- Development of other projects: Cheniere continues to develop other LNG receiving terminal and pipeline projects, with final investment decisions contingent on commercial and financing arrangements.
- Creole Trail Pipeline operational: Phase 1 of the pipeline, connecting Sabine Pass to downstream markets, is in service.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
| 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 |
05—Questions
Frequently Asked Questions
What is Cheniere Energy's primary operational achievement for the period ending December 31, 2009?
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.
How is the Sabine Pass LNG receiving terminal capacity being monetized?
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.
What is the company's financial position regarding debt and liquidity?
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.
What are the company's future development plans?
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.
06—Continue