10-QPeriod: Q2 FY2004

Cheniere Energy, Inc. Quarterly Report for Q2 Ended Jun 30, 2004

Filed August 10, 2004For Securities:LNG

Summary

Cheniere Energy, Inc. (LNG) reported a net loss of $8.05 million for the second quarter ended June 30, 2004, a significant increase from a loss of $1.62 million in the same period last year. This widening loss is primarily driven by increased LNG receiving terminal development expenses, which surged from $0.62 million to $5.45 million year-over-year, reflecting accelerated development schedules for their Sabine Pass and Corpus Christi projects. The company also saw higher other general and administrative expenses due to business expansion and increased professional fees. Despite the increased losses, Cheniere's financial position strengthened with working capital rising to $8.45 million from $0.16 million at year-end 2003, largely due to a successful private placement of common stock and warrant/option exercises, raising over $16 million. The company is actively marketing regas capacity for its terminals and anticipates receiving advance payments upon securing long-term contracts, which would provide crucial capital for ongoing liquidity needs and potential project-level debt financing. Management expects to secure necessary permits for their key LNG projects by the end of 2004.

Key Highlights

  • 1Net loss for Q2 2004 increased to $8.05 million from $1.62 million in Q2 2003, primarily due to higher LNG terminal development expenses.
  • 2LNG terminal development expenses increased significantly to $5.45 million in Q2 2004 from $0.62 million in Q2 2003, reflecting accelerated project schedules.
  • 3Working capital improved substantially to $8.45 million at June 30, 2004, from $0.16 million at December 31, 2003, driven by stock issuances and warrant/option exercises.
  • 4The company received a $2.5 million payment from Freeport LNG and $2.19 million in partnership contributions for Corpus LNG, bolstering liquidity.
  • 5Cheniere is actively marketing regas capacity for its LNG terminals and expects advance payments from secured long-term contracts.
  • 6Oil and gas revenues saw substantial growth, increasing by 176% in Q2 2004 compared to Q2 2003, driven by higher production volumes and prices.
  • 7The company anticipates FERC approval and completion of permitting for its Sabine Pass and Corpus Christi LNG terminals by the end of 2004.

Frequently Asked Questions

The primary driver of the increased net loss is the significant rise in LNG receiving terminal development expenses, which surged from $0.62 million in Q2 2003 to $5.45 million in Q2 2004. This reflects accelerated development schedules for their Sabine Pass and Corpus Christi projects.

Cheniere's liquidity has improved significantly. Working capital increased from $0.16 million at the end of 2003 to $8.45 million by June 30, 2004. This improvement is largely due to proceeds from a private placement of common stock and exercises of warrants and stock options, as well as payments received from Freeport LNG and contributions for Corpus LNG.

Cheniere intends to finance the construction of its two LNG receiving terminals and meet its longer-term liquidity needs through a combination of issuing Cheniere debt or equity securities, and/or project-level debt or equity securities. The company also expects that secured long-term terminal use agreements will provide advance payments and serve as collateral for project-level debt financing.

Cheniere anticipates receiving Federal Energy Regulatory Commission (FERC) approval and completing the permitting process for its Sabine Pass and Corpus Christi LNG receiving terminal projects by the end of 2004. Construction is expected to begin shortly thereafter. Additionally, their investment in the Freeport LNG terminal project has progressed, with ConocoPhillips closing a deal in July 2004 to reserve capacity and finance a significant portion of the facility's construction.