What is the primary driver for the increased net loss in the first quarter of 2005 compared to 2004?

The primary driver for the increased net loss is the substantial rise in LNG receiving terminal development expenses, which increased to $5.4 million from $4.4 million year-over-year. Additionally, general and administrative expenses also rose significantly to $5.0 million from $2.9 million, reflecting the expansion of the company's operations and personnel to support its growing project development pipeline.

What is the status of the Sabine Pass LNG terminal project?

Significant progress has been made. Cheniere entered into a lump-sum turnkey EPC contract with Bechtel for $646.9 million (later adjusted to $648.4 million). A Notice to Proceed (NTP) was issued to Bechtel in March 2005, and they accepted it in early April 2005, commencing construction. Furthermore, Sabine Pass LNG secured an $822 million credit facility on February 25, 2005, which will fund a substantial majority of the construction costs. The terminal is expected to commence operations in 2008.

How is Cheniere financing its extensive LNG terminal development projects?

Cheniere anticipates financing its LNG terminal projects, estimated to cost over $3 billion in aggregate, through a combination of project-level debt and equity, proceeds from debt or equity securities issued by Cheniere, and other Cheniere borrowings. The Sabine Pass LNG terminal is largely financed by an $822 million credit facility. Advance capacity reservation fees from customers like Total and Chevron USA also provide liquidity. For the Freeport LNG project, ConocoPhillips is expected to provide a substantial majority of the financing.

What is the significance of the $23 million in deferred revenue related to capacity reservation fees?

The $23 million in deferred revenue represents non-refundable advance payments received from Total and Chevron USA for reserving regasification capacity at the Sabine Pass LNG terminal. These fees are deferred because they relate to future services and will be recognized as revenue over a 10-year period once the terminal operations commence, effectively reducing the future capacity fees owed by these customers. These payments provide an immediate source of capital for Cheniere's liquidity needs.

LNG 10-Q Quarterly Report Q1 FY2005 — Revenue, Net Income, EPS

Summary

Cheniere Energy, Inc. reported a net loss of $9.2 million ($0.18 per share) for the quarter ended March 31, 2005, a significant increase from the $1.1 million net loss ($0.03 per share) in the prior year's quarter. This widening loss is primarily attributed to increased LNG receiving terminal development expenses and general and administrative costs, reflecting the company's ongoing expansion and project development activities. Despite the increased loss, the company made substantial progress on its key LNG terminal projects. The Sabine Pass LNG facility received a significant advance payment from Bechtel for its EPC contract, and the Sabine Pass Credit Facility was secured. The Corpus Christi LNG terminal received FERC authorization for construction, and the company acquired full ownership of this project. These developments indicate significant forward momentum in the company's core business strategy of developing LNG receiving terminals, although substantial capital investment will be required to bring these projects to fruition.

Key Highlights

1Net loss widened to $9.2 million for the quarter ended March 31, 2005, from $1.1 million in the prior year, driven by higher development and administrative expenses.
2Significant progress was made on the Sabine Pass LNG terminal, including the issuance of a Notice to Proceed to EPC contractor Bechtel and the closing of an $822 million credit facility.
3Corpus Christi LNG received FERC authorization to construct and operate its terminal, and Cheniere acquired full ownership of the project.
4Advance capacity reservation fees totaling $23 million were received from Total and Chevron USA, recorded as deferred revenue, contributing to liquidity.
5The company's oil and gas exploration segment showed increased revenues due to higher production volumes, though average natural gas prices saw a slight decrease.
6Cheniere's cash balance decreased from $308.4 million to $246.8 million, reflecting substantial investments in project development and operational activities.
7The company underwent a two-for-one stock split on April 22, 2005, adjusting all historical per-share data.

Cheniere Energy, Inc. Quarterly Report for Q1 Ended Mar 31, 2005

Summary

Key Highlights

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