10-QPeriod: Q2 FY2011

Cheniere Energy, Inc. Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:LNG

Summary

Cheniere Energy, Inc. (LNG) reported a net loss of $47.2 million for the second quarter of 2011, a significant shift from the $85.7 million net income in the same period of 2010. This change was primarily driven by the absence of a $128.3 million gain from the sale of an investment in Freeport LNG in the prior year, partially offset by increased development expenses for the Sabine Pass liquefaction project and higher marketing and trading revenues. The company's financial position shows an increase in cash and cash equivalents to $162.6 million from $74.2 million at the end of 2010, but also a substantial increase in current liabilities, largely due to the reclassification of $298 million of its 2007 Term Loan as current debt, as it becomes due within 12 months. This necessitates a plan to refinance or retire this debt by May 2012, which will be dependent on market conditions.

Financial Highlights

52 data points
Beta

Revenue

$72.81M

Net Income

-$47.17M

-64.8% Net Margin

EPS (Diluted)

$-0.67

Total Assets

$2.62B

Cash & Equivalents

$162.56M

Free Cash Flow

$14.24M

Financial Statements
Beta
Revenue$72.81M
R&D Expenses$13.36M
Operating Expenses$56.35M
Operating Income$16.46M
Interest Expense$64.59M
Net Income-$47.17M
EPS (Basic)$-0.67
EPS (Diluted)$-0.67
Shares Outstanding (Basic)70.63M
Shares Outstanding (Diluted)70.63M

Key Highlights

  • 1Net loss of $47.2 million for Q2 2011, compared to a net income of $85.7 million in Q2 2010, largely due to a significant gain on asset sale in the prior year.
  • 2Total assets increased to $2.62 billion from $2.55 billion, while total liabilities and deficit also grew.
  • 3Cash and cash equivalents significantly increased to $162.6 million from $74.2 million.
  • 4Current liabilities rose dramatically to $364.2 million from $66.3 million, primarily due to the reclassification of the $298 million 2007 Term Loan as current debt.
  • 5Long-term debt, net of discount, decreased to $2.66 billion from $2.93 billion.
  • 6Company is actively pursuing regulatory approvals and authorizations for its liquefaction and export project at Sabine Pass.
  • 7Secured DOE authorization to export domestically produced natural gas to countries with LNG import capacity.

Frequently Asked Questions

The primary reason for the shift from net income in Q2 2010 to a net loss in Q2 2011 was the absence of a significant $128.3 million gain recognized in May 2010 from the sale of the company's 30% interest in Freeport LNG Development, L.P. This gain was not present in the current period's results.

Cheniere reclassified $298 million of its 2007 Term Loan from long-term debt to current liabilities because it is due within 12 months (as of May 31, 2011). This significantly increases its short-term debt obligations and necessitates a plan to address this maturity by May 2012, potentially through refinancing, equity issuance, or asset sales.

Cheniere is making progress on its liquefaction project. In early 2011, they submitted applications to FERC for construction and operation permits. A significant development was receiving authorization from the U.S. Department of Energy (DOE) to export domestically produced natural gas as LNG to countries with import capacity, which is crucial for the project's export potential.

The company's liquidity has improved in terms of cash on hand, with cash and cash equivalents increasing to $162.6 million from $74.2 million. However, this is counterbalanced by the substantial increase in current liabilities mentioned above, which creates a near-term obligation that needs to be managed.