10-QPeriod: Q1 FY2012

Cheniere Energy, Inc. Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 4, 2012For Securities:LNG

Summary

Cheniere Energy, Inc. reported a net loss of $56.4 million for the first quarter of 2012, an increase from the $39.8 million loss in the same period of 2011. This was largely driven by increased LNG terminal and pipeline development expenses, particularly related to the Sabine Pass liquefaction project, and a decrease in marketing and trading revenues. Despite the net loss, the company made significant progress in strengthening its financial position and advancing its development projects. A key development was the successful $351.9 million equity offering in March 2012, which significantly boosted unrestricted cash. This influx of capital, along with prior equity raises, allowed Cheniere to repay its $298.0 million 2007 Term Loan in January 2012. The company ended the quarter with $439.8 million in unrestricted cash and cash equivalents, which management believes is sufficient to meet its obligations and fund operations for at least the next 12 months. Major project milestones include FERC authorization for the Sabine Pass liquefaction facilities and new Sale and Purchase Agreements (SPAs) with BG Group and Korea Gas Corporation, signaling strong progress towards commercializing its liquefaction business.

Financial Highlights

50 data points
Beta

Revenue

$70.47M

Net Income

-$56.41M

-80.1% Net Margin

EPS (Diluted)

$131107000.00

Total Assets

$2.93B

Cash & Equivalents

$439.83M

Free Cash Flow

-$68.70M

Financial Statements
Beta
Revenue$70.47M
R&D Expenses$21.82M
Operating Expenses$69.75M
Operating Income$721K
Interest Expense$58.35M
Net Income-$56.41M
EPS (Basic)$-0.43
EPS (Diluted)$131107000.00
Shares Outstanding (Basic)131.11M
Shares Outstanding (Diluted)131.11M

Key Highlights

  • 1Net loss widened to $56.4 million ($0.43/share) in Q1 2012 from $39.8 million ($0.60/share) in Q1 2011, primarily due to increased development expenses.
  • 2Successfully raised $351.9 million in net proceeds from a common stock offering in March 2012, significantly improving liquidity.
  • 3Repaid the $298.0 million 2007 Term Loan in full in January 2012 using proceeds from a prior stock offering, reducing near-term debt obligations.
  • 4Received FERC authorization in April 2012 to construct and operate liquefaction facilities at Sabine Pass LNG, a critical step for its export business.
  • 5Secured new LNG Sale and Purchase Agreements (SPAs) with BG Gulf Coast LNG and Korea Gas Corporation (KOGAS) in early 2012, expanding contracted export volumes.
  • 6Ended the quarter with $439.8 million in unrestricted cash and cash equivalents, providing ample liquidity for operations and debt obligations.

Frequently Asked Questions

Cheniere Energy, Inc. ended the first quarter of 2012 with $439.8 million in unrestricted cash and cash equivalents, a significant increase driven by a recent equity offering. The company also repaid its $298 million 2007 Term Loan. Management believes it has sufficient liquidity to meet debt obligations and fund operations for at least the next 12 months.

The company received crucial FERC authorization in April 2012 to construct and operate liquefaction facilities at Sabine Pass. Additionally, significant progress was made on securing offtake agreements, with new SPAs signed with BG Group for an additional 2.0 mtpa and with KOGAS for approximately 3.5 mtpa. These developments are vital for the commercialization of its LNG export business.

The increase in net loss to $56.4 million from $39.8 million in the prior year's quarter was primarily driven by higher LNG terminal and pipeline development expenses, which include costs for front-end engineering, design, and regulatory approvals for projects like the Sabine Pass liquefaction facility. Lower marketing and trading revenues also contributed to the wider loss.

Cheniere has actively managed its debt. In January 2012, it repaid the $298 million 2007 Term Loan. The company also has Convertible Senior Unsecured Notes due in August 2012, which it may satisfy using a portion of its unrestricted cash. The Senior Notes issued by Sabine Pass LNG are well-covered by contractual payments.