Summary
Cheniere Energy, Inc. (LNG) filed an 8-K on October 23, 2006, providing crucial updates on its Sabine Pass Liquefied Natural Gas (LNG) receiving terminal construction and operations. The company detailed projected completion timelines for various phases of the terminal, with the first phase expected to be operational by Q1 2008, achieving 2.0 Bcf/d capacity. Further expansion, Phase 2 – Stage 1, aims for full operability at 4.0 Bcf/d by Q3 2009. A significant development highlighted is the anticipated amended and restated Terminal Use Agreement (TUA) between its subsidiary Cheniere Marketing, Inc. and Sabine Pass LNG. This TUA is expected to generate approximately $250 million in annual revenues for at least 19 years, commencing January 1, 2009, providing a substantial revenue stream for the project. The filing also provided an illustrative cash flow summary for Sabine Pass LNG, projecting approximately $467 million in EBITDA for 2010, based on projected revenues from TUAs with Total, Chevron, and Cheniere Marketing. This projection assumes full operation of the terminal and contractually stipulated payments. The company also disclosed significant construction expenditures, with $507 million of the anticipated $900-$950 million for Phase 1 and $39 million of the $500-$550 million for Phase 2 – Stage 1 already funded as of September 30, 2006. Financing for the construction is supported by a $1.5 billion credit facility and a $600 million term loan.
Key Highlights
- 1Construction of the Sabine Pass LNG receiving terminal is progressing, with Phase 1 aiming for operational status and 2.0 Bcf/d capacity by Q1 2008, and Phase 2 – Stage 1 expansion targeting 4.0 Bcf/d by Q3 2009.
- 2Cheniere Marketing, Inc. is expected to enter an amended TUA with Sabine Pass LNG, reserving 2.0 Bcf/d of regasification capacity.
- 3The Cheniere Marketing TUA is projected to generate approximately $250 million in annual revenue for at least 19 years, commencing January 1, 2009, with initial monthly revenues of $5 million in 2008.
- 4An illustrative cash flow summary for Sabine Pass LNG projects $467 million in EBITDA for 2010, based on projected TUA revenues and operating expenses.
- 5As of September 30, 2006, Cheniere had funded $507 million of Phase 1 and $39 million of Phase 2 – Stage 1 construction expenditures, utilizing a mix of equity and project finance debt.
- 6The Sabine Pass LNG receiving terminal project is financed through a $1.5 billion credit facility and a $600 million term loan.
- 7An independent engineer's report deems the Phase 1 and Phase 2 – Stage 1 projects technically viable, with reasonable budgets and schedules, and low environmental risks.