What is the significance of this SPA for Cheniere Energy?

This SPA is significant as it represents a material definitive agreement for Cheniere's Corpus Christi liquefaction project, specifically for the development of its second liquefaction train. It provides a long-term revenue stream, de-risks the project, and demonstrates continued market demand for U.S. LNG exports.

What are the key terms of the LNG pricing in this agreement?

The LNG will be sold at a contract price of $3.50 per MMBtu plus 115% of the final settlement price for the New York Mercantile Exchange Henry Hub natural gas futures contract for the month of delivery. A portion of the fixed fee is subject to an annual inflation adjustment.

What conditions must be met before Cheniere proceeds with the second liquefaction train under this SPA?

Cheniere (CCLNG) must receive all necessary regulatory approvals, secure financing for construction, make a positive final investment decision, have export authorizations in place, and issue an unconditional notice to proceed with construction. These conditions must be met for Woodside's purchase obligation to become fully effective.

How much LNG is involved and for how long?

The agreement covers an annual contract quantity of 44,120,000 MMBtu, equivalent to approximately 0.85 million tonnes per annum. The SPA has a base term of 20 years, starting from the first commercial delivery of the second liquefaction train, with an option for Woodside to extend it for an additional period of up to 10 years.

LNG 8-K: Material Agreements & Regulation FD

Summary

Cheniere Energy, Inc. (LNG) announced on June 30, 2014, through an 8-K filing, a significant long-term Liquefied Natural Gas (LNG) Sale and Purchase Agreement (SPA) between its subsidiary, Corpus Christi Liquefaction, LLC (CCLNG), and Woodside Energy Trading Singapore Pte Ltd. This agreement marks a crucial step for Cheniere's Corpus Christi liquefaction project, particularly for its second liquefaction train. The SPA involves Woodside purchasing a substantial annual contract quantity of LNG, with deliveries commencing upon the first commercial delivery from the second liquefaction train. The pricing structure is linked to the Henry Hub natural gas futures contract, providing a clear revenue stream for Cheniere while including provisions for inflation adjustments and flexibility for Woodside to suspend deliveries under certain conditions. The 20-year term, with an option for an additional 10 years, underscores the long-term strategic importance of this deal for both parties and signals continued progress in developing U.S. LNG export capacity.

Key Highlights

1Cheniere Energy's subsidiary, CCLNG, signed a 20-year LNG Sale and Purchase Agreement (SPA) with Woodside Energy Trading Singapore Pte Ltd.
2The SPA is for an annual contract quantity of 44,120,000 MMBtu (approx. 0.85 mtpa) of LNG from the second liquefaction train at the Corpus Christi facility.
3The contract sales price is based on $3.50 plus 115% of the relevant month's Henry Hub natural gas futures contract price, with a portion subject to inflation adjustment.
4Woodside has the right to suspend deliveries with advance notice, though payment obligations for the fixed portion remain.
5The SPA has a 20-year term, commencing on the first commercial delivery from the second liquefaction train, with an option for Woodside to extend for up to 10 additional years.
6The effectiveness of CCLNG's obligation to proceed with the second liquefaction train is contingent on satisfying several conditions, including regulatory approvals, securing financing, and making a positive final investment decision.
7Termination clauses are included for both parties under specific circumstances, such as force majeure events, failure to meet delivery/take obligations, and financial or creditworthiness issues.

Cheniere Energy, Inc. 8-K Report, Material Agreement (Jun 30, 2014)

Summary

Key Highlights

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