8-KRegulation FDExhibits & Filings

Cheniere Energy, Inc. 8-K Report, Regulation FD Disclosure (Oct 20, 2015)

Filed October 20, 2015For Securities:LNG

Summary

Cheniere Energy, Inc. (LNG) issued an 8-K filing on October 20, 2015, to clarify financial estimates for its Sabine Pass and Corpus Christi liquefaction projects. The company provided updated projections for consolidated EBITDA, estimated at approximately $4.3 billion annually from fixed-fee contracts and an additional $0.6 billion from excess volumes at current market prices, alongside $0.4 billion in gas receipt revenue. Estimated operating, G&A, pipeline, and maintenance costs are projected at $1.5 billion annually. The filing also detailed projected total debt of $24.6 billion, with $21.5 billion attributed to the seven liquefaction trains under construction. Project-level debt for these trains is substantial, with Sabine Pass Liquefaction having approximately $8.5 billion in bonds and $4.6 billion in credit facilities, and Corpus Christi Holdings having $8.4 billion in credit facilities. Notably, the project-level debt is non-recourse to Cheniere. The company also provided an estimate of $175 million per year for plant maintenance expenditures for Trains 1-5, largely driven by long-term service agreements with third-party vendors, including GE. These clarifications were made to address public comments and investor inquiries regarding EBITDA, project-level debt, and maintenance capital costs. Cheniere noted that all estimates are based on the seven trains currently under construction and that further trains are under development, contingent on securing additional SPAs and financing.

Key Highlights

  • 1Consolidated annual EBITDA from seven liquefaction trains estimated at $4.3 billion from fixed-fee SPAs, plus potential $0.6 billion from excess volumes at current market prices.
  • 2Estimated annual operating, G&A, pipeline, and maintenance costs across the seven trains are approximately $1.5 billion.
  • 3Total projected debt for Cheniere is approximately $24.6 billion, with $21.5 billion related to project-level debt for the seven trains under construction.
  • 4Project-level debt for Sabine Pass Liquefaction and Corpus Christi Liquefaction are substantial, with various bonds and committed credit facilities.
  • 5Project-level debt is explicitly stated as non-recourse to Cheniere Energy, Inc.
  • 6Estimated annual plant maintenance expenditures for Trains 1-5 are approximately $175 million, significantly influenced by third-party service agreements.
  • 7The company is advancing financing for Train 3 of the Corpus Christi Liquefaction Project, with debt financing expected by Q4 2015 and equity by Q2 2016.

Frequently Asked Questions

Cheniere estimates consolidated annual EBITDA from its seven liquefaction trains under construction to be approximately $4.3 billion from fixed-fee sale and purchase agreements (SPAs), with an additional potential $0.6 billion from selling excess volumes at current market prices. This estimate is based on current market conditions in Europe and the U.S. and includes approximately $0.4 billion in revenue for gas receipts from SPA customers.

Cheniere's total projected debt is estimated at $24.6 billion. Of this, approximately $21.5 billion is project-level debt for the seven liquefaction trains currently under construction. This project-level debt is non-recourse to Cheniere.

Plant maintenance expenditures for Trains 1-5 are estimated to be approximately $175 million per year. A significant portion of these costs is related to long-term contract service agreements with third-party vendors, notably with GE for gas turbines and refrigerant compressors.

The filing indicates that estimated EBITDA from the Sabine Pass Liquefaction Project supports approximately 300% interest coverage, and the Corpus Christi Liquefaction Project shows over 250% interest coverage, suggesting a comfortable margin for servicing project-level debt based on these estimates.