Cheniere Posts Third Quarter Financial Results
Cheniere Energy reported a net loss of $67.4 million, or $1.42 per share (basic and diluted), for the third quarter of 2008 compared with a net loss of $53.5 million, or $1.14 per share (basic and diluted), during the corresponding period in 2007. Results are reported on a consolidated basis with Cheniere Energy Partners, L.P. as Cheniere Energy, Inc. holds a 90.6% ownership interest.
Losses from operations were $39.1 million for the third quarter of 2008 compared to $47.3 million for the third quarter of 2007. This decrease of $8.2 million primarily resulted from lower LNG receiving terminal and pipeline development expenses of $8.5 million, lower general and administrative expenses of $5.0 million and an increase in marketing and trading gains of $3.1 million. These decreases and gains were partially offset by increased repair and maintenance expense of $2.8 million related to Hurricane Ike and increased depreciation expense of $5.3 million quarter over quarter as the Sabine Pass terminal was placed into service during the quarter.
Cash and Cash Equivalents
Restricted cash and cash equivalents and treasury securities at September 30, 2008 was $578.0 million of which $127.3 million was held at the parent level and $450.7 million was held at Cheniere Energy Partners. Restricted cash held by Cheniere includes approximately $120.1 million for a reserve account for payments under Cheniere Marketing LLC's TUA with the Sabine Pass LNG receiving terminal. This reserve requirement is to be reduced to one quarter of payments (approximately $63 million) by the third quarter of 2009.
Restricted cash held by Cheniere Energy Partners included approximately $54.9 million reserved by Sabine Pass LNG for interest payments on its senior secured notes, $82.4 million in a permanent debt service account, $43.4 million as a reserve for distributions to Cheniere Partners' common unit holders and $270.0 million for construction, other expenses and distributions as allowed per the indenture.
In September 2008, Sabine Pass LNG completed an additional issuance of $183.5 million of its senior secured notes due 2016.
Unrestricted cash and cash equivalents at September 30, 2008 was $128.3 million of which the majority was held by Cheniere Energy, Inc. Cheniere estimates remaining cash expenditures for the Creole Trail pipeline to be $11.0 million from October 2008 through completion.
In August 2008, a subsidiary of Cheniere Energy, Inc. closed a $250 million senior secured convertible loan agreement. Proceeds were used to repay the $95.0 million bridge loan obtained in May 2008, fund a reserve account for payments under Cheniere Marketing LLC's TUA with the Sabine Pass LNG receiving terminal and for general corporate purposes.
Sabine Pass Terminal
During the quarter, construction of the initial 2.6 Bcf/d of sendout capacity and 10.1 Bcf of storage capacity at the Sabine Pass terminal was completed and the terminal was placed into service. There are a few outstanding work items that the contractor needs to complete in order for the terminal to be fully commissioned and the terminal may need to obtain and process additional LNG to complete the testing.
In September, Hurricane Ike struck the Texas and Louisiana coasts resulting in minimal impact to the in-service portion of the terminal, damage to the temporary facilities and salt water exposure to some stored construction materials associated with the 1.4 Bcf/d expansion still under construction. The temporary facilities have been replaced and the damaged construction materials are being refurbished or replaced as required. Cheniere expects that the majority of the costs will be recoverable under its insurance policies. The project was approximately 84% complete at quarter end and the remaining construction is still expected to be completed by the third quarter of 2009.
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