Cheniere Energy Reports First Quarter 2009 Results
Cheniere Energy reported a net loss of $82.7 million, or $1.70 per share (basic and diluted), for the first quarter of 2009 compared with a net loss of $49.9 million, or $1.06 per share (basic and diluted), during the corresponding period in 2008. The $32.8 million increase in net loss compared to the prior period was largely due to the $33.4 million increase in interest expense. The increase in interest expense was due to 1) less interest being capitalized due to the placement of a portion of the Sabine Pass LNG receiving terminal and the Creole Trail Pipeline into service and 2) the accrual of interest on the convertible debt incurred in the third quarter of 2008.
Losses from operations were $37.4 million for the first quarter of 2009 compared to $38.4 million for the corresponding period in 2008. LNG receiving terminal and pipeline development expenses decreased by $6.7 million and LNG receiving terminal and pipeline operating expenses and depreciation expenses increased by $8.7 million and $9.8 million, respectively, as the Sabine Pass LNG receiving terminal was placed into service during the second half of 2008. General and administrative expenses decreased $12.8 million to $17.8 million in the first quarter of 2009 primarily due to the restructuring initiatives implemented during 2008. General and administrative expenses include non-cash compensation expenses of approximately $3.9 million in the first quarter 2009 and $10.8 million in the comparable period in 2008.
During the first quarter, Cheniere Energy purchased an additional LNG commissioning cargo for the Sabine Pass LNG receiving terminal, received the first monthly capacity payment from Total LNG USA, Inc. under its terminal use agreement ("TUA") with Sabine Pass LNG, L.P. ("Sabine") for the month of April 2009 and received a cash distribution from Freeport LNG Development, L.P.
Cash and Cash Equivalents
Unrestricted cash and cash equivalents held by Cheniere Energy at March 31, 2009 were $81.5 million.
Restricted cash and cash equivalents and treasury securities at March 31, 2009 were $409.1 million, of which $339.9 million were held at Cheniere Energy Partners, L.P. ("Cheniere Partners") and $69.2 million were held at Cheniere Energy. Restricted cash held by Cheniere Partners includes approximately $82.4 million in a permanent debt service account and $54.9 million for four months of interest as required under the indenture governing the Sabine Pass LNG senior secured notes, $32.8 million available for distributions to Cheniere Partners' common unit holders and general partner and $169.8 million for construction, working capital and general purposes.
The majority of the restricted cash held by Cheniere Energy is comprised of the balance held in the reserve account for payments under the TUA between Cheniere Marketing, LLC and Sabine Pass LNG. This reserve account was established in August 2008 with an initial balance of $135.0 million. During the quarter ended March 31, 2009, Cheniere Marketing made a payment to Sabine Pass LNG for the second quarter 2009 capacity payments of $62.4 million.
Cheniere Energy, Inc. believes that it will have sufficient liquidity to fund operations and pursue its business strategy for the next several years. At the parent level, Cheniere Energy, Inc. had unrestricted cash of approximately $81.5 million as of March 31, 2009 and expects an additional approximately $100.0 million to be released from restricted cash during the second half of 2009. The net use of unrestricted cash of $20.7 million during the first quarter of 2009 was in-line with management’s expectations.
The remaining portion of the Sabine Pass LNG receiving terminal is expected to be placed into service during the third quarter of 2009. Total estimated construction costs before financing costs are $1.559 billion with costs incurred as of March 31, 2009 totaling $1.465 billion.
Exchange of 2.25% Senior Convertible Notes
During April 2009, Cheniere Energy retired $77.2 million aggregate principal amount of its 2.25% Convertible Senior Notes due 2012 in exchange for $13.5 million cash and approximately 4.0 million common shares through a series of private transactions. Due to the retirement of the notes, future interest payments were reduced by approximately $6.0 million and the Company will recognize a non-taxable gain in the second quarter of 2009 of approximately $46.0 million.
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