Cheniere Energy, Inc. (LNG) Reports Second Quarter 2015 Results


Cheniere Energy, Inc. (NYSEMKT:LNG) reported a net loss attributable to common stockholders of $118.5 million, or $0.52 per share (basic and diluted), for the three months ended June 30, 2015, compared to a net loss attributable to common stockholders of $201.9 million, or $0.90 per share (basic and diluted), for the comparable 2014 period.  For the six months ended June 30, 2015, Cheniere reported a net loss attributable to common stockholders of $386.2 million, or $1.71 per share (basic and diluted), compared to a net loss attributable to common stockholders of $299.7 million, or $1.34 per share (basic and diluted), during the corresponding period of 2014.

Significant items for the three and six months ended June 30, 2015 were a gain of $21.9 million and a loss of $209.2 million, respectively, compared to losses of $189.8 million and $236.6 million for the comparable 2014 periods, respectively. Significant items for the three and six months ended June 30, 2015 related to derivative gains (losses) associated with the cancellation of, and fees related to, interest rate derivatives and changes in long-term LIBOR during the period, losses on early extinguishment of debt related to the write-off of debt issuance costs by Sabine Pass Liquefaction, LLC (“SPL”) primarily in connection with the refinancing of a portion of its credit facilities in March 2015, and development expenses primarily for the natural gas liquefaction and export facility being developed by us near Corpus Christi, Texas (the “CCL Project”).

Included in general and administrative expense were non-cash compensation expenses of $43.0 millionand $58.1 million for the three and six months ended June 30, 2015, respectively, compared to $24.6 million and $59.2 million for the comparable 2014 periods, respectively.

Results are reported on a consolidated basis and include our ownership interest in Cheniere Energy Partners, L.P. (“Cheniere Partners”), which is based on our 100% ownership of the general partner ofCheniere Partners and 80.1% ownership interest in Cheniere Energy Partners LP Holdings, LLC which owns a 55.9% limited partner interest in Cheniere Partners.

Recent Significant Events

  • In May 2015, we made a positive final investment decision (“FID”) and issued a notice to proceed (“NTP”) with construction to Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) for the first two natural gas liquefaction trains (“Trains”) and the related new facilities (“Stage 1”) of the CCL Project.
  • In connection with the commencement of construction of Stage 1 of the CCL Project, Cheniere Corpus Christi Holdings, LLC entered into an $8.4 billion credit facility to be used for costs associated with the development, construction, operation and maintenance of Stage 1 of the CCL Project and a 23-mile, 48″ natural gas supply pipeline that will interconnect the CCL Project with several interstate and intrastate natural gas pipelines (the “Corpus Christi Pipeline”).
  • Cheniere CCH Holdco II, LLC, our wholly owned subsidiary, issued $1.0 billion aggregate principal amount of 11% Senior Secured Notes due 2025, which will be used to pay a portion of the capital costs associated with Stage 1 of the CCL Project and the Corpus Christi Pipeline.
  • In June 2015, SPL made a positive FID and issued an NTP with construction to Bechtel for Train 5 of the Sabine Pass Liquefaction Project (defined below).
  • In connection with the commencement of construction of Train 5 of the Sabine Pass Liquefaction Project, SPL entered into four credit facilities totaling $4.6 billion, which replaced its existing credit facilities, to fund a portion of the costs of developing, constructing, and placing into operation Trains 1 through 5 of the Sabine Pass Liquefaction Project.
  • In June 2015, we announced the development of an additional two Trains at the CCL Project, bringing the total number of Trains under development at the CCL Project to up to five, each with expected nominal production capacity of approximately 4.5 million metric tonnes per annum (“mtpa”) of LNG. We have initiated the regulatory process by filing the National Environmental Policy Act (“NEPA”) pre-filing request with the U.S. Federal Energy Regulatory Commission(“FERC”), and requesting authorization from the U.S. Department of Energy (“DOE”) to export LNG to both free trade agreement (“FTA”) and non-FTA countries.
  • In June 2015, we announced an agreement in principle to partner with Parallax Enterprises, LLCfor the development of two mid-scale natural gas liquefaction projects in Louisiana, each with expected nominal production capacity of approximately 5.2 mtpa of LNG.

Liquefaction Projects Update

Sabine Pass Liquefaction Project

Through Cheniere Partners, we are developing up to six Trains, each with an expected nominal production capacity of approximately 4.5 mtpa of LNG, at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the “Sabine Pass Liquefaction Project”).

The Trains are in various stages of development:

  • Construction on Trains 1 and 2 began in August 2012, and as of June 30, 2015, the overall project completion percentage for Trains 1 and 2 was approximately 92.2%, which is ahead of the contractual schedule. Based on our current construction schedule, we anticipate that Train 1 will produce LNG as early as late 2015.
  • Construction on Trains 3 and 4 began in May 2013, and as of June 30, 2015, the overall project completion percentage for Trains 3 and 4 was approximately 69.2%, which is ahead of the contractual schedule. We expect Trains 3 and 4 to become operational in late 2016 and 2017, respectively.
  • The permitting process for Trains 5 and 6 has been completed. In April 2015, Cheniere Partnersreceived FERC authorization to site, construct, and operate Trains 5 and 6. In June 2015,Cheniere Partners received authorization from the DOE to export LNG to non-FTA countries.
  • Construction on Train 5 began on June 30, 2015, and Train 6 is under development. We expect Train 5 to commence operations as early as 2018. We expect to commence construction on Train 6 upon entering into acceptable commercial arrangements and obtaining adequate financing.

CCL Project

We are developing up to five Trains, each with an expected nominal production capacity of approximately 4.5 mtpa of LNG, as part of the CCL Project.

The Trains are in various stages of development:

  • Construction on Trains 1 and 2 began in May 2015. Train 3 is under development. We have entered into a Sale and Purchase Agreement (“SPA”) for approximately 0.8 mtpa of LNG volumes that commence with Train 3 and will contemplate making an FID to commence construction upon entering into additional SPAs. To date, we have obtained sufficient financing commitments and all necessary regulatory permits required to support the development of three Trains.
  • Trains 4 and 5 are under development. We have initiated the regulatory process by filing the NEPA pre-filing request with the FERC, and requesting authorization from the DOE to export LNG to both FTA and non-FTA countries. (Original Source)

Shares of Cheniere Energy closed today at $70.16, up $2.07 or 3.04%. LNG has a 1-year high of $85 and a 1-year low of $58.10. The stock’s 50-day moving average is $68.36 and its 200-day moving average is $73.86.

On the ratings front, Cheniere Energy has been the subject of a number of recent research reports. In a report released today, BTIG analyst William Frohnhoefer reiterated a Buy rating on LNG, with a price target of $100, which implies an upside of 42.5% from current levels. Separately, on July 22, Global Hunter’s Sunil Sibal initiated coverage with a Buy rating on the stock and has a price target of $76.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, William Frohnhoefer and Sunil Sibal have a total average return of 12.1% and -3.8% respectively. Frohnhoefer has a success rate of 38.9% and is ranked #879 out of 3721 analysts, while Sibal has a success rate of 50.0% and is ranked #3018.

Cheniere Energy Inc is engaged in LNG-related businesses. It owns and operates the Sabine Pass LNG terminal in Louisiana through its ownership interest in and management agreements with Cheniere Energy Partners, L.P.