Cheniere Energy reports first quarter highlights

Cheniere Energy Partners, L.P. reported a net loss of US$74.9 million for the three months ended 31 March 2016, compared to a net loss of US$178.7 million for the same period in 2015.

Significant items for the three months ended 31 March 2016 totlaled a loss ofUS$22.3 million, compared to a loss of US$126.1 million for the comparable 2015 period. Significant items for the three months ended 31 March 2016 related to derivative loss primarily as a result of a decrease in the forward LIBOR curve over the period and loss on early extinguishment of debt associated with the write-off of debt issuance costs by Cheniere Creole Trail Pipeline, L.P. (CTPL) as a result of the prepayment of its outstanding term loan. Significant items for the three months ended 31 March 2015 related to loss on early extinguishment of debt related to the write-off of debt issuance costs by Sabine Pass Liquefaction, LLC (SPL) in connection with the refinancing of a portion of its credit facilities and derivative loss due primarily to contingent interest rate derivatives entered into and changes in long term LIBOR during the period.

2016 highlights

• In February, the first commissioning cargo with LNG produced at the Sabine Pass Liquefaction Project was successfully loaded and exported. A total of four LNG commissioning cargoes were loaded and exported during the three months ended 31 March 2016, and a total of seven LNG commissioning cargoes have been loaded and exported to date.
• In February, Cheniere Partners closed on up to approximately US$2.8 billion of senior secured credit facilities (the CQP Credit Facilities). The four year credit facilities consist of a US$450 million CTPL tranche term loan, an approximately US$2.1 billion Sabine Pass LNG, L.P. (SPLNG) tranche term loan, a US$125 million debt service reserve credit facility, and a US$115 million revolving credit facility. The CTPL tranche term loan was used to prepay the US$400 million senior secured term loan at CTPL subsequent to closing of the facilities. Remaining proceeds from the facilities will be used by Cheniere Partners (i) to redeem or repay the approximately US$1.7 billion senior secured notes due 2016 and the US$420 million senior secured notes due 2020 that were issued by SPLNG, (ii) to pay associated transaction costs and make-whole amounts, if any, and (iii) for general business purposes of Cheniere Partners and its subsidiaries.

Sabine Pass LNG Terminal

The company is developing up to six trains, each with an expected nominal production capacity of approximately 4.5 million tpy 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 construction and development. Train 1 is expected to reach substantial completion imminently, after which the company expects to take over care, custody and control. Train 2 is undergoing the commissioning process. A train is expected to achieve substantial completion upon the completion of construction, commissioning and successfully satisfying certain tests. Once a train achieves substantial completion, results from LNG sales will be reflected in the statement of operations.

• Construction on Trains 1 and 2 began in August 2012, and as of 31 March 2016, the overall project completion percentage for Trains 1 and 2 was approximately 98.3%, which is ahead of the contractual schedule. The company expects substantial completion of Train 1 to be achieved in May 2016. The commissioning process on Train 2 has commenced, and the company expects substantial completion of Train 2 to be achieved in September 2016.
• Construction on Trains 3 and 4 began in May 2013, and as of 31 March 2016, the overall project completion percentage for Trains 3 and 4 was approximately 83.8%, which is ahead of the contractual schedule. The company expects Trains 3 and 4 to reach substantial completion in 2017.
• Construction on Train 5 began in June 2015, and as of 31 March 2016, the overall project completion percentage for Train 5 was approximately 28.8%, which is ahead of the contractual schedule. Engineering, procurement, subcontract work and Bechtel direct hire construction were approximately 59.1%, 45.1%, 24.2% and 0.4% complete, respectively. The company expects Train 5 to reach substantial completion in 2019.
• Train 6 is currently under development, with all necessary regulatory approvals in place. The company expects to make a final investment decision and commence construction on Train 6 upon, among other things, entering into an EPC contract, entering into acceptable commercial arrangements and obtaining adequate financing.

Adapted from press release by Rosalie Starling

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