Cheniere Energy, Inc. · NYSE:LNG
Cheniere Energy — Investor Presentation (May 2007)
28 slides from Cheniere Energy's investor presentation, May 14, 2007
Slide 1: Corporate Presentation May 2007
Corporate Presentation May 2007 CHENIERE ENERGY ,INC . *Corpus Christi LNG, LLC Cheniere Energy, Inc. 100% *Artist’s Rendition *Creole Trail LNG, L.P. Cheniere Energy, Inc. 100% *Freeport LNG Development, L.P. Cheniere Energy, Inc. 30% * Sabine Pass LNG, L.P. Cheniere Energy Partners, L.P. Cheniere
Slide 2: Forward-looking statements
This presentation contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements, other than statements of histo
Slide 3: Value Drivers
3 Value Drivers Cheniere Marketing, Inc. Cheniere Marketing, Inc. Corpus Christi Pipeline Corpus Christi Pipeline Creole Trail LNG Terminal Creole Trail LNG Terminal Sabine Pass Pipeline Sabine Pass Pipeline Creole Trail Pipeline Creole Trail Pipeline Corpus Christi LNG Terminal Corpus Christi LNG T
Slide 4: Value Drivers
4 Value Drivers Corpus Christi Pipeline Creole Trail LNG Terminal Sabine Pass Pipeline Creole Trail Pipeline Corpus Christi LNG Terminal Asset Development Asset Development Cheniere Marketing, Inc. Cheniere Marketing, Inc. Partnership Interests Partnership Interests Cheniere Energy Partners GP, LLC
Slide 5: Freeport LNG Development, L.P.
5 Freeport LNG Development, L.P. Cheniere Energy, Inc. 30% ?? Land – 233 acres in Brazoria County, TX ?? Berthing/Unloading – 1 dock – LNGCs up to 265,000 cm – 3 dedicated tugs ?? Storage – 2 x 160,000 cm (6.7 Bcfe) ?? Vaporization – 1.5 Bcf/d ?? Project Status – 75% complete March 2007 – Operationa
Slide 6: Cheniere Energy Partners, L.P. / Sabine Pass LNG, L.P.
6 Cheniere Energy Partners, L.P. (AMEX: CQP) Sabine Pass LNG, L.P. Cheniere Energy, Inc. 91% ?? Land – 853 acres in Cameron Parish, LA ?? Accessibility – Deep Water Ship Channel – Sabine River Channel dredged to 40 feet ?? Proximity – 3.7 nautical miles from coast – 22.8 nautical miles from outer bu
Slide 7: Cheniere Energy Partners Cash Flows
7 Cheniere Energy Partners Cash Flows (1) Fees do not vary with the actual quantity of LNG processed; tax reimbursement not included in the fees. (2) Subject to annual inflation adjustment. (3) Cheniere Marketing TUA payments after commercial start-up in 2008 will be $5.0 million per month and will
Slide 8: MLP Market – Equity Value
8 Market Capitalization ($ Billions) MLP Market – Equity Value* *As of May 4, 2007; assumes that all MLP subordinated and common units are valued equally. 13.9 12.8 8.5 6.4 6.0 4.6 4.4 4.0 3.3 3.2 3.0 2.1 1.9 1.7 1.7 1.5 1.4 1.3 1.3 1.2 0.8 0.7 0.6 0.6 0.6 0.5 0.5 0.5 0.4 0.4 0.3 0.3 0 1 2 3 4 5 6 7
Slide 9: Value Drivers
9 Value Drivers Cheniere Marketing, Inc. Cheniere Marketing, Inc. Corpus Christi Pipeline Corpus Christi Pipeline Creole Trail LNG Terminal Creole Trail LNG Terminal Sabine Pass Pipeline Sabine Pass Pipeline Creole Trail Pipeline Creole Trail Pipeline Corpus Christi LNG Terminal Corpus Christi LNG T
Slide 10: Potential Pipeline Interconnects
10 Sabine PL Targa Transco Gulf South Trunkline Jefferson Island Storage Sabine Pass LNG Terminal Phase I – 2Q 2008 Phase II – 2Q 2009 Sabine Pass LNG Terminal Phase I – 2Q 2008 Phase II – 2Q 2009 Creole Trail LNG Terminal Creole Trail LNG Terminal Henry Hub Varibus NGPL Transco Bridgeline Tennessee
Slide 11: Corpus Christi LNG, LLC
11 Corpus Christi LNG, LLC Cheniere Energy, Inc. 100% ?? Land – 212 acres in San Patricio County, TX – ~ 400 acres of permanent easement ?? Accessibility - Deepwater Ship Channel – La Quinta Channel dredged to 45 feet ?? Proximity – 14.3 nautical miles from coast – 16 nautical miles from outer buoy
Slide 12: Creole Trail LNG, L.P.
12 Creole Trail LNG, L.P. Cheniere Energy, Inc. 100% ?? Land – 1463 Acres in Cameron Parish, LA ?? Accessibility - Deepwater Ship Channel – Calcasieu Channel dredged to 40+ feet ?? Proximity – 3.2 nautical miles from Coast – 30.9 nautical miles from outer buoy ?? Berthing/Unloading – 2 docks – LNGCs
Slide 13: Value Drivers
13 Value Drivers Cheniere Marketing, Inc. Cheniere Marketing, Inc. Corpus Christi Pipeline Creole Trail LNG Terminal Sabine Pass Pipeline Creole Trail Pipeline Corpus Christi LNG Terminal Asset Development Asset Development Partnership Interests Partnership Interests Cheniere Energy Partners GP, LLC
Slide 14: Cheniere Marketing, Inc. Potential Value of Capacity
14 Cheniere Marketing, Inc. Potential Value of Capacity ?? Annual TUA commitment to Sabine Pass LNG, L.P. is: – 2 Bcf/d @ $0.32 MMbtu = $256 million* ?? Intrinsic value: replacement cost of new capacity ?? Option value – Seasonal flows and basis differential (natural gas demand) – Liquidity of Gulf
Slide 15: North America Onshore Regasification Capacity By 2010
15 Everett Everett Cove Point Cove Point Elba Island Elba Island Lake Charles Lake Charles Sabine Pass Sabine Pass Freeport Freeport Golden Pass Golden Pass Cameron Cameron Costa Azúl Costa Azúl Canaport Canaport Existing Under Construction Altamira Altamira Source: Websites of Terminal Owners, Wood
Slide 16: Next Generation of Terminals
16 Next Generation of Terminals Including Some Terminals Under Construction ?? Higher construction costs: ~ $1 billion for 1 Bcf/d ?? Utilization constraints: – Operational: • Marine access • Pipeline takeaway • Storage – Market size and access • Affects regional price basis – Seasonality ?? Regas h
Slide 17: Liquefaction Growth
17 Liquefaction Growth Source: Wood Mackenzie, 2007 Global Liquefaction Capacity 0 5 10 15 20 25 30 35 40 45 2005 2006 2007 2008 2009 2010 Bcf/d 37 Bcf/d 37 Bcf/d 18 12
Slide 18: Realignment of LNG Imports By Region
18 25 5 7 12 2 11 13 0 5 10 15 20 25 30 2005 2010 2015 Source: Cheniere Research Realignment of LNG Imports By Region Bcf/d North America Europe Asia Pacific Atlantic Basin Pacific Basin Atlantic Basin Pacific Basin Atlantic Basin Pacific Basin
Slide 19: Seasonal LNG Imports - 2010
19 Seasonal LNG Imports - 2010 15 16 18 0 5 10 15 20 Atlantic Basin Q2 Q3 Q4 Bcf/d North America Europe Asia 10 8 7 14 6 14 10 8 Pacific Basin Atlantic Basin Pacific Basin Atlantic Basin Pacific Basin Atlantic Basin Pacific Basin Q1 18 Source: Cheniere Research 14 Bcf/d North American imports; 6 Bcf
Slide 20: Contractual Trends Away from Utilities
20 Contractual Trends Away from Utilities 0 10 20 30 40 50 Bcf/d 2005 2006 2007 2008 2009 2010 2011 2012 Non-Utility Non-Utility Uncommitted Uncommitted Utility Utility ~44% of 2010 LNG supply will seek premium markets Source: Cheniere Research
Slide 21: NYMEX vs. NBP
21 NYMEX vs. NBP – April 30, 2007 Historical Data Futures as of 04/30/07 Henry Hub Index minus National Balancing Point Index ($6.00) ($5.00) ($4.00) ($3.00) ($2.00) ($1.00) $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 N
Slide 22: Cheniere Marketing Goal
22 Cheniere Marketing Goal ?? Exceed Cheniere’s opportunity cost for the capacity held by Cheniere Marketing by: – Capturing the intrinsic value of cross-Atlantic spreads – Capturing a portion of the option value associated with being in the world’s most liquid market
Slide 23: Value of LNG Purchasing Strategy
23 Value of LNG Purchasing Strategy Example: 1 Bcf/d of baseload supply purchased at 86% of $7.00 Henry Hub after 2% fuel and power = $306 million per year • Any redirection benefits are incremental – Diversion of one cargo to $1.00 premium market adds $1.5 million assuming 50% sharing with IPA supp
Slide 24: 2007 Value of LNG Purchasing Strategy
2007 24 Value of LNG Purchasing Strategy 3. LNG Gateway Spread Options: Individual per-cargo put rights that give option buyers the right, but not the obligation, to sell LNG to Cheniere Marketing, Inc. at pre-agreed index discounts
Slide 25: LNG Gateway
25 LNG Gateway Months with negative spreads still have positive put option values Support My Account Optional Sale Month NYMEX Henry Hub Ice NBP Spread Change in Spread Apr 08 8.331 6.951 1.380 May 08 8.201 6.036 2.165 Jun 08 8.273 5.985 2.88 Jul 08 8.358 5.823 2.535 Aug 08 8.428 5.861 2.567 Sept 08
Slide 26: Value of LNG Purchasing Strategy
26 Value of LNG Purchasing Strategy 4. Hybrid Term / Spread Option Structures • Gaz de France: Option to deliver 7 cargoes during 2008 • Exchange of puts 2009-2024 – Sale to other party ex-ship at Sabine Pass LNG and Isle of Grain, respectively • Gaz de France strike price, delivered to Cheniere Mar
Slide 27: Cheniere Growth Strategy
27 Cheniere Growth Strategy ?? Pursue acquisitions for Cheniere Energy Partners, L.P. (AMEX: CQP) ?? Continue asset development: terminals and pipelines ?? Develop a balanced supply portfolio for Cheniere Marketing between long-term IPA’s and LNG Gateway exposure to the spot, option and and short-te
Slide 28: Condensed Balance Sheet
28 Condensed Balance Sheet Cheniere Energy Other Cheniere Consolidated Partners, L.P. Energy, Inc. (1) Cheniere Energy, Inc. (2) Unrestricted cash - $ 584 $ 584 $ Restricted cash and securities 1,191 14 1,205 Property, plant and equipment 769 188 957 Goodwill and other assets 54 112 166 Total assets