UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 2015
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CHENIERE ENERGY PARTNERS, L.P. |
(Exact name of registrant as specified in its charter)
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Delaware | 001-33366 | 20-5913059 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
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700 Milam Street
Suite 1900
Houston, Texas | | 77002 |
(Address of principal executive offices) | | (Zip Code) |
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Registrant’s telephone number, including area code: (713) 375-5000 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On October 30, 2015, Cheniere Energy Partners, L.P. (the “Partnership”) issued a press release announcing the Partnership’s results of operations for the third quarter ended September 30, 2015. The press release is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein in its entirety.
The information included in this Item 2.02 of Current Report on Form 8-K, including the attached Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
d) Exhibits
Exhibit
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99.1* | Press Release, dated October 30, 2015. |
* Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | CHENIERE ENERGY PARTNERS, L.P. | |
| | | | By: | Cheniere Energy Partners GP, LLC, | |
| | | | | its general partner | |
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| Date: | October 30, 2015 | | By: | /s/ Michael J. Wortley
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| | | | Name: | Michael J. Wortley | |
| | | | Title: | Senior Vice President and | |
| | | | | Chief Financial Officer | |
EXHIBIT INDEX
Exhibit
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99.1* | Press Release, dated October 30, 2015. |
* Furnished herewith.
EXHIBIT 99.1
CHENIERE ENERGY PARTNERS, L.P. NEWS RELEASE
Cheniere Energy Partners, L.P. Reports Third Quarter 2015 Results
Houston, Texas - October 30, 2015 - Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE MKT: CQP) reported a net loss of $24.1 million and $262.9 million for the three and nine months ended September 30, 2015, respectively, compared to a net loss of $43.2 million and $339.2 million for the same periods in 2014, respectively.
Significant items for the three months ended September 30, 2015 resulted in a gain of $21.1 million and are related to derivative loss associated with the changes in long-term LIBOR during the period and development expense, offset by changes in operating and maintenance expense associated with the increase in fair value of certain natural gas purchase agreements related to gas procurement for the liquefaction project currently under construction at the Sabine Pass LNG terminal adjacent to the existing regasification facilities (the “Sabine Pass Liquefaction Project”). Significant items for the nine months ended September 30, 2015 resulted in a loss of $113.8 million and are related to loss on early extinguishment of debt, derivative losses primarily due to the termination of interest rate swaps, and development expense, partially offset by changes in operating and maintenance expense described above.
General and administrative expense (including affiliate) increased by $2.5 million and $7.4 million for the three and nine months ended September 30, 2015, respectively, compared to the corresponding 2014 periods, primarily due to an increase in management fees incurred under certain management service agreements with wholly owned subsidiaries of Cheniere Energy, Inc. (“Cheniere”) (NYSE MKT: LNG). Our wholly-owned subsidiary, Sabine Pass Liquefaction, LLC (“SPL”) is required to pay monthly fees to an affiliate of Cheniere based upon the capital expenditures incurred in the previous month for construction of the first five natural gas liquefaction trains (“Trains”) of the Sabine Pass Liquefaction Project. Operating and maintenance expense (including affiliate) decreased by $40.8 million and $30.9 million for the three and nine months ended September 30, 2015, respectively, compared to the corresponding 2014 periods, primarily due to the increase in fair value of certain natural gas purchase agreements related to gas procurement for the Sabine Pass Liquefaction Project.
Recent Significant Events
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• | SPL entered into a $1.2 billion working capital facility that will be used primarily for certain working capital requirements related to developing and placing into operation the Sabine Pass Liquefaction Project. |
Sabine Pass Liquefaction Project Update
We continue to make progress on the Sabine Pass Liquefaction Project, which is being developed for up to six Trains, each with an expected nominal production capacity of approximately 4.5 million tonnes per annum (“mtpa”) of LNG.
The Trains are in various stages of development:
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▪ | Construction on Trains 1 and 2 began in August 2012, and as of September 30, 2015, the overall project completion percentage for Trains 1 and 2 was approximately 95.2%, 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. |
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▪ | Construction on Trains 3 and 4 began in May 2013, and as of September 30, 2015, the overall project completion percentage for Trains 3 and 4 was approximately 73.6%, which is ahead of the contractual schedule. We expect Trains 3 and 4 to become operational in late 2016 and 2017, respectively. |
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▪ | The permitting process for Trains 5 and 6 has been completed. In April 2015, we received U.S. Federal Energy Regulatory Commission (“FERC”) authorization to site, construct, and operate Trains 5 and 6. In June 2015, we received authorization from the U.S. Department of Energy (“DOE”) to export LNG to non-free trade agreement countries. |
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▪ | Construction on Train 5 began on June 30, 2015, and 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. |
Sabine Pass Liquefaction Project Timeline
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| | Target Date |
Milestone | | Trains 1 - 4 | | Trains 5 & 6 |
DOE export authorization | | Received | | Received |
Definitive commercial agreements | | Completed 16.0 mtpa | | T5: Completed T6: 2015/2016 |
- BG Gulf Coast LNG, LLC | | 5.5 mtpa | | |
- Gas Natural Fenosa | | 3.5 mtpa | | |
- KOGAS | | 3.5 mtpa | | |
- GAIL (India) Ltd. | | 3.5 mtpa | | |
- Total Gas & Power N.A. | | | | 2.0 mtpa |
- Centrica plc | | | | 1.75 mtpa |
EPC contracts | | Completed | | T5: Completed T6: 2015/2016 |
Financing | | Completed | | T5: Completed T6: 2015/2016 |
FERC authorization | | Completed | | Completed |
Issue Notice to Proceed | | Completed | | T5: Completed T6: 2015/2016 |
Commence operations | | 2015 - 2017 | | 2018/2019 |
Distributions to Unitholders
We estimate that the annualized distribution to common unitholders for fiscal year 2015 will be $1.70 per unit.
We will pay a cash distribution per common unit of $0.425 to unitholders of record as of November 2, 2015, and the related general partner distribution on November 13, 2015.
Cheniere Partners owns 100 percent of the Sabine Pass LNG terminal located on the Sabine Pass deepwater shipping channel less than four miles from the Gulf Coast. The Sabine Pass LNG terminal includes existing infrastructure of five LNG storage tanks with capacity of approximately 16.9 Bcfe, two docks that can accommodate vessels with nominal capacity of up to 266,000 cubic meters and vaporizers with regasification capacity of approximately 4.0 Bcf/d.
Cheniere Partners is developing natural gas liquefaction facilities at the Sabine Pass LNG terminal adjacent to the existing regasification facilities. Cheniere Partners plans to construct over time up to six natural gas Trains, which are in various stages of development. Each Train is expected to have a nominal production capacity of approximately 4.5 mtpa of LNG. The overall project completion percentage of Trains 1 and 2 is approximately 95.2% as of September 30, 2015. The overall project completion percentage of Trains 3 and 4 is approximately 73.6% as of September 30, 2015. Construction commenced on Train 5 in June 2015. Cheniere Partners has received all regulatory approvals to construct and operate Train 6. Cheniere Partners has entered into six third-party LNG Sale and Purchase Agreements (“SPAs”) that in the aggregate equate to approximately 19.75 mtpa of LNG and commence with the date of first commercial delivery of Trains 1 through 5 as specified in the respective SPAs.
For additional information, please refer to the Cheniere Partners website at www.cheniere.com and Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the Securities and Exchange Commission.
This press release contains certain statements that may include “forward-looking statements.” All statements, other than statements of historical facts, included herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things, (i) statements regarding Cheniere Partners’ business strategy, plans and objectives, including the development, construction and operation of liquefaction facilities, (ii) statements regarding expectations regarding regulatory authorizations and approvals, (iii) statements expressing beliefs and expectations regarding the development of Cheniere Partners’ LNG terminal and liquefaction business, (iv) statements regarding the business operations and prospects of third parties, (v) statements regarding potential financing arrangements, and (vi) statements regarding future discussions and entry into contracts. Although Cheniere Partners believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Cheniere Partners’ actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Cheniere Partners’ periodic reports that are filed with and available from the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, Cheniere Partners does not assume a duty to update these forward-looking statements.
(Financial Table Follows)
Cheniere Energy Partners, L.P.
Consolidated Statements of Operations
(in thousands, except per unit data) (1)
(unaudited)
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| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2015 | | 2014 | | 2015 | | 2014 |
Revenues | | | | | | | |
Revenues | $ | 66,596 |
| | $ | 66,890 |
| | $ | 199,804 |
| | $ | 199,933 |
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Revenues—affiliate | 941 |
| | 700 |
| | 2,952 |
| | 2,206 |
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Total revenues | 67,537 |
| | 67,590 |
| | 202,756 |
| | 202,139 |
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Operating costs and expenses | |
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Operating and maintenance expense (income) | (22,782 | ) | | 21,041 |
| | 17,840 |
| | 54,750 |
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Operating and maintenance expense—affiliate | 8,081 |
| | 5,016 |
| | 20,355 |
| | 14,307 |
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Depreciation expense | 16,687 |
| | 14,781 |
| | 47,557 |
| | 43,821 |
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Development expense | 113 |
| | 1,383 |
| | 2,631 |
| | 8,671 |
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Development expense—affiliate | 152 |
| | 329 |
| | 562 |
| | 723 |
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General and administrative expense | 3,673 |
| | 2,448 |
| | 11,269 |
| | 10,048 |
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General and administrative expense—affiliate | 25,692 |
| | 24,454 |
| | 80,761 |
| | 74,579 |
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Total operating costs and expenses | 31,616 |
| | 69,452 |
| | 180,975 |
| | 206,899 |
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Income (loss) from operations | 35,921 |
| | (1,862 | ) | | 21,781 |
| | (4,760 | ) |
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Other income (expense) | |
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Interest expense, net of amounts capitalized | (49,360 | ) | | (46,884 | ) | | (142,353 | ) | | (130,943 | ) |
Loss on early extinguishment of debt | — |
| | — |
| | (96,273 | ) | | (114,335 | ) |
Derivative gain (loss), net | (10,872 | ) | | 5,379 |
| | (46,541 | ) | | (89,222 | ) |
Other income | 179 |
| | 127 |
| | 535 |
| | 63 |
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Total other expense | (60,053 | ) | | (41,378 | ) | | (284,632 | ) | | (334,437 | ) |
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Net loss | $ | (24,132 | ) | | $ | (43,240 | ) | | $ | (262,851 | ) | | $ | (339,197 | ) |
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Basic and diluted net income (loss) per common unit | $ | 0.18 |
| | $ | 0.08 |
| | $ | (0.44 | ) | | $ | (0.83 | ) |
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Weighted average number of common units outstanding used for basic and diluted net income (loss) per common unit calculation | 57,081 |
| | 57,079 |
| | 57,081 |
| | 57,079 |
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(1) | Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the Securities and Exchange Commission. |
Cheniere Energy Partners, L.P.
Consolidated Balance Sheets
(in thousands, except per unit data) (1)
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| September 30, | | December 31, |
| 2015 | | 2014 |
ASSETS | (unaudited) | | |
Current assets | | | |
Cash and cash equivalents | $ | 170,433 |
| | $ | 248,830 |
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Restricted cash | 391,495 |
| | 195,702 |
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Accounts and interest receivable | 95 |
| | 333 |
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Accounts receivable—affiliate | 2,566 |
| | 3,651 |
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Advances to affiliate | 54,995 |
| | 27,323 |
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LNG inventory | 7,145 |
| | 4,293 |
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Other current assets | 16,055 |
| | 6,388 |
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Total current assets | 642,784 |
| | 486,520 |
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Non-current restricted cash | 76,107 |
| | 544,465 |
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Property, plant and equipment, net | 11,299,725 |
| | 8,978,356 |
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Debt issuance costs, net | 307,099 |
| | 241,909 |
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Non-current derivative assets | 30,657 |
| | 11,744 |
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Other non-current assets | 190,960 |
| | 124,521 |
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Total assets | $ | 12,547,332 |
| | $ | 10,387,515 |
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LIABILITIES AND PARTNERS’ EQUITY | | | |
Current liabilities | | | |
Accounts payable | $ | 7,096 |
| | $ | 8,598 |
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Accrued liabilities | 352,457 |
| | 136,578 |
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Due to affiliates | 32,851 |
| | 18,952 |
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Deferred revenue | 26,653 |
| | 26,655 |
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Deferred revenue—affiliate | 708 |
| | 708 |
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Derivative liabilities | 7,388 |
| | 23,247 |
|
Other current liabilities | 267 |
| | 18 |
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Total current liabilities | 427,420 |
| | 214,756 |
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| | | |
Long-term debt, net | 11,244,002 |
| | 8,991,333 |
|
Non-current deferred revenue | 10,500 |
| | 13,500 |
|
Non-current derivative liabilities | 8,832 |
| | 267 |
|
Other non-current liabilities | 1,177 |
| | 2,185 |
|
Other non-current liabilities—affiliate | 61,691 |
| | 34,745 |
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Partners’ equity | | | |
Common unitholders’ interest (57.1 million units issued and outstanding at September 30, 2015 and December 31, 2014) | 346,443 |
| | 495,597 |
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Class B unitholders’ interest (145.3 million units issued and outstanding at September 30, 2015 and December 31, 2014) | (37,981 | ) | | (38,216 | ) |
Subordinated unitholders’ interest (135.4 million units issued and outstanding at September 30, 2015 and December 31, 2014) | 467,054 |
| | 648,414 |
|
General partner’s interest (2% interest with 6.9 million units issued and outstanding at September 30, 2015 and December 31, 2014) | 18,194 |
| | 24,934 |
|
Total partners’ equity | 793,710 |
| | 1,130,729 |
|
Total liabilities and partners’ equity | $ | 12,547,332 |
| | $ | 10,387,515 |
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(1) | Please refer to the Cheniere Energy Partners, L.P. Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the Securities and Exchange Commission. |
CONTACTS:
Investors: Randy Bhatia: 713-375-5479, Katy Cox: 713-375-5079
Media: Faith Parker: 713-375-5663
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