Cheniere Energy To Sell 30% Stake In Freeport LNG To Zachry
April 22 2010 - 6:29PM
Dow Jones News
Cheniere Energy, Inc. (LNG) said Thursday that the company has
agreed to sell its 30% interest in Freeport LNG Development LP to
Zachry American Infrastructure LLC and Hastings Fund Management USA
Inc. for $104 million.
Freeport LNG Development operates an LNG terminal off the Texas
Gulf Coast. Houston-based Cheniere, a developer and owner of
liquefied natural-gas terminals, plans to use the proceeds of the
sale of its stake in the company to pay down part of a $400 million
loan. ConocoPhillips (COP) and Colorado oilman Michael Smith have
stakes in Freeport LNG Development's general partner, the entity
that manages the company and receives a percentage of its
profits.
Zachry American Infrastructure is an independent member of the
Zachry group of construction, engineering and infrastructure
companies based in San Antonio, Texas. Hastings Fund Management USA
is the North American arm of Hastings Fund Management, an
Australian infrastructure fund manager and subsidiary of Westpac
Banking Corp (WBC.AU).
Cheniere's plans to develop the Freeport LNG terminal were
hatched in 2001, when declining U.S. gas supplies were expected to
drive imports of the fuel from overseas. But improved technology
has led to a boom in gas production from onshore fields, and
Cheniere's terminals have seen few LNG cargoes, leaving the company
with meager cash flows. Cheniere also owns the Sabine Pass LNG
terminal in Louisiana.
Gas marketers continue to view the U.S. as a "market of last
resort" for cargoes that aren't needed in Europe and Asia, however.
A unit of Russian energy giant Gazprom announced Thursday that it
had signed an agreement with a subsidiary of San Diego-based Sempra
Energy (SE) for the right to deliver LNG cargoes to the Cameron LNG
terminal in Louisiana. In April, Cheniere announced a pact with
J.P. Morgan Chase & Co. (JPM) that will give J.P. Morgan's
clients access to the Sabine Pass terminal. The two firms will also
work together to find other clients who want to ship through the
terminal.
Cheniere expects the Freeport deal to close in the second
quarter. Shares of Cheniere were up 24 cents, or 4.94%, to trade at
$5.10 after hours.
-By Christine Buurma, Dow Jones Newswires; 212-416-2143;
christine.buurma@dowjones.com
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