Cheniere Energy, Inc. · NYSE:LNG
Cheniere Energy — Investor Presentation (March 2006)
28 slides from Cheniere Energy's investor presentation, March 2006
Slide 1: Corporate Presentation March 2006
CHENIERE ENERGY, INC. *Sabine Pass LNG L.P. *Corpus Christi LNG L.P. *Creole Trail LNG L.P. *Freeport LNG L.P. Cheniere 100% Cheniere 100% Cheniere 100% Cheniere 30% Limited Partner Corporate Presentation March 2006 *Artist’s Rendition
Slide 2: Safe Harbor Act
Safe Harbor Act 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 sta
Slide 3: New Supply Must Come from New Areas
New Supply Must Come from New Areas… Arctic Gas “We've “We've got got to to make make sure sure that that we we have have enough enough natural natural gas gas to to meet meet our our home home heating heating andand industrial industrial needs. needs. And And one one ofof “Our “Our limited limited
Slide 4: Cheniere LNG Receipt Network
Cheniere LNG Receipt Network • 4 Deepwater Ports • 7 Unloading Docks Sabine Pass • 15 Storage Tanks 4.0 Bcf/d (51.7 Bcf equivalent) Creole Trail • 11.4 Bcf/d Regas Freeport (30%) 3.3 Bcf/d 1.5 Bcf/d Capacity Under Construction Under Construction Corpus Christi 2.6 Bcf/d 4
Slide 5: Timing of Operations
Timing of Operations 2008 2009 2010 2011 Freeport 1.5 1.5 1.5 1.5 Sabine Pass 2.6 4.0 4.0 4.0 Corpus Christi -- -- 2.6 2.6 Creole Trail -- -- -- 3.3 Total Bcf/d 4.1 5.5 8.1 11.4 Certain Key Considerations • Regulatory – no delays in schedules currently anticipated • Commercial – Cheniere’s ability t
Slide 6: Issues
Issues Is Cheniere building too much capacity? – Availability of supply – Competition for regasification Optimum commercial arrangements 6
Slide 7: Projected Liquefaction Capacity 2010
Projected Liquefaction Capacity 2010 Existing Liquefaction Under Construction or Proposed Liquefaction 2010 Liquefaction Capacity Atlantic 2004 LNG Imports Atlantic Basin Basin 14.5 14.5 Bcf/d Bcf/d 2004 2004 N. N. America America 2004 2004 Europe Europe 2.0 2.0 Bcf/d Bcf/d 4.0 Bcf/d 4.0 Bcf/d ME ME
Slide 8: Liquefaction Growth: Where will it go?
Liquefaction Growth Global liquefaction capacity in 2004 was 19 Bcf/d Liquefaction in 2010 is estimated to be 41 Bcf/d Growth in liquefaction is 22 Bcf/d Where will it go? 8
Slide 9: Asia Pacific LNG demand
Asia Pacific* ~7 Bcf/d needed for demand growth by 2010 Regional Regional Demand Demand by by Country Country (2004) (2004) Consumption Pipeline Import 2004 = 20 Bcf/d Capacity 2010 = 27 Bcf/d Eventually Large LNG Import Capacity Incremental Korea Korea 2004 = 32 Bcf/d LNG Need 33 Japan Japan 2010 =
Slide 10: Europe LNG demand
Europe* ~12 Bcf/d needed for demand growth for 2010 Consumption Pipeline Import Capacity Regional Regional Demand Demand by by Country Country (2004) (2004) 2004 = 45 Bcf/d 2004 = 26 Bcf/d 2010 = 57 Bcf/d 2010 = 32 Bcf/d LNG Import Capacity Incremental 2004 = 6 Bcf/d LNG Need 2010 = 10 Bcf/d 2010 =
Slide 11: World LNG Supply-Demand 2010
World LNG Supply-Demand 2010 Existing Liquefaction Under Construction or Proposed Liquefaction 2010 Liquefaction Capacity 2010 Consumption Atlantic Atlantic Basin Basin 14.5 Bcf/d 14.5 Bcf/d 2010 2010 Europe Europe Asia Asia Pacific Pacific 66 -- 88 Bcf/d Bcf/d ME ME Gulf Gulf 14.2 14.2 Bcf/d Bcf/d
Slide 12: Demand Seasonality
Demand Seasonality • Competitive winter markets • Complementary summer markets 35 30 25 Bcf/d 20 15 10 5 0 3 3 03 03 03 3 3 03 03 3 3 3 l-0 -0 -0 r-0 -0 -0 -0 n- n- b- g- p- ov ar Ju ec ct ay Ap Ja Ju Fe Au Se M O N D M Belgium, France & UK Gulf Coast (Bcf/d) 12 Source: IEA
Slide 13: North American Receiving Capacity
North American Receiving Capacity Can North America receive 16 to 19 Bcf/d? - Gas consumption constraint - Regasification
Slide 14: Projected U.S. Lower-48 Gas Production
Projected U.S. Lower-48 Gas Production At $6/MMBtu ~9 Bcf/d replacement production needed 3 F & D Costs 2.5 54 54 $/Mcfe 2 Bcf/d Bcf/d 55 50 1.5 50 1 Bcf/d Bcf/d 0.5 50 0 Bcf/d 1999 2000 2001 2002 2003 2004 41 41 45 Bcf/d Bcf/d 40 35 00 01 02 03 04 05 06 07 08 10 09 n- n- n- n- n- n- n- n- n- n- n-
Slide 15: Production and Imports vs. Consumption
Production and Imports vs. Consumption Replacement production + growth = 21 Bcf/d (at $6.00 per MMBtu) 80 70 9 Bcf/d Bcf/d 60 LNG Canadian Imports 12 Bcf/d 50 Lower-48 Production 40 00 01 02 03 04 05 06 07 08 09 10 20 20 20 20 20 20 20 20 20 20 20 Source: Lower-48, IHS 2005; Canadian imports & consu
Slide 16: North America Gas Demand & LNG Import Facilities
North America Gas Demand & LNG Import Facilities Import Import Capacity Capacity Bcf/d Bcf/d Bcf/d Bcf/d Demand Demand by by Country Country and and Region Region (2004) (2004) Existing Existing 3.4 3.4 Expansion Expansion ofof existing existing 1.4 1.4 New New 12.2 12.2 Total Total in in 2010 2010
Slide 17: Observations
Observations – Capacity utilization probably under 75% – U.S. will not receive sufficient gas at $6.00/MMBtu so prices will remain higher on average – European seasonality will increase volatility and reduce utilization rates – NYMEX will increasingly be a benchmark price globally 17
Slide 18: Financing
Financing Financing is not an issue any longer if: – Resource is controlled (hydrocarbon) – Market is accessible • Regasification • Customer base – NYMEX pricing is used Trend is increasingly toward transactions between owners and users 18
Slide 19: Cheniere's LNG Receiving Portfolio
Cheniere’s LNG Receiving Portfolio In this context, what is the optimal business model for Cheniere’s capacity?
Slide 20: Three Major Business Groups
Three Major Business Groups Cheniere Terminal Group – Asset and cash flow foundation – Non-regulated fee based Cheniere Pipeline Group – Downstream liquidity and optionality – Regulated fee based Cheniere LNG Marketing – Commercialization vehicle for retained capacity – Transaction based 20
Slide 21: Cheniere Terminal Group
Cheniere Terminal Group Freeport LNG L.P. – 30 % Capacity Revenue to Cheniere Sold – Terminal Use Agreement (TUA) Conoco 1.0 Bcf/d $15 Dow 0.5 Bcf/d Revenue to Cheniere @ Cheniere Energy – 100% Capacity $0.32 MMBtu ($MM) Sold – Terminal Use Agreement Total, S.A. 1.0 Bcf/d $125 Chevron 1.0 Bcf/d $125
Slide 22: Cheniere Pipeline Group
Cheniere Pipeline Group Purpose: to service terminals and connect to grid Capacity: approximately 155 miles of pipelines from Sabine Pass, Creole Trail, and Corpus Christi (20 Bcf/d of interconnected capacity) CapEx: $800 million to $1 billion over 5 years Rates: regulated – estimate $120 -
Slide 23: Cheniere LNG Marketing
Cheniere LNG Marketing Foster the marriage between North American demand and global LNG supply Developing portfolio of LNG HH Indexed Purchase Agreements and Natural Gas Sale Agreements Manage LNG GatewayTM Cheniere LNG Marketing provides: – Producers – LNG monetization service – Consumers –
Slide 24: Cheniere LNG Marketing Targeted Long-Term Agreements
Cheniere LNG Marketing Targeted Long-Term Agreements Long-term LNG Indexed Purchase Agreements delivered at the terminal Example: LNG Index Purchase Agreement – 1 Bcf/d x Gross Margin 10% Henry Hub @ $6.00 = $250 million When LNG Index Purchase Agreements are concluded, Cheniere LNG Marketing
Slide 25: Cheniere LNG Marketing LNG Gateway
Cheniere LNG Marketing LNG GatewayTM Because of seasonality and volatility the market for short-term transactions will continue to grow Opportunity to purchase LNG on opportunistic terms Plan to start receiving cargoes beginning in 2008 and gauge market reaction 25
Slide 26: Commercial Opportunity
Commercial Opportunity Cheniere Terminal Group – Approximately $2 billion of CapEx – Annual revenue potential $800 million – $1 billion – No commodity price exposure Cheniere Pipeline Group – Approximately $1 billion of CapEx – Annual revenue potential $120 - $150 million – Crucial to balance of
Slide 27: Target Market Access
Target Market Access Northeast Northeast Midwest Midwest Markets Markets Markets Markets 5.7 5.7 Bcf/d Bcf/d 11.8 11.8 Bcf/d Bcf/d Southeast Southeast Markets Markets 4.6 4.6 Bcf/d Bcf/d Gulf Gulf Coast Coast Markets Markets 4.9 4.9 Bcf/d Bcf/d Mexican Mexican Cheniere Markets Cheniere LNG LNG Marke
Slide 28: Financial Resources
Financial Resources (in millions) 9-30-2005 Working Capital $ 910 Capital Contribution in Sabine Pass LNG L.P. $ 203 Undrawn Sabine Pass Project Facility $ 822 Cost of Debt Interest Rate % Sabine Pass LNG L.P. – Project Facility $ 822 6.38 1 Convertible Notes $ 325 2.25 2 B Loan $ 600 7.25 3 1. Base