Cheniere Energy, Inc. · NYSE:LNG
Cheniere Energy — IPAA Oil & Gas Investment Symposium 2004
23 slides from Cheniere Energy's conference presentation, Apr 20, 2004
Slide 1: Is it too late?
Cheniere Energy, Inc. IPAA Oil & Gas Investment Symposium New York April 20, 2004 “Is it too late?” Charif Souki – Chairman, President & Chief Executive Officer
Slide 2: Safe Harbor Act Statement
Cheniere Energy, Inc. Safe Harbor Act Statement Under the Private Securities Litigation Reform Act of 1995: Certain information in this presentation are forward looking statements that are based on management’s belief, as well as assumptions made by, and information currently available to management
Slide 3: American Stock Exchange Ticker: LNG
American Stock Exchange Ticker: LNG Stock Shares Performance Outstanding Market Cap March 31, 2003 $1.40 13,297,393 $ 18,616,350 March 31, 2004 $17.34 18,707,811 $ 324,393,442
Slide 4: Cheniere Energy, Inc.
Cheniere Energy, Inc. Exploration • Gryphon Exploration: 9.3 % Warburg Pincus Equity Partners L.P.: 90.7 % • Cheniere Exploration LNG • Terminals - Freeport LNG: 30% limited partner - Corpus Christi: 66.6 % - Sabine Pass: 100% • Trading - J&S Cheniere S.A. LNG Trading affiliate with no risk exposure
Slide 5: LNG: Myth vs. Reality
LNG: Myth vs. Reality MYTH • Gas will never average $3/mcf • Cost to deliver LNG prohibitive • Will never get onshore facility permitted • Gulf Coast siting: • Coal to Newcastle Must control supply • Too many proposals REALITY • Dispelled—2004 estimate: $5.25 mcf •$ 2.50/mcf to $3.50/mcf • Over 30 I
Slide 6: US Supply—Demand Gap
US Supply—Demand Gap Historical Forecast 8 Tcf Production Consumption Source: EIA, Historical Natural Gas Annual (2003), Forecast based on 3% AA decline in existing production
Slide 7: Supply and Liquefaction
Supply and Liquefaction • Global Stranded Reserves: 6000 Tcf • Committed Liquefaction Investment $20 Billion by 2010 • 80% Controlled by National Oil Companies Liquefaction Atlantic Mideast/Gulf Pacific Total 1999 3.1 2 8 13.1 Bcf/d 2002 5.6 3.7 8 17.3 Bcf/d 2006 10.5 5.7 11.0 27.2 Bcf/d
Slide 8: Shipping
Shipping Committed Shipping Investment $10 Billion by 2007 Increasing number of ships uncommitted to a trade World Fleet* 1995 93 2001 128 2003 152 2006 208 *Source Clarksons, LNG Shipping Solutions, Poten & Partners
Slide 9: Regasification: Proposed Sites
Regasification – Over 30 proposed “Ideas” Proposed Sites
Slide 10: Actual Projects
Actual Projects 6 onshore permit applications with FERC. 9.3 Bcf/d 6 offshore applications with Coast Guard 5.4 Bcf/d 3 NEPA pre-filing 3.2 Bcf/d Numerous outside U.S. (Bahamas, Mexico) 2 for US Markets
Slide 11: Consumption by Coastal States
Consumption by Coastal States NH – 0.06 CT – 0.4 RI – 0.2 MD – 0.5
Slide 12: US Gas Flows
US Gas Flows Canada to MW 5.8 Bcf/d Into Chicago Area Hub 7.2 Bcf/d From Gulf Coast Production 19 Bcf/d Canada to NE 0.5 Bcf/d Into Boston Metro Area 0.8 Bcf/d Into NY Metro Area 1.8 Bcf/d
Slide 13: Existing US Pipeline Infrastructure
Existing US Pipeline Infrastructure
Slide 14: Permitting
Permitting Permit Requirements • Objective: FERC codes and rules very straight forward • Subjective: Local acceptance • Length of process: 12-18 months from filing application Offshore • Never done • More expensive • Reliability un-tested
Slide 15: Status of Industry
Status of Industry In the next three years: • Liquefaction growth of 10 Bcf/d represents 60% increase over next 3 years • Shipping growth of 62 vessels represents 50% increase over next 3 years • The supply—demand gap in the US continues to make this market the prime target for LNG producers • 10—12
Slide 16: Cheniere's Business Model
Cheniere’s Business Model - Gulf coast: liquidity, optionality and acceptability - Lowest cost regas supplier: • Large sites: easy to build within code • Large terminals for economies of scale • Proximity to large takeaway capacity & industrial users • Cooperate with communities to generate local su
Slide 17: Cheniere LNG: Terminals, Pipelines, Trading
Cheniere Energy, Inc. Cheniere LNG Terminals Pipelines J & S Cheniere Trading
Slide 18: Equity Structure: Cheniere LNG Receiving Terminals
Equity Structure Cheniere LNG Receiving Terminals Freeport LNG 30% • 1.5 Bcf/d sendout • 2007- In-service • Limited partnership interest • Capacity soldout Corpus Christi LNG 66.7% • 2.6 Bcf/d sendout • 2007-2008 In-service • General Partner Sabine Pass LNG 100% • 2.6 Bcf/d sendout • 2007-2008 In-se
Slide 19: Marketing of Capacity
Marketing of Capacity Total capacity in development 6.7 Bcf/d Held to Cheniere’s Account 2.2 Bcf/d Offered to Market 4.5 Bcf/d Committed—Dow Chemical & ConocoPhillips 1.5 Bcf/d Available 3.0 Bcf/d
Slide 20: Cheniere 2003–2004 Accomplishments
Cheniere 2003 – 2004 Accomplishments March—Freeport FERC application filed June—Signed MOU with Dow Chemical 500 MMcf/d November—FERC issued Freeport Draft Environmental Impact Statement December—Freeport & ConocoPhillips signed agreement COP to finance construction and to use 1Bcf/d Freeport capaci
Slide 21: Cheniere 2004 Goals
Cheniere 2004 Goals • Sell 3 bcf/d of capacity in Sabine and Corpus • Finalize construction turnkey with Bechtel • Permits for all three locations • Complete financing for Sabine and Corpus • Commence construction on at least two maybe all three projects by Q1 2005
Slide 22: Model Economics
Model Economics Freeport LNG, L.L.P – Cheniere 30% Limited Partner • Capacity: 1.5 Bcf/d • CAPEX: Estimate $500 million financed by ConocoPhillips • Revenue stream: - ConocoPhillips – terminal usage fee sufficient to recover financing and pro-rata costs; plus throughput fee 5 cents/Mcf on 1 Bcf/d -
Slide 23: Is it too late?
Cheniere Energy, Inc. Is it too late? • By 2007/2008 these terminals represent only a portion of this nation’s requirements. • These terminals, with strong local support and early applications will be among the first new terminals built onshore in the US. • With their cost structure they will provid
Cheniere Energy — IPAA Oil & Gas Investment Symposium 2004 on 6ix