Cheniere Energy, Inc. · NYSE:LNG
Cheniere Energy — Investor Presentation (November 2005)
30 slides from Cheniere Energy's investor presentation, Nov 14, 2005
Slide 1: Cheniere Energy
Exhibit 99.2 Cheniere Energy *Freeport LNG L.P. (Cheniere 30% Limited Partner) *Corpus Christi LNG L.P. (Cheniere 100%) *Sabine Pass LNG L.P. (Cheniere 100%) *Creole Trail LNG L.P. (Cheniere 100%) November 2005
Slide 2: Forward-looking statements safe harbor
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: Cheniere LNG terminal capacity
Corpus Christi 2.6 Bcf/d Freeport (30%) 1.5 Bcf/d Under Construction Sabine Pass 4.0 Bcf/d Under Construction Creole Trail 3.3 B cf/d - 4 Deepwater Ports - 7 Unloading Docks - 15 Storage Tanks (51.7 Bcf equivalent) - 11.4 Bcf/d Regas Capacity
Slide 4: Terminal capacity by year and key considerations
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 to expand to meet growing w
Slide 5: Is Cheniere building too much capacity?
Is Cheniere building too much capacity? Availability of supply Competition for regasification Optimum commercial arrangements
Slide 6: Projected Liquefaction Capacity
Projected Liquefaction Capacity 2010 Bcf/d: 2003 17, 2008 30, 2009 35, 2010 41 2004 N. America 2.0 Bcf/d Atlantic Basin 14.5 Bcf/d 2004 Europe 4.0 Bcf/d ME Gulf 12.5 Bcf/d Asia Pacific 14.2 Bcf/dBcf 2004 Asia Pacific 11.7
Slide 7: Liquefaction Growth
Liquefaction Growth World LNG consumption in 2004 was 17 Bcf/d Liquefaction in 2010 is estimated to be 41 Bcf/d Growth in liquefaction is 24 Bcf/d Where will it go?
Slide 8: Asia Pacific LNG demand growth
Asia Pacific* ~8 Bcf/d needed for demand growth by 2010 Regional Demand by Country (2004) Japan 7, China 4, Korea 3, India 3, Australia 2, Taiwan 1 Consumption 2004=20 Bcf/d 2010=27 Bcf/d Production 2004=10 Bcf/d LNG Import Capacity 2004=32 Bcf/d 2010=36 Bcf/d Historical: BP Statistical Review (2005
Slide 9: Europe LNG demand growth
Europe* ~12 Bcf/d needed for demand growth for 2010 Consumption 2004=45 Bcf/d 2010=57 Bcf/d Pipeline Import Capacity 2004=26 Bcf/d 2010=32 Bcf/d Production 2004=27 Bcf/d 2010=22 Bcf/d LNG Import Capacity 2004=6 Bcf/d 2010=10 Bcf/d Regional Demand by Country (2004) U.K. 9, W. Europe 20, Europe-Med 12
Slide 10: World LNG Supply-Demand 2010
World LNG Supply-Demand 2010 Atlantic Basin 14.5 Bcf/d 2010 Europe 6 - 8 Bcf/d ME Gulf 12.0 Bcf/d Asia Pacific 14.0 Bcf/d 2010 Asia Pacific 17 Bcf/d Europe & Asia/Pacific Demand: 23 - 25 Bcf/d Remaining for North America: 16 - 19 Bcf/d
Slide 11: Demand Seasonality
Demand Seasonality Europe/Korea seasonal peak = 3x trough Seasonal Delta Europe/Korea = 19 Bcf/d Source: OECD Europe: U.K., France and Belgium
Slide 12: North American Receiving Capacity
North American Receiving Capacity Can North America receive 16 to 19 Bcf/d? - Gas consumption constraint - Regasification
Slide 13: U.S. Lower-48 Gas Production
U.S. - Lower-48 Gas Production At $6/MMBtu ~10 Bcf/d replacement production needed Source: IHS 2005
Slide 14: Production and Imports vs. Consumption
Production and Imports vs. Consumption Replacement production + growth = ~20 Bcf/d+ (at $6.00 per MMBtu) Source: Lower-48, IHS 2005; Canadian imports & consumption EIA, AEO 2005
Slide 15: North America Receiving Capacity 2010
North America Receiving Capacity 2010 1.0 Bcf/d 10 - 12 Bcf/d 2.0 Bcf/d 0.7 Bcf/d 1.8 Bcf/d 0.8 Bcf/d
Slide 16: North America Receiving Capacity
North America Receiving Capacity Enough capacity but not too much Depends on utilization rate
Slide 17: North America demand growth
North America ~8 Bcf/d needed for growth by 2010 Demand by Country and Region (2004) Canada 9, Mexico 5, 1.0, 13, 14, 20, 6, 9, 2.7, 2.6 Historical: EIA (2004), BP Statistical Review (2005); Forecast: IEA WEO (2004), Cheniere Research
Slide 18: Observations
Observations Capacity utilization probably under 75% U.S. will not receive sufficient gas at $6.00/MMBtu so prices will remain higher on average European seasonality will increase volatility and reduce utilization rates NYMEX will increasingly be a benchmark price globally
Slide 19: Financing
Financing - Financing is not an issue any longer if: - Resource is controlled (hydrocarbon) - Market is accessible - Regasification - Customer base - NYMEX pricing is used - Trend is increasingly toward transactions between owners and users
Slide 20: Cheniere's LNG Receiving Portfolio
Cheniere's LNG Receiving Portfolio In this context, what is the optimal business model for Cheniere's capacity?
Slide 21: Terminal Use Agreements
Terminal Use Agreements TUA Capacity (Bcf/d) Calculated Revenue to Cheniere ($MM) Freeport (30% LP) 1.5 $15 Conoco Dow Sabine Pass 1.7 - 2.0 Bcf/d $220 - 250 Total, S.A. Chevron $235 - 265 Sabine TUA monthly payment of $0.32/MMbtu plus 2% retention of the LNG delivered for use as fuel at the facilit
Slide 22: Three Major Business Groups
Three Major Business Groups Cheniere Terminal Group Non-regulated fee based Cheniere Pipeline Group Mostly regulated fee based Cheniere Trading and Marketing Transaction based
Slide 23: Cheniere Terminal Group
Cheniere Terminal Group Capacity: 10 Bcf/d (without Freeport) Capacity (Bcf/d) Revenue to Cheniere @ $0.32 MMBtu ($MM) Sold 1.7 - 2.0 Bcf/d $220 - 250 Marketing to third parties 2.0 Bcf/d $250 Will be subscribed by Cheniere Trading & Marketing 3.0 Bcf/d $375 Held for spot: LNG Gateway TM 3.0 Bcf/d ?
Slide 24: Cheniere Pipeline Group
Cheniere Pipeline Group Purpose: to service terminals and connect to grid Capacity: ~ 155 miles of pipeline from Sabine Pass, Creole Trail, and Corpus Christi CAPEX: $800 million to $1 billion over 5 years Rates Regulated: ~$120 - $150 million of annual revenues Customer Mix: - 60% third parties - 4
Slide 25: Target Market Access
Target Market Access Midwest Markets 11.8 Bcf/d Northeast Markets 5.7 Bcf/d Gulf Coast Markets 4.9 Bcf/d Mexican Markets 1.7 Bcf/d Southeast Markets 4.6 Bcf/d Cheniere LNG Receipt Network
Slide 26: Cheniere Trading & Marketing
Cheniere Trading & Marketing Developing portfolio of gas purchase and gas sale agreements Manage LNG Gateway TM
Slide 27: Targeted Long-Term Agreements
Targeted Long-Term Agreements Long-term purchase transactions currently between 83% and 87% of NYMEX delivered at the terminal When purchase agreements are concluded, Cheniere Trading & Marketing will enter into corresponding agreements with Cheniere's Terminal Group - imputed opportunity cost $0.32
Slide 28: LNG Gateway
LNG GatewayTM Because of seasonality and volatility we think the market for short-term transactions will continue to grow Opportunity to purchase LNG on better conditions Plan to start receiving cargoes beginning in 2008 and gauge market reaction
Slide 29: Commercial Opportunity
Commercial Opportunity Three very different business groups Cheniere Terminal Group Approximately $2 billion of CapEx Revenue potential $800 million - $1 billion No commodity price exposure Cheniere Pipeline Group Approximately $1 billion of CapEx Revenue potential $120 - $150 million Crucial to bal
Slide 30: Financial Resources
Financial Resources (in millions) 9-30-2005 Working Capital $909.7 Capital Contribution in Sabine Pass LNG L.P. $203.0 Undrawn Sabine Pass Project facility $822.0 Cost of Debt Interest Rate % Sabine Pass LNG L.P. - Project Facility $822.0 6.38 1 Convertible Notes $325.0 2.25 2 B Loan $600.0 7.25 3 1
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