Cheniere Energy, Inc. · NYSE:LNG
Cheniere Energy — Investor Presentation (February 2006)
30 slides from Cheniere Energy's investor presentation, February 2006
Slide 1: Cheniere Energy Corporate Presentation February 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 February 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: 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 3
Slide 4: 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 5: Issues
Issues Is Cheniere building too much capacity? – Availability of supply – Competition for regasification Optimum commercial arrangements 5
Slide 6: Projected Liquefaction Capacity 2010
Projected Liquefaction Capacity 2010 Existing Liquefaction Under Construction or Proposed Liquefaction 2010 Liquefaction Capacity Atlantic 2004 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 Gul
Slide 7: Liquefaction Growth: Where will it go?
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? 7
Slide 8: Asia Pacific: ~7 Bcf/d needed for demand growth by 2010
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 9: Europe: ~12 Bcf/d needed for demand growth for 2010
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 10: 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 11: Demand Seasonality
Demand Seasonality Europe/Korea seasonal peak = 3x trough 35 Seasonal Seasonal Delta Delta Europe/Korea Europe/Korea = 19 = 19 Bcf/d Bcf/d 30 25 20 Bcf/d S. Korea 15 Trough Trough == 10 10 Bcf/d Bcf/d 10 Europe 5 0 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 S
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 54 54 Bcf/d Bcf/d 55 50 50 Bcf/d Bcf/d 50 Bcf/d 41 41 45 Bcf/d Bcf/d 40 35 00 02 04 05 06 07 08 09 01 03 10 n- n- n- n- n- n- n- n- n- n- n- Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja Ja 13 Source: IHS 2005
Slide 14: 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 LNG Bcf/d 60 Canadian Imports Requirement 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 imp
Slide 15: North America Receiving Capacity
North America Receiving Capacity 2010 2.0 Bcf/d 0.7 Bcf/d 1.8 Bcf/d 0.8 Bcf/d (Potential Expansion) 1.0 Bcf/d Existing Facilities New Terminals Total Regasification 10 - 12 Bcf/d Capacity: 17 – 20 Bcf/d 15 Cheniere Estimate 0.7 Bcf/d
Slide 16: North America Receiving Capacity: Enough capacity but not too much
North America Receiving Capacity Enough capacity but not too much Depends on utilization rate
Slide 17: North America: ~8 Bcf/d needed for growth by 2010
North America ~8 Bcf/d needed for growth by 2010 Demand Demand by by Country Country and and Region Region (2004) (2004) Canada Canada 99 14 14 99 2.7 13 13 66 2.6 1.0 20 20 Bcf/d Historical: EIA (2004), BP Statistical Review (2005); Forecast: IEA WEO (2004), Cheniere Research Mexico Mexico 55 9.0 3
Slide 18: Observations
Observations – Capacity utilization probably under 75% – U.S. will not receive sufficient gas at $6.00/MMBtu so prices will remain higher on average – European seasonality will increase volatility and reduce utilization rates – NYMEX will increasingly be a benchmark price globally 18
Slide 19: Financing
Financing Financing is not an issue any longer if: – Resource is controlled (hydrocarbon) – Market is accessible • Regasification • Customer base – NYMEX pricing is used Trend is increasingly toward transactions between owners and users 19
Slide 20: Cheniere's LNG Receiving Portfolio
Cheniere’s LNG Receiving Portfolio In this context, what is the optimal business model for Cheniere’s capacity?
Slide 21: Terminal Use Agreements
Terminal Use Agreements TUA Capacity Calculated Revenue to (Bcf/d) Cheniere ($MM) Freeport (30% LP) 1.5 $15 Conoco Dow Sabine Pass 2.0 Bcf/d $250 Total, S.A. Chevron $265 Sabine TUA monthly payment of $0.32/MMbtu plus 2% retention of the LNG delivered for use as fuel at the facility 20 years or
Slide 22: Three Major Business Groups
Three Major Business Groups Cheniere Terminal Group – Non-regulated fee based Cheniere Pipeline Group – Regulated fee based Cheniere LNG Marketing – Transaction based 22
Slide 23: Cheniere Terminal Group
Cheniere Terminal Group Capacity: 10 Bcf/d (without Freeport) Revenue to Cheniere Capacity (Bcf/d) @ $0.32 MMBtu ($MM) Sold 2.0 Bcf/d $250 Marketing to third parties 2.0 Bcf/d $250 Will be subscribed by Cheniere LNG Marketing 3.0 Bcf/d $375 Held for spot: LNG GatewayTM 3.0 Bcf/d ? Capex: $2 billion
Slide 24: 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 CAPEX: $800 million to $1 billion over 5 years Rates: regulated – estimate $120 - $150 million of annual revenues Cust
Slide 25: 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 26: Cheniere LNG Marketing
Cheniere LNG Marketing Developing portfolio of LNG Index Purchase Agreements and Natural Gas Sale Agreements Manage LNG GatewayTM 26
Slide 27: Cheniere LNG Marketing Targeted Long-Term Agreements
Cheniere LNG Marketing Targeted Long-Term Agreements Long-term LNG Index Purchase Agreements currently between 83% and 87% of NYMEX 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 a
Slide 28: Cheniere LNG Marketing LNG Gateway
Cheniere LNG Marketing 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 terms Plan to start receiving cargoes beginning in 2008 and gauge market reaction 28
Slide 29: 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 30: 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
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