Cheniere Energy, Inc. · NYSE:LNG
Cheniere Energy — Investor Day (April 2014)
122 slides from Cheniere Energy's investor day presentation, Apr 7, 2014
Slide 1: Cheniere Energy Analyst / Investor Day
Cheniere Energy Analyst / Investor Day April 7, 2014 1
Slide 2: Forward Looking Statements
Forward Looking Statements 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 of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, oth
Slide 3: Introduction
Introduction Analyst Day / Investor Day Charif Souki - Chairman, President, and CEO April 2014
Slide 4: Value of the Cheniere Platform
Value of the Cheniere Platform People Financial Strength Cash Flows 4
Slide 5: People
Value of the Cheniere Platform People Many are talking about LNG exports - Cheniere is building Sabine Pass is the only U.S. liquefaction project to achieve all commercial, financial, and regulatory requirements necessary to commence construction Project Status • Trains 1-2: ~61% complete • Trains
Slide 6: Financial Strength
Value of the Cheniere Platform Financial Strength Demonstrated ability to raise capital, multiple options available Other Cheniere Consolidated As of December 31, 2013 CQP Energy, Inc. CEI Unrestricted cash and equivalents $0 $961 $ 961 Restricted cash and securities 1,604 26 1,630 Current & long-te
Slide 7: Cash Flows
Value of the Cheniere Platform Cash Flows 9 trains: ~$3.5B - $4.5B annual EBITDA Significant cash flows under 20-year take-or-pay contracts • ~$2.9B in fixed-fee revenue contracted to date at Sabine Pass • Corpus Christi commercialization underway – 6 mtpa @ $3.50 equates to ~$1B+ in incremental f
Slide 8: Macro Opportunities
Macro Opportunities Continue to de-risk Corpus Christi and SPL Trains 5 & 6 Seeking opportunities upstream and downstream from the platform Hydrocarbon abundance - additional export opportunities 8
Slide 9: Sabine Pass Liquefaction Train 1-4 Construction Update
Sabine Pass Liquefaction Train 1-4 Construction Update Analyst / Investor Day Keith Teague, Executive VP – Assets April 2014
Slide 10: Brownfield LNG Export Project: Sabine Pass Liquefaction
Brownfield LNG Export Project: Sabine Pass Liquefaction Utilizes Existing Assets, Trains 1-4 Fully Contracted, Under Construction Current Facility ~1,000 acres in Cameron Parish, LA 40 ft ship channel 3.7 miles from coast 2 berths; 4 dedicated tugs 5 LNG storage tanks (~17 Bcfe of storage)
Slide 11: Satellite Imagery, Oct 2004
Greenfield Opportunity 850+ acres in Southwest Cameron Parish, Louisiana Site situated along the Sabine Pass Ship Channel • 40’ deep shipping channel • 3.7 nautical miles from the coast • 22.8 nautical miles from the outer buoy Acreage consisted primarily of former dredge material placement ar
Slide 12: Satellite Imagery, Mar 2010
Sabine Pass LNG Terminal $1.5 billion infrastructure investment, delivered on-time and on-budget 5 tanks x 160,000 cm (~ 17 Bcfe of storage) ~4.3 Bcf/d peak vaporization capacity Two docks capable of handling the world’s largest LNG carriers; four dedicated tugs Construction materials: • 6
Slide 13: Satellite Imagery, Feb 2013
Sabine Pass Liquefaction – Under Construction ~1,000 acres under control Construction commenced Aug 2012 Trains 1 – 4 represent $9 - $10 billion infrastructure investment, before financing costs Trains 1 – 4 Construction materials • 260,000 yd3 of concrete • 57,000 tons of structural steel •
Slide 14: Project Scope and Scale
Project Scope and Scale Each LNG Train • Measures over 1,300 feet, or more than 3 football fields in length • Consists of over 14,000 tons of structural steel; enough to build the roof for 4 NFL stadiums 14
Slide 15: Project Scope and Scale
Project Scope and Scale Six GE LM2500 Gas Turbine Generators • Over 150 MW of installed generation capacity; enough to power 119,000 homes • Four in place and two being added Twenty four GE LM2500 Gas Turbines driving refrigerant compressors (6 per Train) • Horsepower equivalent of over 600 MW •
Slide 16: Brownfield Opportunity
Brownfield Opportunity 16
Slide 17: Brownfield LNG Export Project
Brownfield LNG Export Project 17
Slide 18: Project Scope and Scale
Project Scope and Scale Four LNG Trains occupy a footprint sufficient for six MLB stadiums Project acreage: • Footprint of approximately 22 acres per Train • 60 acre footprint for interconnecting pipe racks and other facilities • 245 acres for material staging, laydown and employee parking 18
Slide 19: Project Scope and Scale
Project Scope and Scale FERC and DOT regulatory process includes the review of consequence modeling for the potential of inadvertent LNG and refrigerant release Composite vapor exclusion zones for the four Trains total over 150 acres 19
Slide 20: Project Scope and Scale
Project Scope and Scale FERC and DOT regulatory process includes the review of consequence modeling for the potential of ignition and resulting fire associated with an inadvertent LNG and refrigerant release Composite thermal radiation zones for the four Trains total over 460 acres 20
Slide 21: Project Siting Challenges – A Recap
Project Siting Challenges – A Recap Physical • Scope and scale of the liquefaction process dictate a large acreage position • Sequential, simultaneous construction of multiple liquefaction trains dictate a large acreage position – Material staging and laydown areas – Accommodations for a significa
Slide 22: Minimize Construction Costs and Risks
LSTK EPC Contracts with Bechtel Minimize Construction Costs and Risks Why Bechtel Constructed one-third of the world’s liquefaction facilities - more than any other contractor Top US construction contractor for 15 straight years by Engineering News-Record Bechtel was the EPC contractor for the
Slide 23: Project Execution – 18 Months of Progress
Project Execution – 18 Months of Progress 23
Slide 24: Project Execution – Trains 1 & 2
Project Execution – Trains 1 & 2
Slide 25: Project Execution – Trains 3 & 4
Project Execution – Trains 3 & 4
Slide 26: Project Execution – Train 1
Project Execution – Train 1
Slide 27: Project Execution – Train 2
Project Execution – Train 2
Slide 28: Project Execution – New Warehouse and O&M Buildings
Project Execution – New Warehouse and O&M Buildings
Slide 29: Project Execution - Trains 1 - 4
Project Execution - Trains 1 - 4 Record First LNG – Egyptian LNG T1 BG DFCD Train 1 Feb 2016 First LNG GN DFCD Train 2 June 2016 KOGAS DFCD Train 3 Jun 2017 April 2017 GAIL DFCD Train 4 Mar 2018 Sept 2017 Despite recent winter weather delays, Target dates for first LNG remain 40 months from NTP fo
Slide 30: Sabine Pass Liquefaction – Construction Manpower
Sabine Pass Liquefaction – Construction Manpower Train 1 – 4 Workforce to peak at 4,500; ~2,800 personnel currently on site Over 31 million construction man hours; $1.7 billion in construction wages 30
Slide 31: Cheniere Engineering and Operations Staffing
Cheniere Engineering and Operations Staffing Hiring experienced personnel – Estimating 470+ employees by 2016 500 471 455 Number of employees 387 409 409 387 400 282 282 300 200 100 – 2013A 2014E 2015E 2016E O&M (SPL/SPLNG) O&M (Technical/Reliability) Engineering & Construction O&M (Other) O&M (Pipe
Slide 32: Experienced Liquefaction Operations Team
Experienced Liquefaction Operations Team Leadership Team • Leadership Team (8 persons) with ~225 years of Management • Production Director • VP, Sabine Pass Operations management experience, including ~105 years of • Training Advisor • VP, Operations Excellence liquefaction experience • Outage Plann
Slide 33: Project Execution Keys to Success
Sabine Pass Liquefaction Project Execution Keys to Success World class terminal site • Deep channel in close proximity to the coast • Sufficient acreage to satisfy siting challenges, both regulatory and physical World class Contractor • Bechtel has constructed one third of the world’s liquefacti
Slide 34: Growth Projects – Corpus Christi and Sabine Pass T5-6
Growth Projects – Corpus Christi and Sabine Pass T5-6 Analyst / Investor Day Katie Pipkin, SVP - Business Development & Corporate Communications April 2014
Slide 35: Cheniere Liquefaction Projects
Cheniere Liquefaction Projects 9 Trains, ~$31B investment, ~40.5 MTPA LNG Exports (~5.5Bcf/d) Sabine Pass Corpus Christi Sabine Pass Corpus T1-4 T1-2 T5-6 Christi T3 Estimated Cost $12B $10B $6B $3B Volume (MTPA) 18.0 9.0 9.0 4.5 3rd Party Contracts to 16.0 2.3 3.75 - date (MTPA) Development Under F
Slide 36: U.S. LNG Export Projects
U.S. LNG Export Projects Quantity Company DOE FERC* Contracts (Bcf/d) Cheniere Sabine Fully 2.2 Fully permitted Pass T1 – T4 Subscribed Oregon LNG FTA + Freeport 1.8 NonFTA T1-T3 FTA + Lake Charles 2.0 NonFTA Dominion Cove Point Jordan Cove Dominion Cove FTA + Fully 1.0 Point NonFTA Subscribed
Slide 37: Technical Considerations for Liquefaction Projects
Technical Considerations for Liquefaction Projects LNG projects are physically difficult • This will become apparent only through the FERC process • Sites of limited size or near dense populations • Possible, but expensive & delays Must have sufficient land for complex infrastructure and lay-dow
Slide 38: Corpus Christi Liquefaction Project
Corpus Christi Liquefaction Project Proposed 3 Train Facility >1,000 acres owned and/or controlled 2 berths, 3 LNG storage tanks (~10.1 Bcfe of storage) Project Update Lump Sum Turnkey contracts signed with Bechtel • Stage 1: ~$7.1B, 2 Trains, 2 tanks, 1 berth • Stage 2: ~$2.4B, 1 Train, 1 tan
Slide 39: Aerial Map of Surrounding Area
Aerial Map of Surrounding Area 39
Slide 40: Corpus Christi Pipeline Project
Corpus Christi Pipeline Project 23 Miles of 48” Pipe, 2.25 bcf/d Deliverability Interconnects Tennessee Enterprise Transco Sinton Compressor Station ~41,000 hp NGPL KM Tejas Channel/HPL TETCO Taft Compressor Station ~12,300 hp Corpus Christi Liquefaction 40
Slide 41: Sabine Pass Liquefaction
Sabine Pass Liquefaction Current Facility ~1,000 acres in Cameron Parish, LA 40 ft ship channel 3.7 miles from coast 2 berths; 4 dedicated tugs 5 LNG storage tanks (~17 Bcfe of storage) 5.3 Bcf/d of pipeline interconnection Liquefaction Trains 1-4 Under Construction On an accelerated bas
Slide 42: Competitive With Other Recent Liquefaction Projects
Competitive With Other Recent Liquefaction Projects Range of liquefaction project costs: $200 - $2,000+ per ton 1 Bcf/d of capacity = $1.5B to $15.0B+ Corpus Christi liquefaction project estimated costs are ~$800/ton (1) Cost: $/ton Sabine Pass Trains 5 & 6 estimated costs are ~$550/ton (1)
Slide 43: Timeline & Milestones
Timeline & Milestones Target Date SPL CCL SPL Milestone T1-2 T3-4 T1-3 T5-6 Initiate permitting process (FERC & DOE) T1 2.3 MTPA T5 Commercial agreements 2014 T6: 2014 EPC contract 2015 Financing commitments 2014 2015 Regulatory approvals 2014/15 2015 Issue No
Slide 44: Regulatory Review
Regulatory Review Analyst / Investor Day Pat Outtrim, Vice President Government and Regulatory Affairs April 2014
Slide 45: Regulatory Process for LNG Facilities
Regulatory Process for LNG Facilities Dual regulatory tracks with DOE and FERC • Federal Energy Regulatory Commission (FERC) is lead agency that coordinates all federal and state agencies • Department of Energy (DOE) authorizes license to import and export natural gas U.S. Coast Guard reviews wa
Slide 46: FERC as Lead Agency
FERC as Lead Agency FERC is the coordinating agency that leads federal and state review of LNG projects National Environmental Policy Act (NEPA) empowers FERC to prepare an Environmental Impact Statement (EIS) for a project in cooperation with other state and federal agencies EPACT 2005 confir
Slide 47: FERC Regulatory Process - EIS
FERC Regulatory Process - EIS Pre-filing • 13 resource reports and engineering drawings • FERC coordinates public meetings and consultations, includes cooperating agencies Review of Application • Schedule notice - EA or EIS date and date when all federal authorizations are required • Review of a
Slide 48: DOE Regulatory Process Non-FTA countries
DOE Regulatory Process Non-FTA countries DOE is a cooperating agency with FERC • Required to authorize exports to a foreign country unless there is a finding that such exports “will not be consistent with the public interest” • A statutory presumption in favor of approval by DOE of export applicat
Slide 49: FERC Applications Filed for Liquefaction Projects
FERC Applications Filed for Liquefaction Projects LNG Export Projects Pre-filing Date Application Date FERC Scheduling Rec’d Approval Notice Issued Sabine Pass Liquefaction T1-4 July 26, 2010 Jan. 31, 2011 Corpus Christi Liquefaction Dec. 13, 2011 Aug. 31, 2012 Feb 12, 2014 Freeport LNG Dec. 23, 2
Slide 50: U.S. DOE Applications for LNG Exports
U.S. DOE Applications for LNG Exports* ** Application filed = , FERC scheduling notice issued = Date Applicant Received Expected Order to FERC Approval to Begin Date Non FTA Received be Processed (1)2 Company Pre-Filing Process Quantity (Bcf/d) Conditional (2) Final FERC** Contracts Cheniere Sabi
Slide 51: Regulatory Update – Corpus Christi Liquefaction & Pipeline
Corpus Christi Liquefaction & Pipeline Regulatory Update Regulatory Process Expected to Be Complete 1Q 2015 FERC Schedule Notice issued • Final EIS: 10/08/2014 • 90-day Federal Authorization Deadline: 01/06/2015 DOE FTA approved 10/16/12 DOE Non-FTA under review – expect by mid-year, second in
Slide 52: Regulatory Update – Sabine Pass Liquefaction Trains 5&6
Sabine Pass Liquefaction Trains 5&6 Regulatory Update Regulatory Process Expected to Be Complete by 2015 FERC application filed 9/30/2013 • Expect an EA • All data requests received and answered DOE • FTA approved 07/12/13 and 01/22/14 • Non-FTA: – Train 5 is 13/14th in Queue – Train 6 is 18th i
Slide 53: Additional Authorization Requested
Sabine Pass Liquefaction – Trains 1-4 Additional Authorization Requested FERC Amendment to Increase Capacity • Increase from authorized capacity of 2.2 Bcf/d to 2.76 Bcf/d submitted 10/25/2013 • Environmental Assessment issued on 01/24/2014 • Order issued on 02/20/2014 53
Slide 54: Washington Update
Washington Update LNG permitting process a focus in Washington Several recent hearings held by Congress • House Energy and Power Subcommittee– H.R. 6, The Domestic Prosperity and Global Freedom Act • Senate Energy and Natural Resources - Importing Energy, Exporting Jobs. Can it be Reversed? • Hous
Slide 55: EU-US Summit Joint Statement
EU-US Summit Joint Statement Welcomes the prospect of U.S. LNG exports President Barack Obama Leaders of the European Union EU-US Summit, Brussels, Belgium, March 26 “The situation in Ukraine proves the need to reinforce energy security in Europe and we are considering new collaborative efforts to a
Slide 56: Supply Procurement
Supply Procurement Analyst / Investor Day Corey Grindal, Vice President, Supply April 2014
Slide 57: Gas Supply Procurement Plan for Liquefaction Projects
Gas Supply Procurement Plan for Liquefaction Projects Natural gas will be procured by the terminals, liquefied and LNG sold based on NYMEX settlement for the month of delivery Gas procurement overview U.S. pipeline infrastructure changes Sabine Pass Corpus Christi Ongoing supply strategy 5
Slide 58: Gas Procurement Overview
Gas Procurement Overview Pipeline capacity contracted at terminal level • Redundant delivery capacity Pipeline capacity contracted upstream of terminal • Supply basin diversity • Supplier diversity Term gas purchases into capacities • Reduces physical market exposure • Reduces pricing exposure
Slide 59: U.S. Infrastructure Changes
U.S. Infrastructure Changes The United States is undergoing massive changes due to current and forecasted supply growth Over 10 Bcf/d of “retrofits” or reversals of traditional flows have been announced by U.S. interstate pipelines • 2 Bcf/d under construction or in-service • 1.5 Bcf/d filed awa
Slide 60: Pipelines Reversing Flows
Pipelines Reversing Flows Transco Tetco ANR Trunkline NGPL Tennessee Gas Columbia Gulf Rockies Express Texas Gas CTPL Shale Plays Basins Capacity Pipelines (Bcf/d) Transco 1,700,000 TETCO 2,100,000 ANR 700,000 Trunkline 200,000 Tennessee Gas 1,600,000 Rockies Express 2,500,000 NGPL 750,000 Columbia
Slide 61: Establishing NAESB Contracts With Counterparties
Establishing NAESB* Contracts With Counterparties Producer driven supply base • Have signed NAESB agreements with over 20 producers to date – Examples of producers enabled to date and 4Q2013 rank** • #1 ExxonMobil/ XTO (XOM) #5 Devon Energy Services (DVN) • #2 Chesapeake Energy (CHK) #11 EQT Energ
Slide 62: Direct Pipeline Capacity
SPL Terminal Pipeline Network Direct Pipeline Capacity SPL contracting long-term pipeline capacity • Creole Trail Pipeline: Trains 1 / 2 – 1.5 Bcf/d contracted at FID • Natural Gas Pipeline Company: Trains 1 /2 – 1.5 Bcf/d Interconnect – 0.5 Bcf/d contracted by SPL • Proposed pipeline to be announ
Slide 63: SPL Terminal Pipelines
SPL Terminal Pipelines Cheniere Creole Trail Pipeline (CTPL) Kinder Morgan Louisiana Pipeline (KMLP) Pine Prairie Natural Gas Pipeline Company (NGPL) Energy Center Transco Columbia Gulf Texas Eastern Texas Gas Liquidity Points ANR Transco Trunkline TETCO Storage Trunkline Tennessee Henry Hub NGPL .
Slide 64: Upstream Pipeline Capacity
SPL Terminal Pipeline Network Upstream Pipeline Capacity Selectively contracting capacity from major supply basins: • Utica/ Marcellus – TETCO, TGP, Texas Gas, CGT, Rockies Express • Fayetteville – Trunkline, Texas Gas, ANR, NGPL, Columbia Gulf • Perryville/ Haynesville - Trunkline, Texas Gas, ANR
Slide 65: SPL Supply Network
SPL Supply Network Marcellus / Utica Woodford Fayetteville Shale Plays Granite Basins Wash Permian Basin Barnett Transco Haynesville Tetco ANR Trunkline NGPL Eagle Ford Tennessee Gas Sabine Pass Columbia Gulf Rockies Express Texas Gas Source: Lippman Consulting, Baker Hughes and Bentek, as of Januar
Slide 66: SPL Supply Transactions Completed
SPL Supply Transactions Completed Sabine Pass has termed up a significant amount of long-term supply to date • Staggered over time and train completion • Accessing diverse supply basins • Using existing portfolio of pipeline capacity to reach terminal • Pricing to date provides terminal supply bel
Slide 67: Corpus Christi Contracting
Corpus Christi Contracting Working with 8 pipelines on supplying CCPL • 3 Intrastates – Houston Pipeline/ Channel Industries (HPL) – Enterprise Texas Pipeline (ETP) – Kinder Morgan Texas/ Tejas (KMT) • 5 Interstates – Tennessee Gas Pipeline (TGP) – Natural Gas Pipeline (NGPL) – Transcontinental Pi
Slide 68: Corpus Christi Pipeline (CCPL)
Corpus Christi Pipeline (CCPL) 23 Miles of 48” Pipe, 2.25 bcf/d Deliverability, 4.5 bcf/d Interconnect Capacity Capacity Interconnect Bcf/d Tennessee 1.00 Enterprise 0.50 Transco 0.50 NGPL 0.50 Sinton Compressor Station ~41,000 hp KM Tejas 1.00 Channel/HPL 0.50 TETCO 0.50 Total 4.50 Taft Compressor
Slide 69: Corpus Christi Gas Supply Network
Corpus Christi Gas Supply Network Current Current 2020 Rig Production est. Source Count Bcf/d Bcf/d Barnett 30 5.3 4.7 Haynesville 41 4.6 7.2 Eagle Ford 221 4.6 9.4 Marcellus / Marcellus 82 12.3 20.0 Utica Permian 487 4.8 5.6 Granite Wash 54 1.4 1.2 Woodford 46 1.6 2.5 Woodford Granite Wash Haynesvi
Slide 70: Cheniere Ongoing Supply Strategy
Cheniere Ongoing Supply Strategy Sabine Pass • Continue to purchase gas supply and strategically fill existing pipeline capacity – Currently in discussion with 15+ counterparties on term deals – Structuring deals to best mitigate both physical risk and price risk • Acquire strategic upstream pipel
Slide 71: Commercializing Corpus Christi & Sabine Pass T6
Commercializing Corpus Christi & Sabine Pass T6 Analyst / Investor Day Meg Gentle, Executive VP – Marketing April 2014
Slide 72: 2013 Year in Review
2013 Year in Review LNG market growth is constrained by supply, not by demand 1 new liquefaction plant came on-line (Angola) plus 1 rebuild (Algeria) 12 new regasification plants came on-line including 5 floating 20 vessels delivered 237 mtpa imported, only 0.3% greater than 2012 77.3 mtpa
Slide 73: Steady LNG Demand Growth
Steady LNG Demand Growth Demand forecasted to increase by 215 mtpa 2014 to 2025, a 5.6% CAGR Average 23 mtpa of new liquefaction capacity needed each year(1) mtpa 500 450 400 350 300 250 200 150 100 50 0 Asia Pacific Europe Middle East North Africa North America South & East Africa South America Sou
Slide 74: Firm Liquefaction Capacity Additions (mtpa)
Firm Liquefaction Capacity Additions (mtpa) Nameplate Liquefaction Capacity ~ 289 mtpa as of YE 2013 ~ 394 mtpa by YE 2019 mtpa 20 Asia Pacific SPL T2, Gorgon T2, Petronas FLNG1 18 Atlantic Basin APLNG T2 Gladstone T1 16 SPL T1, Gorgon, T1 APLNG T1 Gorgon T3, Wheatstone T1, Gladstone T2 PNG T2 14 QC
Slide 75: 39 mtpa of Contracted LNG to Expire 2018 - 2020
39 mtpa of Contracted LNG to Expire 2018 - 2020 Estimated Expiring Contracted LNG, mtpa 24.7 17.0 17.7 15.7 9.6 8.9 8.5 7.7 8.4 6.5 7.3 5.0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Cheniere Research estimates based on public disclosures and some assumptions on contract sta
Slide 76: What is our competitive advantage?
What is our competitive advantage? 1. Low cost natural gas and Henry Hub pricing 2. Low cost construction 3. Full destination flexibility 4. Ability to cancel cargo lifting with notice 5. Contract structure – FOB tailgate vs tolling 6. Proven record of execution 7. On time / on budget construction 8
Slide 77: What is the plan?
What is the plan? Project Commercial Deadline Corpus Christi T1-2 Pertamina 0.8 mtpa Complete Endesa 1.5 mtpa Complete FOB 3.7 mtpa 2014 Sabine Pass T6 FOB 2.0 mtpa TBD upon finalization of EPC Corpus Christi T3 TBD TBD 77
Slide 78: Short Term and Medium Term Marketing
Short Term and Medium Term Marketing
Slide 79: LNG Trade in 1988, MMcf/d
LNG Trade in 1988, MMcf/d Two highly regionalized markets 76 USA 169 Belgium 524 To 192 35 France 157 Japan Spain 2,437 USA S. Korea 185 58 873 UAE Japan Algeria Libya 422 480 Brunei 1,280 Malaysia Imports Indonesia Exports *USA and Italy each imported less than 50 MMcf/d Source: GIIGNL 79
Slide 80: LNG Trade in 2007, MMcf/d
LNG Trade in 2007, MMcf/d Regional markets growing New supply players Spot trade increasing 157 USA 136 U.K. 277 Belgium 282 8,938 1,282 231 To Portugal 2,486 France 3,500 Italy 547 Japan 2,088 Spain Turkey 398 USA S. Korea 779 China 79 1,334 3,909 1053 1,112 Japan 247 2,383 Libya UAE 1,802 Eg
Slide 81: LNG Trade in 2013, MMcf/d
LNG Trade in 2013, MMcf/d Many more small importers Longer shipping routes South America enters trade Re-exports from 17 countries Optimization needed! Historical exporters shrink 374 Norway 138 11,042 9,708 1,353 860 Belgium Russia UK 730 522 5,139 166 1,177 France 533 230 Portugal Spai
Slide 82: Flexibility
Flexibility mtpa Non Long Term LNG Trade 90 35% 80 31% 70 27% 60 23% 50 19% 40 16% 30 12% 20 8% 10 4% 0 0% 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Sources: IHS, US DOE, IGU 82
Slide 83: Cheniere’s Marketing Assets Amid the Global Importers
Cheniere’s Marketing Assets Amid the Global Importers Cheniere is long options and vessel charters Call options at Henry Hub Index to begin in 2016 5 year time charters on 3 LNG vessels to begin in 2015 and 2016 Put options at Isle of Grain until 2022 Cheniere assets Countries with existing LNG impo
Slide 84: Futures Prices Support $7.25 / MMBtu Intrinsic Margin
Futures Prices Support $7.25 / MMBtu Intrinsic Margin $ 9.70 / MMBtu – gross margins realized from purchasing LNG at 115% of HH and selling at 15% of Brent; higher in the prompt month $ 7.25 / MMBtu – intrinsic margins net of shipping, boil-off & fuel to Asia $/MMBtu Brent and Henry Hub: 5 Years
Slide 85: Annual Gross Profit from 2 mtpa
Annual Gross Profit from 2 mtpa Volumes LNG Loaded Sabine Pass (Tbtu) 104 Assumptions LNG Delivered DES (Tbtu) 98 $5 Henry Hub Price Cash Flows $15 LNG sales price, delivered at terminal Sales Total Revenue ($MM) $1,466 6% loss of gas on the vessel Cheniere vessels: $84,000 Expenses per day
Slide 86: Price Sensitivities
Price Sensitivities $MM Gross Profit at Varying Prices Observations LNG Sales Price, $/MMBtu The intrinsic value of 104 $10.00 $15.00 $20.00 million MMBtu of LNG from Henry Hub $4.00 $338 $827 $1,316 Sabine Pass is ~$700 million Price, $5.00 $219 $707 $1,196 Trading activity could add an $/MMBtu
Slide 87: Upside; Scalability
Upside; Scalability Potential Annual Marketing Gross Margin, $MM $2,750 $1,350 $1,250 $150 $1,000 $250 $900 $100 2 mtpa SPL Extrinsic 3.0 mtpa CCL Notes: 1. 2 mtpa from SPL is based on the range in slide 16 based on $6 HH and $10 LNG sales price to $4 HH and $20 LNG sales price 2. Extrinsic assumes
Slide 88: Maximizing Long Term Value
Maximizing Long Term Value Asset Backed Trading Toolkit 1. Options to buy LNG from Sabine Pass 2. Ship charters 3. FOB sales 4. Ex-ship deliveries 5. Put options 6. Time swaps 7. Additional ship charters 8. LNG purchases from other terminals 9. Capacity in international regasification terminals 10.
Slide 89: Organizational Resources
Organizational Resources Staffing • Front Office • Mid Office / Risk control • Back Office IT Systems • Current system: Sungard Entegrate • Future system: Endur OpenLink Credit • Cash • Transactional lines of credit • Hedging accounts Risk Management • Risk Committee / Risk Policy Enabling
Slide 90: Conclusions
Conclusions The potential LNG market is limited by supply By 2020 we expect: • U.S. / Qatar / Australia will each produce > 70 mtpa of LNG • Over 50% of the LNG market will trade on a gas price basis • The entire LNG market could be flexible Cheniere Marketing • Develop a portfolio to maximize
Slide 91: Financial Update
Financial Update Analyst / Investor Day Conference Michael Wortley, Chief Financial Officer April 2014
Slide 92: US LNG Well Positioned for Growth
US LNG Well Positioned for Growth US has a tremendous resource base at low cost • 1,000 Tcf of unconventional gas reserves(1) recoverable at prices less than $7/MMBtu − Equivalent to 27 Bcf/d of incremental production assuming a 100 year horizon Demand for LNG expected to increase 2.4x faster th
Slide 93: Financing Strategy Update
Financing Strategy Update • As of February 2014, SPL Project o Engineering: 94% (Trains 1-2), 48% (Trains 3-4) (Trains 1-4) o Overall project completion: 61% (Trains 1-2), 23% (Trains 3-4) • Spent ~$6bn to date, expect to draw on TL-A in April 2014 CCL Project • FID for Stage 1 expected in Q1 2015 (
Slide 94: Summary Organizational Structure
Summary Organizational Structure Cheniere Energy, Inc. (NYSE: LNG) 84.5% Interest 100% Interest 100% Interest 100% Interest Cheniere Energy Partners Cheniere Corpus Christi Public Cheniere Energy 15.5% LP Holdings, LLC Marketing, LLC Liquefaction, LLC Partners GP, LLC (NYSE: CQH) (“CMI”) (“CCL”) 55.
Slide 95: Estimated Consolidated CQP Cash Flows
Estimated Consolidated CQP Cash Flows SPL Trains 1-4 ($ in billions, except per unit amounts or unless otherwise noted) SPL Trains 1-4 SPL firm SPA payments $2.3 SPL commodity payments, net(1) 0.2 CMI SPA payments(2) 0.1 - 0.2 SPLNG TUA payments and other revenues(3) 0.2 Total CQP revenues $2.9 Plan
Slide 96: Estimated CEI Cash Flows
Estimated CEI Cash Flows SPL Trains 1-4 $1.0 - $1.2 billion of run-rate EBITDA CEI NOL exhausted in 2019 – 2020, depending on CMI profitability CEI EBITDA build up ($ in billions, unless otherwise noted) CQH distributions (based on 84.5% interest) (1) $0.6 GP and IDR distributions 0.3 Management
Slide 97: Estimated CEI EBITDA Build Up
Estimated CEI EBITDA Build Up SPL Trains 1-4 $5.0 CEI EBITDA ($ in billions) $4.0 $3.0 $2.0 $1.0 - $1.2 $1.0 $0.7 $0.2 $0.3 – SPL Sales (T1-4) SPL CMI Sales Cumulative build up Number of trains 4 trains 4 trains Nameplate capacity 18.0 MTPA 18.0 MTPA Long term SPA 16.0 MTPA 16.0 MTPA volumes Short /
Slide 98: Corpus Christi Liquefaction Trains 1-2
Corpus Christi Liquefaction Trains 1-2 Corpus Christi Liquefaction Trains 1-2 CCL Trains 1-2 Houston New Orleans FID Date Q1 2015 Corpus Christi Capex Estimate ~$10 billion Gulf of Mexico Project Equity ~$4 billion Project Debt ~$6 billion COD 2018 Commercial Assumptions 6.0 MTPA 20-year “take-or-pa
Slide 99: Estimated CCL Project Level Economics
Estimated CCL Project Level Economics Trains 1-2 $0.9 - $1.3 billion of incremental EBITDA to CEI ($ in billions, unless otherwise noted) CCL Trains 1-2 Long term SPAs $1.1 Short / medium term LNG sales(1) 0.5 - 0.9 Commodity payments, net(2) 0.2 Total CCL revenues $2.1 Plant O&M (0.3) Plant maint
Slide 100: Estimated CEI EBITDA Build Up
Estimated CEI EBITDA Build Up SPL Trains 1-4 and CCL Trains 1-2 $5.0 CEI EBITDA ($ in billions) $4.0 $3.0 $1.9 - $2.5 $0.4 $2.0 $1.0 - $1.2 $0.9 $1.0 $0.7 $0.2 $0.3 – SPL Sales (T1-4) SPL CMI Sales CCL Sales (T1-2) Cumulative build up Number of trains 4 trains 4 trains 6 trains Nameplate capacity 18
Slide 101: Sabine Pass Liquefaction Trains 5-6 Expansion
Sabine Pass Liquefaction Trains 5-6 Expansion SPL Trains 5-6 Expansion SPL Trains 5-6 Expansion FID Date H2 2015 Capex Estimate ~$6 billion Project Equity ~$1.5 billion Project Debt ~$4.5 billion COD 2018/2019 Commercial Assumptions Train 5 Train 6 20-year “take-or-pay” 3.75 MTPA style SPAs $3.00/MM
Slide 102: Estimated Consolidated CQP Cash Flows
Estimated Consolidated CQP Cash Flows SPL Trains 1-6 ($ in billions, except per unit amounts or unless otherwise noted) SPL Trains 5-6 SPL Trains 1-6 SPL firm SPA payments(1) $1.4 $3.6 SPL commodity payments, net(2) 0.1 0.4 CMI SPA payments(3) 0.0 0.2 - 0.2 SPLNG TUA payments and other revenues(4) (
Slide 103: Estimated CQH Cash Flows
Estimated CQH Cash Flows SPL Trains 1-6 CQH NOL exhausted in 2019(1) with an average effective tax rate of ~20% thereafter CQH dividend build up (100% of CQH interest) ($ in billions, except per share amounts or unless otherwise noted) SPL Trains 1-4 SPL Trains 5-6 SPL Trains 1-6 CQH pre-tax cash
Slide 104: Estimated CEI Cash Flows
Estimated CEI Cash Flows SPL Trains 1-6 $0.5 - $0.7 billion of incremental EBITDA to CEI CEI EBITDA build up ($ in billions, except per unit amounts or unless otherwise noted) SPL Trains 5-6 SPL Trains 1-6 CQH distributions(1) $0.1 $0.6 GP and IDR distributions 0.4 0.8 Management fees 0.0 0.1 CMI
Slide 105: Estimated CEI EBITDA Build Up
Estimated CEI EBITDA Build Up SPL Trains 1-6 and CCL Trains 1-2 $5.0 CEI EBITDA ($ in billions) $4.0 $2.6 - $3.3 $0.1 $3.0 $0.1 $1.9 - $2.5 $0.5 $0.4 $2.0 $1.0 - $1.2 $0.9 $1.0 $0.7 $0.2 $0.3 – SPL Sales (T1-4) SPL CMI Sales CCL Sales (T1-2) SPL Sales (T5-6) Cumulative build up Number of trains 4 tr
Slide 106: Corpus Christi Liquefaction Train 3 Expansion
Corpus Christi Liquefaction Train 3 Expansion CCL Train 3 Expansion CCL Train 3 Expansion Houston New Orleans FID Date H1 2016 Corpus Christi Capex Estimate ~$3 billion Gulf of Mexico Project Equity ~$3 billion Project Debt ~$0 billion COD 2020 Commercial Assumptions 3.6 MTPA(1) Short / medium term
Slide 107: Estimated CCL Project Level Economics
Estimated CCL Project Level Economics Trains 1-3 $0.7 - $1.2 billion of incremental EBITDA to CEI from Train 3 ($ in billions, unless otherwise noted) CCL Train 3 CCL Trains 1-3 Long term SPAs – $1.1 Short / medium term LNG sales(1) 0.8 - 1.3 1.3 - 2.2 Commodity payments, net(2) 0.1 0.2 Total CCL
Slide 108: Estimated CEI EBITDA Build Up
Estimated CEI EBITDA Build Up SPL Trains 1-6 and CCL Trains 1-3 $5.0 $3.3 - $4.5 CEI EBITDA ($ in billions) $0.6 $4.0 $2.6 - $3.3 $0.7 $0.1 $3.0 $0.1 $1.9 - $2.5 $0.5 $0.4 $2.0 $1.0 - $1.2 $0.9 $1.0 $0.7 $0.2 $0.3 – Cumulative build up SPL Sales (T1-4) SPL CMI Sales CCL Sales (T1-2) SPL Sales (T5-6)
Slide 109: Potential Financial Profile of CEI
Potential Financial Profile of CEI Cheniere development of ~41 MTPA of US liquefaction capacity (9 trains) leads to EBITDA of $3.3 - $4.5 billion (unconsolidated) CEI level debt of ~$4 billion (unconsolidated) CEI share count of 268 million(1) (1) Assumes no incremental CEI public equity issua
Slide 110: Strategic Update and LTIP
Strategic Update and LTIP Analyst/ Investor Day Charif Souki, President, Chairman and CEO April 2014
Slide 111: U.S. Crude May Outpace Demand by 2017
U.S. Crude May Outpace Demand by 2017 Effective U.S. Refining Capacity @92% Util Rate – 16 MMb/d Production (MM b/d) Capacity Accounting for LT Contracts Projected Production Actual History 1/2008 1/2009 1/2010 1/2011 1/2012 1/2013 1/2014 1/2015 1/2016 1/2017 1/2018 1/2019 1/2020 1/2021 1/2022 1/202
Slide 112: South Texas Oil Trades at a Discount
South Texas Oil Trades at a Discount ($/bbl) Jan-Mar 2014 Brent Crude $108 WTI Crude 99 Eagle Ford Crude (42° API) 95 Eagle Ford Condensate (60° API) 90 Eagle Ford Crude Discount – Brent $13 Source: Bloomberg, Sunoco postings (Eagle Ford Condensate) 112
Slide 113: U.S. Rig Activity
U.S. Rig Activity Oil Gas Source: Baker Hughes (March 28, 2014) 113
Slide 114: Oil and Gas Estimated Annual Capital Spend
Estimated Annual Capital Spend Oil and Gas Unconventional development will reconfigure America’s rails, pipelines and marine terminals -- $200B+ midstream investment required Capital spend in 2012 for 42,000 wells drilled ~$200B Expected capital spend for midstream and ~$18B downstream oil and gas i
Slide 115: U.S. - Net Energy Exporter
U.S. - Net Energy Exporter 1,000 B/D Net Propane Exports 1,000 B/D Net Gasoline Exports 300 600 200 400 100 200 0 0 -100 -200 -200 -400 -300 -600 -400 -800 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 1,000 B/D Net Dist
Slide 116: Build-up of NGLs Coming
Build-up of NGLs Coming Projected NGL Production 5,000 2,100 4,500 2,050 Projected Production (MBbld) 4,000 2,000 3,500 1,950 Active Rig Count 3,000 1,900 2,500 1,850 2,000 1,800 1,500 1,750 1,000 1,700 500 1,650 0 1,600 Source: Ponderosa Energy Advisors LLC 116
Slide 117: In Summary
In Summary U.S. will need new export infrastructure Expect 2-3 MMBoe to be available for export based on current drilling Investment of $100-$150B needed to support these exports Domestically, no one is paying attention Source: Cheniere estimates 117
Slide 118: Cheniere Strategy
Cheniere Strategy 2014: De-risk Corpus Christi 2015: De-risk Sabine Pass T5 & 6 Focus on next high return opportunities 118
Slide 119: 2014 - 2018 LTI Plan
CHENIERE == 2014 - 2018 LTI Plan
Slide 120: 2014-2018 Long Term Incentive Plan
2014-2018 Long Term Incentive Plan Aligns shareholders and Company, focused on shareholder returns 2014-2018 LTIP is a 100% performance-based equity incentive plan Designed to align the interests of stockholders and the Company Incentivizes management and employees to develop future projects a
Slide 121: Key Features of the 2014-2018 LTI Plan
Key Features of the 2014-2018 LTI Plan Awards completely dependent on total shareholder return (“TSR”) • If TSR is more than 9% then 10% of the increase is shared • No awards if TSR is less than 8%. • A pro rata portion is shared between 8% and 9% Three hurdles ensure the Company is rewarded onl
Slide 122: Awards Granted Under the 2014-2018 LTIP
Awards Granted Under the 2014-2018 LTIP Based on Estimated TSRs (In MM) Annualized Total Shareholder Return (TSR) 9% 15% 30% Current Shares Outstanding 238.9 238.9 238.9 Estimated Shares Granted Over 5 Years 9.8 15.7 28.2 Ending Shares in 5 Years 248.7 254.6 267.1 Total % Granted 4.1% 6.6% 11.8% Ave