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Cheniere Stock Offer Nets $286M; But Shares Drop After ChevronTexaco Deal Folds

December 13, 2004
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Cheniere Stock Offer Nets $286M; But Shares Drop After ChevronTexaco Deal Folds

Cheniere Energy's stock dropped $5.34, or more than 9%, to $51.16 Thursday after the company announced late Wednesday that ChevronTexaco had broken off negotiations for an ownership stake in Cheniere's Sabine Pass LNG partnership.

The announcement came the same day Cheniere closed on a public offering of five million shares of common stock at $60 per share which netted approximately $286 million in cash. Cheniere said it was not notified by ChevronTexaco until after the offer closed.

Cheniere said it received a notice at 5 p.m. Houston time from ChevronTexaco that Chevron U.S.A. Inc. had determined not to continue negotiations regarding its proposed acquisition of a limited partner interest in Cheniere's wholly-owned Sabine Pass LNG partnership. Cheniere is developing an LNG receiving terminal near Sabine Pass in Cameron Parish, LA.

The company said net proceeds from the offering are expected to be used to fund the equity requirements of the project financing for the Sabine Pass LNG terminal or for other general corporate purposes.

Cheniere said the notice also confirmed that, as previously announced, ChevronTexaco will advise Cheniere on or before Dec. 20 whether it will proceed forward with the Terminal Use Agreement as a long-term user of reserved capacity at the Sabine Pass LNG terminal.

Cheniere's common stock shot up nearly 45% to $37 after it announced in early November it had signed separate 20-year agreements for a total of 1.7 Bcf/d of capacity at Sabine Pass with Total LNG USA Inc. and ChevronTexaco (see NGI, Nov. 15). The agreement with ChevronTexaco was for 700 MMcf/d of regasification capacity, with the option of inceasing to 1 Bcf/d or decreasing to 500 MMcf/d. The agreement was subject to final approval by ChevronTexaco management by Dec. 20, 2004.

Cheniere's stock price continued to escalate through November as it received final environmental impact statements from FERC for Sabine Pass and its planned Corpus Christi facility. It announced its share offering on Nov. 29, pricing it at $60 per share on Dec. 2.

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