LNG receiving terminal developer, Cheniere Energy Inc., announced Monday that it posted first quarter 2003 net income of $3,121,309, or $0.23 per share, compared with a net loss of $2,530,967, or $0.19 per share, a year earlier.

The Houston-based company attributed the $5 million-plus swing from loss to profit to:

Cheniere is focused on the development of LNG receiving terminals, the investment in its exploration affiliate, Gryphon, and the exploitation of its own 3D seismic data base through prospect generation.

On the LNG front, Cheniere sold its Freeport LNG project in Feb. 2003 to Freeport LNG Development LP., in which Cheniere retained a 40% interest. At or prior to closing, Freeport LNG paid Cheniere $2,180,215 in cash and assumed Cheniere liabilities of $560,211. In addition, Freeport LNG will pay an another $4 million to Cheniere over time and will spend up to $9 million to obtain permits and prepare the project for the construction phase with no further contribution by Cheniere. In March, Cheniere sold a 10% limited partnership interest in Freeport LNG to a third party for $2,333,333 payable over time. In late March, Freeport LNG submitted an application for a permit to construct the terminal with the Federal Energy Regulatory Commission.

From its inception in October 2000 through March 31, 2003, Cheniere said its 100%-owned Gryphon Exploration Co. has drilled 19 wells, of which nine have been successful. Gryphon uses a 20,000-square-miles 3D seismic database to explore in the shallow waters of the Gulf of Mexico. The company said it expects to drill 14 exploratory wells and three to four development wells in 2003. Gryphon’s production in March 2003 averaged 30 MMcfe/day. In addition, Cheniere noted that Gryphon was the apparent high bidder on 19 blocks in the March 2003 Louisiana Federal Offshore Lease Sale.

Warburg, Pincus Equity Partners LP. has invested $85,000,000 to date in Gryphon preferred stock, which is convertible into 91% of Gryphon and accrues dividends at 8% per annum. Upon the conversion of Gryphon’s preferred stock into common stock, Cheniere’s interest would be diluted to 9%.

Following the formation of Gryphon, Cheniere reestablished its own exploration capability. To date, Cheniere’s exploration group said it has captured and sold 19 prospects over its 7,000-square-mile 3D seismic database. The drilling of these prospects has begun and to date has resulted in nine new discoveries and three dry holes. Five wells were on production as of March 31.

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