As it continues to develop liquefied natural gas (LNG) terminals along the Gulf Coast, Houston-based Cheniere Energy Inc. on Friday reported a net loss of $9.8 million (minus 18 cents/share), compared with a net loss of $8.1 million (minus 21 cents) for the same period of 2004.
Cheniere said the LNG terminal development expenses of $5.4 million, along with general and administrative expenses of $5.6 million, were the major factors contributing to the losses, and they mirrored similar losses in 2Q2004.
Cheniere is building a 100%-owned Gulf Coast LNG receiving terminal near Sabine Pass in Cameron Parish, LA. It also is developing 100%-owned Gulf Coast LNG receiving terminals near Corpus Christi, TX, which received its authorization from the Federal Energy Regulatory Commission in March 2005, and another near the Creole Trail in Cameron Parish, LA, for which Cheniere filed its application with the FERC in May 2005. Cheniere is also a 30% limited partner in Freeport LNG Development LP, which is building an LNG receiving terminal in Freeport, TX.
Cheniere’s working capital at June 30, 2005 was $150.8 million, a decrease of $155.0 million from $305.8 million at Dec. 31, 2004. The decrease in working capital, the company said, was primarily attributable to construction-in-progress expenditures related to Cheniere’s Sabine Pass LNG receiving terminal and debt issuance costs related to project financing of the terminal.
Cheniere had previously announced that it closed a private offering on July 27 of $3.25 million aggregate principal amount of convertible senior unsecured notes, which are due in 2012, and which will bear interest at a rate of 2.25% per year.
When the notes were issued, Cheniere also entered into hedge transactions for a net cost of $76 million. These hedge transactions are expected to offset potential dilution from conversion of the notes up to a market price of $70/share of Cheniere common stock. Net proceeds from the offering were approximately $240 million, after deducting the cost of the hedge transactions, the underwriting discount and related fees. The pro forma effect as of June 30 of these transactions would have increased working capital to approximately $391 million, Cheniere said.
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