Cheniere Energy Inc. announces signing of purchase and sale agreement for offshore California reserves.

HOUSTON--(BUSINESS WIRE)--Dec. 23, 1996--Cheniere Energy California ("Cheniere"), a wholly-owned direct subsidiary of Cheniere Energy, Inc. (EBB: CHEX), today announced the signing of a Purchase and Sale Agreement with Poseidon Petroleum, LLC ("Poseidon") to acquire Poseidon's 60% working interest in six undeveloped leases in the Bonito Unit of the Pacific Outer Continental Shelf (OCS), off Santa Barbara County, California.

The majority interest in the unit is owned by Nuevo Energy Corp. Torch Operating Co. is the operator of the Unit, pursuant to an agreement with Nuevo.

Poseidon estimates that the net proved undeveloped reserves attributable to its interests are approximately 47 million barrels of oil equivalent. As payment for this interest, Poseidon will receive production payments aggregating $18,000,000 to be paid as three percent (3%) of the production revenue from the leases being assigned. Minimum prepayments of the annual production payment shall be made at the rate of $540,000 per year, payable in advance. Poseidon will receive the first minimum prepayment of $540,000 at closing. Poseidon will have a reserve report prepared with respect to the leases which is subject to Cheniere's acceptance. The principal amount of the production payment and the required minimum yearly payments are subject to adjustment based on the results of the reserve report. It is anticipated that closing of the purchase will occur during the second quarter of 1997.

Houston-based Cheniere Energy, Inc. is an independent oil and gas company that focuses on early stage oil and gas projects characterized by high reserve potential in which the company can obtain a large working interest. The Company's first project is a 3-D seismic exploration program being conducted in the Louisiana Transition Zone of West Cameron Parish.

CONTACT: Cheniere Energy Inc., Houston

Walter L. Williams, Vice-Chairman, [phone]