Cheniere Energy Releases Third Quarter Results.Business/Energy Editors HOUSTON--(BUSINESS WIRE)--Nov. 12, 2002 Cheniere Energy Inc. (AMEX AMEX See: American Stock Exchange :CXY) announced the results of its operations for the third quarter of 2002. Cheniere reported a net loss for the third quarter of $1,474,972, or $0.11 per share, of which $1,015,058 represents start-up Start-up The earliest stage of a new business venture. expenses for its LNG LNG (liquefied natural gas): see under natural gas. receiving terminals business. For the third quarter of 2001, Cheniere reported a net loss of $5,057,915, or $0.38 per share. The major components of the decrease in Cheniere's loss for the quarter were: (1) the effect of a $2,966,603 ceiling test write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. in 2001; (2) a $571,007 increase in 2002 of LNG expenses for engineering work related to Cheniere's planned filing for a FERC FERC Federal Energy Regulatory Commission FERC FEMA Emergency Response Capability permit; (3) a $270,327 decrease in other general and administrative expenses; and (4) a $929,482 decrease in Cheniere's non-cash, equity pick-up of the net loss of its unconsolidated affiliate, Gryphon Exploration Company. Cheniere's financial statements for the quarter, filed with the Securities and Exchange Commission, were certified See certification. by the Company's chief executive officer and its chief financial officer. Cheniere's business is comprised of three components: the development of LNG receiving terminals, an investment in its exploration affiliate, Gryphon, and the exploitation of its own 3D seismic database through prospect generation. LNG Receiving Terminal -- Cheniere continues to make progress toward a FERC filing for its Freeport, Texas Freeport is a city in Brazoria County, Texas within the Houston–Sugar Land–Baytown Metropolitan Area and is situated in Southeast Texas. As of the 2000 U.S. Census, the city population was 12,708 and is about sixteen miles away from Angleton. , LNG receiving terminal. The company previously announced that it has entered into an agreement to sell the Freeport facility to an entity controlled by Michael S. Smith Michael Scott Smith (January 30, 1946–January 2, 2006) was an American Jazz drummer. Based in the Washington D.C. - Baltimore area for most of his 40-year career, Smith played with jazz greats including Dave Liebman, Herbie Hancock, John Abercrombie, Randy Brecker, , retaining 40% of the project, receiving $5,000,000 in various installments and being carried for the first $9,000,000 in project expenses. This agreement is presently set to close in December 2002 unless it is extended by the acquiring entity. Negotiations are presently underway on a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. lease for the Freeport site. Discussions are being held with suppliers of LNG concerning the future use of the terminal. Non-binding memoranda of understanding have been signed with several large purchasers of natural gas for the off-take of 500 mmcf per day from the terminal. Investment in Gryphon Exploration Company -- Cheniere owns 100% of Gryphon's outstanding common stock. Warburg War·burg , Otto Heinrich 1883-1970. German biochemist. He won a 1931 Nobel Prize for research on the respiration of cells. , Pincus Pin·cus , Gregory Goodwin 1903-1967. American physiologist. Through his studies of natural hormones that inhibit ovulation in mammals, he developed the first effective oral contraceptive, which was first tested in 1954. Equity Partners L.P. has invested $85,000,000 to date in Gryphon preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. , which is convertible into 90.7% of Gryphon and accrues dividends at 8% per annum Per annum Yearly. . Upon the conversion of Gryphon's preferred stock into common stock, Cheniere's interest would be diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. to 9.3%. Cheniere has an option to acquire an additional 4.7% of Gryphon's common stock for approximately $3,158,000 as of November 11, 2002. Since its inception in October 2000, Gryphon has drilled 16 wells and discovered nine fields. Gryphon is presently drilling three wells and expects to drill an additional one well during the remainder of 2002. Gryphon owns approximately 20,000 square miles A square mil is a unit of area, equal to the area of a square with sides of length one mil. A mil is one thousandth of an international inch. This unit of area is usually used in specifying the area of the cross section of a wire or cable. of recent vintage 3D seismic data, which it uses to explore in the shallow waters See:
Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . Gryphon has acquired 59 leases, resulting in aggregate lease holdings of 200,000 gross acres (146,000 net). Cheniere Exploration -- So far this year, Cheniere has participated in the drilling of seven wells. Five of these wells are discoveries. The first discovery well is currently producing, and the other four are expected to begin production in the first quarter of 2003. A preliminary estimate of the reserves attributable to the five discoveries is 1.75 BCF BCF Billion Cubic Feet BCF Bioconcentration Factor BCF British Chess Federation BCF British Coatings Federation BCF Breast Cancer Fund BCF Bank Credit Facility BCF Bulked Continuous Filament BCF British Cycling Federation BCF Boeing Converted Freighter net to Cheniere. These reserve additions have been accomplished at no direct cost to Cheniere. Cheniere's current exploration strategy is to generate high quality prospects on its pre-stack time migrated seismic database and sell the prospects to industry partners. The compensation for the prospects includes a cash prospect fee and an overriding royalty interest overriding royalty interest A third-party interest in royalty income derived from oil and gas rights. convertible to a working interest at payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. . Additional prospects are currently being generated and marketed. Additional information on the company may be found on its Web site at www.cheniere.com, by contacting the company's investor and media relations department toll-free at 888/948-2036 or by writing to: cxy@mdcgroup.com. Except for the historical statements contained herein, this news release presents forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be achieved. Certain risks and uncertainties inherent in the company's business are set forth in the company's periodic reports that are filed with and available from the Securities and Exchange Commission.
Cheniere Energy Inc.
Selected Financial Information
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Revenues $21,998 $395,540 $221,557 $2,142,028
------------ ------------ ------------ ------------
Operating Costs and
Expenses
Production Costs - 68,943 90,038 276,006
Depreciation,
Depletion and
Amortization 133,910 332,570 314,382 1,093,202
Ceiling Test
Write-down - 2,966,603 - 5,126,248
General and
Administrative
Expenses
LNG Terminal
Development 1,015,058 536,215 2,744,944 1,426,054
Other 351,032 621,359 1,505,364 2,053,678
------------ ------------ ------------ ------------
Total General
and
Administrative
Expenses 1,366,090 1,157,574 4,250,308 3,479,732
------------ ------------ ------------ ------------
Total Operating
Costs and Expenses 1,500,000 4,525,690 4,654,728 9,975,188
------------ ------------ ------------ ------------
Gain on Sale of
Proved Oil and Gas
Properties - - 340,257 -
------------ ------------ ------------ ------------
Loss from
Operations (1,478,002) (4,130,150) (4,092,914) (7,833,160)
Equity in Net Loss
of Unconsolidated
Affiliate - (929,482) (2,184,847) (1,936,912)
Loss on Early
Extinguishment of
Debt - - (100,544) -
Interest Income 3,030 1,717 6,337 15,681
------------ ------------ ------------ ------------
Net Loss $(1,474,972) $(5,057,915) $(6,371,968) $(9,754,391)
============ ============ ============ ============
Net Loss Per Share -
Basic and Diluted $(0.11) $(0.38) $(0.48) $(0.75)
============ ============ ============ ============
Weighted Average
Number of Shares
Outstanding -
Basic and Diluted 13,297,393 13,297,393 13,297,393 12,946,917
============ ============ ============ ============
9/30/02 12/31/01
------------ ------------
Current Assets $1,195,299 $1,344,159
Oil and Gas
Properties, net,
full cost method 17,228,728 18,166,086
LNG Site Costs 1,525,000 1,350,000
Fixed Assets 251,186 416,232
Investment in
Unconsolidated
Affiliate (Gryphon) - 3,747,199
------------ ------------
Total Assets $20,200,213 $25,023,676
============ ============
Current Liabilities $3,213,112 $1,874,401
Stockholders'
Equity 16,987,101 23,149,275
------------ ------------
Total Liabilities
and Stockholders'
Equity $20,200,213 $25,023,676
============ ============
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
Gryphon Summary
(unaudited): 2002 2001 2002 2001
------------ ------------ ------------ ------------
Gryphon Revenues $3,046,000 $274,000 $6,950,000 $668,000
Gryphon
Depreciation,
Depletion and
Amortization 1,483,000 310,000 3,744,000 738,000
Gryphon Net Income
(Loss) 1,429,000 (46,000) (701,000) 78,000
9/30/02 12/31/01
------------ ------------
Gryphon
Stockholders'
Equity $79,585,000 $62,848,000
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