UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 001-16383
CHENIERE ENERGY, INC.
(Exact name as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
95-4352386
(I.R.S. Employer Identification No.)
717 Texas Avenue, Suite 3100
Houston, Texas
(Address of principal executive offices)
77002
(Zip Code)
(713) 659-1361
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x.
As of May 6, 2004, there were 18,880,592 shares of Cheniere Energy, Inc. Common Stock, $.003 par value, issued and outstanding.
INDEX TO FORM 10-Q
| Page | ||||||
| Part I. |
Financial Information |
|||||
| Item 1. |
Consolidated Financial Statements |
|||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
| 6 | ||||||
| 7 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | ||||
| Item 3. |
20 | |||||
| Item 4. |
20 | |||||
| Part II. |
||||||
| Item 1. |
20 | |||||
| Item 6. |
21 | |||||
CAUTIONARY STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report contains certain statements that may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included herein or incorporated herein by reference are “forward-looking statements.” Included among “forward-looking statements” are, among other things: statements regarding our business strategy, plans and objectives; statements expressing beliefs and expectations regarding the development of our LNG receiving terminal business; statements expressing beliefs and expectations regarding our ability to successfully raise the additional capital necessary to meet our obligations under our current exploration agreements; statements expressing beliefs and expectations regarding our ability to secure the leases necessary to facilitate anticipated drilling activities; statements expressing beliefs and expectations regarding our ability to attract additional working interest owners to participate in the exploration and development of our exploration areas; and statements about non-historical information. These forward-looking statements are often identified by the use of terms and phrases such as “expect,” “estimate,” “project,” “plan,” “believe,” “achievable,” “anticipate” and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this quarterly report.
2
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
| ASSETS |
March 31, 2004 |
December 31, 2003 |
||||||
| (Unaudited) | ||||||||
| CURRENT ASSETS |
||||||||
| Cash and Cash Equivalents |
$ | 14,590,317 | $ | 1,257,693 | ||||
| Accounts Receivable |
||||||||
| Affiliates |
— | 1,000,000 | ||||||
| Other |
1,655,903 | 1,828,065 | ||||||
| Prepaid Expenses |
359,783 | 401,594 | ||||||
| Total Current Assets |
16,606,003 | 4,487,352 | ||||||
| OIL AND GAS PROPERTIES, full cost method |
||||||||
| Proved Properties, net |
1,047,681 | 1,087,152 | ||||||
| Unproved Properties, not subject to amortization |
18,539,329 | 18,047,802 | ||||||
| Total Oil and Gas Properties |
19,587,010 | 19,134,954 | ||||||
| LNG SITE COSTS |
504,967 | 310,500 | ||||||
| FIXED ASSETS, net |
942,350 | 578,281 | ||||||
| INVESTMENT IN UNCONSOLIDATED AFFILIATE |
— | — | ||||||
| INVESTMENT IN LIMITED PARTNERSHIP |
2,155,175 | — | ||||||
| INTANGIBLE LNG ASSETS |
79,670 | 79,670 | ||||||
| Total Assets |
$ | 39,875,175 | $ | 24,590,757 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Accounts Payable |
$ | 2,012,748 | $ | 1,984,314 | ||||
| Accrued Liabilities |
1,292,013 | 1,347,512 | ||||||
| Note Payable |
— | 1,000,000 | ||||||
| Total Current Liabilities |
3,304,761 | 4,331,826 | ||||||
| DEFERRED REVENUE |
1,000,000 | 1,000,000 | ||||||
| MINORITY INTEREST |
— | 120,032 | ||||||
| COMMITMENTS AND CONTINGENCIES |
— | — | ||||||
| STOCKHOLDERS’ EQUITY |
||||||||
| Preferred Stock, $.0001 par value |
— | — | ||||||
| Common Stock, $.003 par value |
56,149 | 49,465 | ||||||
| Additional Paid-in-Capital |
69,044,867 | 48,034,244 | ||||||
| Deferred Compensation |
(3,510,833 | ) | — | |||||
| Accumulated Deficit |
(30,019,769 | ) | (28,944,810 | ) | ||||
| Total Stockholders’ Equity |
35,570,414 | 19,138,899 | ||||||
| Total Liabilities and Stockholders’ Equity |
$ | 39,875,175 | $ | 24,590,757 | ||||
The accompanying notes are an integral part of these financial statements.
3
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues |
||||||||
| Oil and Gas Sales |
$ | 332,345 | $ | 110,120 | ||||
| Total Revenues |
332,345 | 110,120 | ||||||
| Operating Costs and Expenses |
||||||||
| Production Taxes |
7,378 | — | ||||||
| Depreciation, Depletion and Amortization |
205,425 | 58,692 | ||||||
| General and Administrative Expenses |
||||||||
| LNG Terminal Development |
3,875,776 | 394,061 | ||||||
| Non-Cash Compensation |
1,825,834 | — | ||||||
| Other |
1,635,570 | 520,111 | ||||||
| General and Administrative Expenses |
7,337,180 | 914,172 | ||||||
| Total Operating Costs and Expenses |
7,549,983 | 972,864 | ||||||
| Loss from Operations |
(7,217,638 | ) | (862,744 | ) | ||||
| Equity in Net Income (Loss) of Limited Partnership |
2,155,175 | (1,200,000 | ) | |||||
| Gain on Sale of LNG Assets |
— | 4,760,000 | ||||||
| Gain on Sale of Limited Partnership Interest |
— | 423,454 | ||||||
| Reimbursement from Limited Partnership Investment |
2,500,000 | — | ||||||
| Interest Income |
6,032 | 599 | ||||||
| Income (Loss) Before Income Taxes and Minority Interest |
(2,556,431 | ) | 3,121,309 | |||||
| Provision for Income Taxes |
— | — | ||||||
| Income (Loss) Before Minority Interest |
(2,556,431 | ) | 3,121,309 | |||||
| Minority Interest |
1,481,472 | — | ||||||
| Net Income (Loss) |
$ | (1,074,959 | ) | $ | 3,121,309 | |||
| Net Income (Loss) Per Share—Basic |
$ | (0.06 | ) | $ | 0.23 | |||
| Net Income (Loss) Per Share—Diluted |
$ | (0.06 | ) | $ | 0.23 | |||
| Weighted Average Number of Shares Outstanding—Basic |
18,109,258 | 13,297,393 | ||||||
| Weighted Average Number of Shares Outstanding—Diluted |
18,109,258 | 13,500,481 | ||||||
The accompanying notes are an integral part of these financial statements.
4
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Common Stock |
Additional Paid-In |
Deferred Compensation |
Accumulated Deficit |
Total Stockholders’ Equity |
|||||||||||||||||
| Shares |
Amount |
||||||||||||||||||||
| Balance—December 31, 2003 |
16,488,187 | $ | 49,465 | $ | 48,034,244 | $ | — | $ | (28,944,810 | ) | $ | 19,138,899 | |||||||||
| Issuances of Stock |
1,972,905 | 5,918 | 18,146,639 | — | — | 18,152,557 | |||||||||||||||
| Issuance of Restricted Stock |
255,333 | 766 | 3,829,234 | (3,830,000 | ) | — | — | ||||||||||||||
| Amortization of Deferred Compensation |
— | — | — | 319,167 | — | 319,167 | |||||||||||||||
| Expenses Related to Offerings |
— | — | (965,250 | ) | — | — | (965,250 | ) | |||||||||||||
| Net Loss |
— | — | — | — | (1,074,959 | ) | (1,074,959 | ) | |||||||||||||
| Balance—March 31, 2004 |
18,716,425 | $ | 56,149 | $ | 69,044,867 | $ | (3,510,833 | ) | $ | (30,019,769 | ) | $ | 35,570,414 | ||||||||
The accompanying notes are an integral part of these financial statements.
5
CHENIERE ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net Income (Loss) |
$ | (1,074,959 | ) | $ | 3,121,309 | |||
| Adjustments to Reconcile Net Income (Loss) to Net Cash Used in Operating Activities: |
||||||||
| Depreciation, Depletion and Amortization |
205,425 | 58,692 | ||||||
| Non-Cash Compensation |
1,825,834 | — | ||||||
| Equity in Net (Income) Loss of Limited Partnership |
(2,155,175 | ) | 1,200,000 | |||||
| Gain on Sale of LNG Assets |
— | (4,760,000 | ) | |||||
| Gain on Sale of Limited Partnership Interest |
— | (423,454 | ) | |||||
| Reimbursement from Limited Partnership Investment |
(2,500,000 | ) | — | |||||
| Minority Interest |
(1,481,472 | ) | — | |||||
| Other |
32,898 | (3,636 | ) | |||||
| Changes in Operating Assets and Liabilities |
||||||||
| Accounts Receivable—Affiliates |
1,000,000 | — | ||||||
| Other Accounts Receivable |
94,699 | 456,729 | ||||||
| Prepaid Expenses |
(89,554 | ) | (236,008 | ) | ||||
| Accounts Payable and Accrued Liabilities |
(161,353 | ) | (730,546 | ) | ||||
| NET CASH USED IN OPERATING ACTIVITIES |
(4,303,657 | ) | (1,316,914 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Purchases of Fixed Assets |
(563,403 | ) | (12,215 | ) | ||||
| Oil and Gas Property Additions |
(422,823 | ) | (454,847 | ) | ||||
| Sale of Interest in Oil and Gas Prospects |
768,200 | 391,350 | ||||||
| LNG Site Costs |
(96,000 | ) | — | |||||
| Sale of LNG Assets |
— | &nbs | ||||||