3570--2/27/2007--CHENIERE_ENERGY

related topics

{gas, price, oil}

{cost, contract, operation}

{operation, natural, condition}

{cost, operation, labor}

{cost, regulation, environmental}

{acquisition, growth, future}

{investment, property, distribution}

{debt, indebtedness, cash}

{competitive, industry, competition}

{property, intellectual, protect}

{stock, price, operating}

{operation, international, foreign}

{personnel, key, retain}

{loss, insurance, financial}

{customer, product, revenue}

{financial, litigation, operation}

Risks Relating to Our Financial Matters We have not been profitable historically, and we are currently experiencing negative operating cash flow. Our ability to achieve profitability and generate positive operating cash flow in the future is subject to significant uncertainty. Our ability to develop our planned LNG receiving terminals and pipelines is contingent on our ability to obtain funding. If we are unable to do so, we may be unable to implement or complete our business plan, and our business may ultimately be unsuccessful. Even if we are able to obtain financing, the terms required may adversely affect our business. Our substantial indebtedness could adversely affect our ability to operate our business. We may experience cost overruns and delays in the completion of our proposed LNG receiving terminals and pipelines as well as difficulties in obtaining funding for any additional costs, which could have a material adverse effect on our results of operations. Risks Relating to Our LNG Receiving Terminal Business Our inability to timely construct and commission our LNG receiving terminals would prevent us from commencing operations when anticipated and would delay or prevent us from realizing anticipated cash flows. We are dependent on Bechtel and other contractors for the successful completion of our LNG receiving terminals. To commission our LNG receiving terminals, we must purchase and process LNG. We have not previously purchased or processed any LNG. Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the development of our LNG receiving terminals could impede completion of the terminals and have a material adverse effect on us. After our LNG receiving terminals are placed in service, their businesses will involve significant operational risks. We may be required to purchase natural gas to provide fuel at our LNG receiving terminals, which would increase operating costs and could have a material adverse effect on our results of operations. The inability to import LNG into the United States could materially adversely affect our customers and our business plans and results of operations if we have to replace TUAs that terminate or expire. Failure of sufficient LNG liquefaction capacity to be constructed worldwide could adversely affect the performance by our customers of their obligations under the TUAs and could reduce our operating revenue and cause us operating losses. A shortage of LNG tankers worldwide could adversely affect our and our potential customers ability to import LNG into North America, which could inhibit our growth and cause us operating losses. Failure of imported LNG to become a competitive source of energy in North America could adversely affect our ability to enter into TUAs with customers and our ability to import LNG into North America, which could inhibit our growth and cause us operating losses. Decreases in the price of natural gas could lead to reduced development of LNG projects worldwide, which could adversely affect our ability to enter into TUAs and natural gas sale contracts with customers, which could inhibit our growth and cause us operating losses. Cyclical changes in the demand for LNG regasification capacity may adversely affect our ability to enter into TUAs and natural gas sale contracts with customers, which could inhibit our growth and cause us operating losses. We may experience increased labor costs, and the unavailability of skilled workers or our failure to retain key personnel could hurt the ability to construct and operate our proposed LNG receiving terminals. We may face competition in the LNG receiving terminal business from competitors with far greater resources, as well as potential overcapacity in the LNG receiving terminal marketplace. We may have difficulty obtaining enough customers for regasification capacity at our proposed LNG receiving terminals to implement and complete our business plan. We may change our business strategy as to how and when we market our capacity. Our TUAs are subject to termination by our contractual counterparties under certain circumstances, and we are generally dependent on the performance of those counterparties under the TUAs. Risks Relating to Our Pipeline Business Expanding our business by constructing pipelines subjects us to risks. Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the development of our pipelines would have a detrimental effect on us and our LNG projects. Our proposed pipelines, including their FERC gas tariffs, will be subject to FERC regulation. Any reduction in the capacity of, or the allocations to, interconnecting, third-party pipelines could cause a reduction of volumes transported in our proposed pipelines, which would adversely affect our revenues and cash flow. Our pipeline business could be materially adversely affected if we lose the right to situate our proposed pipelines on property owned by third parties. Pipeline safety integrity programs and repairs may impose significant costs and liabilities on us. Because our proposed pipelines will be dependent upon a few customers, including an affiliate, for a significant portion of the revenues anticipated to be generated by our pipeline business, our business may be materially and adversely affected if we lose any one of these customers. Risks Relating to Our LNG and Natural Gas Marketing Business We are in the early stages of developing our LNG and natural gas marketing business. Our use of hedging arrangements may adversely affect our future results of operations or liquidity. The limited operating history of, and limited capital resources and lack of credit available to, our LNG and natural gas marketing business may limit our ability to develop and grow the business. If we do not attract and retain qualified personnel for our developing LNG and natural gas marketing business, our operations could be adversely affected. Other risks related to our LNG receiving terminal business could have similar adverse effects on our marketing business. Risks Relating to Our Oil and Gas Exploration and Development Business We may not be successful in our oil and gas exploration and development activities, which may cause this business to become unprofitable. There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and future net cash flows. Risks Relating to Our Business in General We are currently a developing company with limited operating history in the businesses that we are developing. Our business plans are contingent on our ability to manage successfully our anticipated expansion and transition to operating these businesses. Our initiatives to pursue downstream and upstream opportunities as part of our overall energy business strategy may not be successful and, even if successful, could expose us to greater and unanticipated risks. We are subject to significant operating hazards and uninsured risks, one or more of which may create significant liabilities for us. Existing and future governmental regulation could result in increased compliance costs or additional operating costs and restrictions. Hurricanes or other disasters could result in a delay in the completion of our LNG receiving terminals and pipelines, higher construction costs and the deferral of the dates on which our TUA counterparties are obligated to begin making payments to us. Terrorist attacks or military campaigns may adversely impact our business. We depend on key personnel, and we could be seriously harmed if we lost their services. Some of our economic value is derived from our ownership of minority interests in entities over which we exercise no day-to-day control. We may have to take actions that are disruptive to our business strategy to avoid registration under the Investment Company Act of 1940. We plan to engage in operations and make investments outside the United States, which would expose us to political, governmental and economic instability and foreign currency exchange rate fluctuations.

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3570--2/27/2007--CHENIERE_ENERGY_INC