3570--2/27/2009--CHENIERE_ENERGY

related topics

{gas, price, oil}

{operation, natural, condition}

{cost, contract, operation}

{debt, indebtedness, cash}

{property, intellectual, protect}

{cost, regulation, environmental}

{cost, operation, labor}

{loss, insurance, financial}

{capital, credit, financial}

{investment, property, distribution}

{stock, price, operating}

{operation, international, foreign}

{personnel, key, retain}

{competitive, industry, competition}

{financial, litigation, operation}

Risks Relating to Our Financial Matters We have substantial indebtedness, which we will need to refinance in whole or in part at or prior to maturity. Our substantial indebtedness could adversely affect our ability to operate our business and prevent us from satisfying or refinancing our debt obligations. 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 existing level of cash resources, negative cash flow and limited ability to obtain additional financing could cause us to have inadequate liquidity and could materially and adversely affect our business, financial condition and prospects. Our ability to generate needed amounts of cash is substantially dependent upon our TUAs with two third-party Sabine Pass LNG customers, and we will be materially and adversely affected if either customer fails to perform its TUA obligations for any reason. Each customer s TUA for capacity at the Sabine Pass LNG receiving terminal is subject to termination under certain circumstances. Our ability to generate needed amounts of cash is also substantially dependent upon our ability to commercially exploit the capacity at the Sabine Pass LNG terminal that we have reserved for our own account. Our ability to develop our planned LNG receiving terminals and pipelines and to pursue our other business plans 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. Risks Relating to Our LNG Receiving Terminal Business We may not complete in a timely and cost-effective manner, or at all, the remaining construction and commissioning of the Sabine Pass LNG receiving terminal or the construction and commissioning of our other planned LNG receiving terminals. Cost overruns and delays in the completion of the Sabine Pass LNG receiving terminal or in the construction of our proposed LNG receiving terminals, as well as difficulties in obtaining funding for additional costs, could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects. We are dependent on contractors for the successful completion of our LNG receiving terminals. To commission and test our LNG receiving terminals or in order to maintain their cryogenic readiness, we may need to purchase and process LNG. The cost of such LNG may exceed our estimates, and we may not be able to acquire it at an affordable price or at all. Furthermore, even if we are able to acquire LNG, we may not be able to resell the regasified LNG for a profit or at all. We may be required to purchase natural gas to provide fuel at the Sabine Pass LNG receiving terminal, which would increase operating costs and could have a material adverse effect on our results of operations. We may not be able to enter into satisfactory TUAs with third-party customers for regasification capacity at our proposed LNG receiving terminals, as we have sought to do in order to implement and complete our business plan. We may change our business strategy as to how and when we market LNG receiving terminal capacity. Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the development and operation of our LNG receiving terminals could impede completion or operation and could have a material adverse effect on us. Hurricanes or other disasters could adversely affect us. After our LNG receiving terminals are placed in service, their businesses will involve significant operational risks. Risks Relating to Our Natural Gas Pipeline Business Expanding our business by constructing additional pipelines subjects us to risks. Our existing and proposed pipelines will be dependent upon a few potential customers, and our pipeline business could be materially and adversely affected if we lost any one of those customers. Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the development and operation of our natural gas pipelines would have a detrimental effect on us and our pipeline projects. Our existing and proposed natural gas pipelines, including their FERC gas tariffs, are 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 existing and 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 pipelines on property owned by third parties. Pipeline safety integrity programs and repairs may impose significant costs and liabilities on us. Risks Relating to Our LNG and Natural Gas Marketing Business We may be unable to commercially exploit the capacity at the Sabine Pass LNG terminal that we have reserved for our own account. 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 credit available to, our LNG and natural gas marketing business limit our ability to develop that business. Our exposure to the performance and credit risks of counterparties under agreements may adversely affect our results of operations, liquidity and access to financing. Risks Relating to Our LNG Businesses in General Failure of imported LNG to be a competitive source of energy for North American markets could materially adversely affect our business, financial condition, results of operations and prospects. Cyclical or other changes in the demand for LNG regasification capacity may adversely affect our LNG businesses and the performance of our TUA customers, and could reduce our operating revenues and may cause us operating losses. Insufficient development of additional LNG liquefaction capacity worldwide could adversely affect our LNG businesses and the performance of our TUA customers, and could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects. There may be shortages of LNG vessels worldwide, which could adversely affect our LNG businesses and the performance of our TUA customers, and could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects. Decreases in the demand for and price of natural gas could lead to reduced development of LNG projects worldwide, which could adversely affect our LNG businesses and the performance of our TUA customers, and could have a material adverse effect on our business, results of operations, financial condition, liquidity and prospects. Our LNG businesses face competition, including competing LNG receiving terminals and related pipelines from competitors with far greater resources. Terrorist attacks or military campaigns may adversely impact our LNG businesses. Risks Relating to Our Business in General 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 and losses for us. Existing and future environmental and similar laws and regulations could result in increased compliance costs or additional operating costs and restrictions. We may experience increased labor costs, and the unavailability of skilled workers or our failure to attract and retain key personnel could adversely affect us. Our lack of diversification could have an adverse effect on our financial condition and results of operations. Some of our economic value is derived from our ownership of a minority interest in an entity 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 may engage in operations or make substantial commitments and 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--2/27/2009--CHENIERE_ENERGY_INC