3570--3/13/2006--CHENIERE_ENERGY

related topics

{gas, price, oil}

{operation, natural, condition}

{cost, contract, operation}

{cost, operation, labor}

{acquisition, growth, future}

{customer, product, revenue}

{regulation, change, law}

{cost, regulation, environmental}

{investment, property, distribution}

{property, intellectual, protect}

{operation, international, foreign}

{stock, price, operating}

{personnel, key, retain}

{competitive, industry, competition}

{loss, insurance, financial}

{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. The actual construction costs of our proposed LNG receiving terminals and pipelines may be significantly higher than our current estimates, which are before financing costs. Risks Relating to Our LNG Receiving Terminal Development Business The construction of our planned LNG receiving terminals is subject to a number of development risks, which could cause cost overruns and delays or prevent completion of one or more of our LNG development projects. Failure to obtain and maintain approvals and permits from governmental and regulatory agencies with respect to the development of our LNG receiving terminal business would have a detrimental effect on us and our LNG projects. We face competition in the LNG receiving terminal development business from competitors with far greater resources and the potential for overcapacity in the LNG receiving terminal marketplace. Cyclical changes in the demand for LNG regasification capacity may result in reduced operating revenues and may cause operating losses in the future. 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. Failure of imported LNG to become a competitive source of energy in the United States could have a detrimental effect on our ability to implement and complete our business plan. The inability to import LNG into the United States due to, among other things, governmental regulation or potential instability in countries that supply natural gas, could materially adversely affect our business plans and results of operations. Decreases in the price of natural gas in North America could harm our ability to develop our proposed LNG receiving terminals and market the sale of natural gas. 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. The construction of our proposed LNG receiving terminals will be dependent on performance by, and our relationship with, the contractors that we engage at each facility. Risks Relating to Our Pipeline Development 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 will be subject to FERC rate-making, which could have an adverse impact on our ability to recover the full cost of operating our pipelines, including a reasonable return. 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. 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 development business could have similar adverse effects on our marketing business. Risks Relating to Our Oil and Gas Exploration and Development Business We are subject to significant exploration risks, including the risk that we may not be able to find or produce enough oil and gas to generate any profits. We may not be able to acquire the oil and gas leases we need to sustain profitable operations. If we are unable to obtain satisfactory turnkey contracts, we may have to assume additional risks and expenses when drilling wells. If we are unsuccessful at marketing our oil and gas at commercially acceptable prices, our profitability will decline. Shortage of rigs, equipment, supplies or personnel may restrict our operations. We depend on industry partners and could be seriously harmed if they do not perform satisfactorily, which is usually not within our control. There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and future net cash flows. Because of our lack of diversification, factors harming the oil and gas industry in general, including downturns in prices for oil and gas, would be especially harmful to us. Risks Relating to Our Business in General We are currently a small, 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 use to greater and unanticipated risks. We depend on key personnel, and we could be seriously harmed if we lost their services. We are subject to significant operating hazards and uninsured risks, one or more of which may create significant liabilities for us. Existing and future United States governmental regulation, taxation and price controls could seriously harm us. 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. Terrorist attacks or sustained military campaigns may adversely impact our business. Hurricanes Katrina and Rita, or future similar storms, could have a material adverse effect on our business, financial condition and results of operations.

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3570--3/13/2006--CHENIERE_ENERGY_INC