Cheniere ends effort to consolidate ownership

US LNG exporter Cheniere Energy has ended an attempt to take sole ownership of a division that was previously created to protect some of the company's more lucrative assets.

Houston-based Cheniere owns 100pc of four of its five subsidiaries, including the units that own marketing operations, LNG vessels charters, the LNG export terminal it is building in Corpus Christi, Texas, as well as long-term contracts for Corpus Christi.

Cheniere owns 80.1pc of the Cheniere Energy Partners limited partnership holdings company, which owns 55.9pc of the Cheniere Energy Partners limited partnership, which in turn owns the Sabine LNG import and export terminal in Louisiana and the Creole Trail pipeline that serves that facility. Blackstone owns 29pc of Cheniere Energy Partners limited partnership and public shareholders own the remaining 13.1pc.

Cheniere on 30 September proposed buying the 19.9pc of the publicly owned shares in the holdings company, offering 0.5049 Cheniere shares for each share of the holdings company, a 3pc premium over the closing price of the holding company's shares the previous day. Cheniere later increased its exchange ratio to 0.54, a 10pc premium to closing prices on 29 September, but that was not enough to convince shareholders. Cheniere terminated negotiations on 9 December, saying it "has determined that no acceptable definitive agreement can be reached with the conflicts committee at this time."

Cheniere said it may buy additional shares of the holding company in the open market or in private transactions.

Before Cheniere signed long-term contracts to export LNG, it faced the potential of bankruptcy because it had built 4 Bcf/d (113mn m³/d) of import capacity at Sabine Pass but had only sold half of that under long-term contracts. It created a limited partnership to protect its more lucrative assets, including the long-term import contract. The US shale gas boom virtually eliminated the need for US LNG import capacity, making it difficult for Cheniere to market its excess import capacity. But shale production also allowed Cheniere to turn its fortunes around by focusing on building export terminals.

Sabine Pass started exporting in February and Corpus Christ is scheduled to begin operations in 2018.