<PAGE>
As filed with the Securities and Exchange Commission on February 12, 1999
Registration No. 333-70195
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
CHENIERE ENERGY, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 95-4352386
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1200 Smith Street, Suite 1740
Houston, Texas 77002-4313
(713) 659-1361
(Address, including zip
code, and telephone number, including area code, of
registrant's principal executive offices)
Walter L. Williams
President and Chief Executive Officer
Cheniere Energy, Inc.
1200 Smith Street, Suite 1740
Houston, Texas 77002-4312
(713) 659-1361
(Name, address, including zip
code, and telephone number, including area code,
of agent for service)
Copies to:
John B. Clutterbuck
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
Houston, Texas 77002-2778
(713) 225-7000
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
The information in this Prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
Prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
<PAGE>
Prospectus Subject to Completion
- ---------- February __, 1999
CHENIERE ENERGY, INC.
5,663,917 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale of up to 5,663,917
shares of common stock of Cheniere Energy, Inc. Of these shares, 2,701,417 are
held by certain of our stockholders and the other 2,962,500 are issuable upon
the exercise of warrants held by certain of our warrantholders. One or more of
the selling stockholders may offer to sell these shares from time to time. We
will not receive any proceeds of these sales, but if any of the warrants are
exercised, we will receive payment for the exercise price of the warrants.
Our common stock is traded on The Nasdaq SmallCap Market under the
symbol "CHEX." The last reported sales price of the common stock on The Nasdaq
SmallCap Market on February 9, 1998 was $1.44 per share.
--------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
--------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this Prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------------------------------
The date of this Prospectus is February __, 1999
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any of these documents at the public reference rooms maintained by the
Securities and Exchange Commission at 450 Fifth Street, NW, Washington, D.C.
20549, and at the following regional offices of the Securities and Exchange
Commission: New York Regional Office, Seven World Trade Center, New York, New
York 10048, and Central Regional Office, 1801 California Street, Suite 4800,
Denver, Colorado 80202. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference rooms. Our
filings are also available to the public from commercial documents retrieval
services and at the Internet website maintained by the Securities and Exchange
Commission at http://www.sec.gov.
Our common stock is quoted on The Nasdaq SmallCap Market. You may also
read our reports, proxy and information statements and other information at The
Nasdaq Stock Market at 1735 K Street, NW, Washington, D.C. 20006.
This Prospectus is part of the Registration Statement that we filed
with the Securities and Exchange Commission to register the shares of common
stock referred to above. This Prospectus does not contain important information
that you can find in our Registration Statement and in the annual, quarterly and
special reports, proxy statements and other documents that we file with the
Securities and Exchange Commission.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose in
this Prospectus important information to you by referring you to those
documents. The information below is incorporated in this Prospectus by
reference and is an important part of this Prospectus, except where any of the
information has been modified or superceded by the information in this
Prospectus or in information incorporated by reference in this Prospectus.
Also, certain information that we file after the date of this Prospectus with
the Securities and Exchange Commission will automatically be incorporated in
this Prospectus and update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the
Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until all of the securities offered by this
Prospectus are sold:
- Our Proxy Statement dated October 10, 1997;
- Our Transition Report on Form 10-K for the transition period from
September 1, 1997 to December 31, 1997
- Our Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1998;
- Our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1998; and
- Our Current Report on Form 8-K dated December 9, 1998 (filed December
14, 1998).
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We will provide, without charge, a copy of the documents incorporated by
reference (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents). You may obtain
documents incorporated by reference in this Prospectus by requesting them in
writing or by telephone from:
Cheniere Energy, Inc.
1200 Smith Street, Suite 1740
Houston, Texas 77002-4312
Attn: Don A. Turkleson, Chief Financial Officer
(713) 659-1361
You should rely only on the information provided or incorporated by
reference in this Prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of the shares in any state
where the offer is not permitted. You should not assume that the information in
this Prospectus, in any Prospectus Supplement or in any document incorporated by
reference herein is accurate as of any date other than the date on the front of
those documents.
CAUTIONARY STATEMENT
REGARDING FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
for forward-looking statements made by us or on our behalf. We and our
representatives may from time to time make written or verbal forward-looking
statements, including statements contained in this report and other filings with
the Securities and Exchange Commission and in reports to our stockholders.
All statements, other than statements of historical facts, included in this
Prospectus that address activities, events or developments that we intend,
expect, project, believe or anticipate will or may occur in the future are
forward-looking statements. These statements include, among others:
- statements regarding our business strategy, plans and objectives;
- 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 Year 2000 information.
These forward-looking statements are, and will be, based on management's
then current views and assumptions regarding future events.
Actual results could differ materially from estimates and other forward-
looking statements. Important factors that could affect us and cause
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materially different results are discussed under the heading "Risk Factors"
below.
THE COMPANY
Cheniere Energy, Inc. is a Houston-based company formed for the purpose of
oil and gas exploration and, if warranted, development and exploitation. We
commenced our oil and gas activities in April of 1996.
It is important for you to know that we have not yet established any oil
and gas production, and we do not currently have any proven oil and gas
reserves. We are currently a development stage enterprise with no operating
revenues to date.
Our common stock has been publicly traded since July 3, 1996 under the name
Cheniere Energy, Inc. Our principal executive offices are located at 1200 Smith
Street, Suite 1740, Houston, Texas 77002, and our telephone number is (713) 659-
1361.
The Louisiana Joint Exploration Program
We are involved with one major project: a 3-D seismic joint exploration
project in southern Louisiana. The 3-D seismic survey covers 228 square miles
within a 310 square-mile area running three to five miles north and generally
eight miles south of the coastline in the most westerly portion of Cameron
Parish, Louisiana. Acquisition of the seismic data in the field was completed
in July 1997, and area-wide processing was completed in December 1997. Leasing
activities were begun in March 1998, and further interpretation of the seismic
data continues. Drilling of prospects identified within the area of the
Louisiana joint exploration project began in February 1999.
The Louisiana joint exploration program is governed by an Exploration
Agreement between Cheniere Energy Operating Co., Inc. (our wholly owned
subsidiary) and Zydeco Exploration, Inc. (an operating subsidiary of Zydeco
Energy, Inc.).
Arbitration Proceedings
We have received the binding award of an independent panel of arbitrators
reviewing a dispute related to certain rights and obligations pursuant to the
Exploration Agreement. We have discussed the rulings of the panel in our
Current Report on Form 8-K dated December 9, 1998 that is "incorporated by
reference" as discussed under the heading "Where You Can Find More Information"
above.
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RISK FACTORS
We Have a Limited Operating History
We have a limited operating history with respect to our oil and gas
exploration activities, which were commenced through the Louisiana joint
exploration program in April 1996 by Cheniere Energy Operating Co., Inc. This
company became our wholly-owned subsidiary on July 3, 1996 following a
reorganization with Bexy Communications, Inc. From inception (February 21,
1996) to September 30, 1998, we incurred a net loss of $3,334,105. For the
nine-month period ended September 30, 1998, we incurred a net loss of
$1,147,429. We continued to incur losses during the remainder of 1998 and may
continue to incur losses in 1999, depending on whether we generate sufficient
revenue from producing reserves acquired either through acquisitions or drilling
activities.
We Have Limited Assets and No Proved Reserves or Current Production
We have not yet established oil and gas production. In addition, we have
not yet established any "proved reserves," which means that we have not yet
identified any oil and gas reserves that geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions. Currently,
our primary asset is our interest in the Louisiana joint exploration program.
Because almost all of our assets are represented by the investment to date in
the Louisiana joint exploration program, and we anticipate investing additional
amounts in the program, we are highly dependent on the success of the Louisiana
joint exploration program.
We May Not Be Able to Obtain Sufficient Additional Financing
We presently have no operating revenues. As of September 30, 1998, we had
only $233,841 of current assets. Despite our low level of current assets, we
may need additional capital for a number of purposes, including the following:
- Additional capital will be required to pay for our share of costs
relating to the development of prospects we may wish to pursue, to
exercise lease options, to acquire additional oil and gas leases and
to drill wells on potential prospects. The total amount of our
capital needs will be determined in part by the number of prospects
generated within the Louisiana joint exploration program and by the
working interest that we retain in those prospects.
- We may need funds for the repayment of a portion of the $4.0 million
(plus interest) in short-term senior notes payable that were
outstanding as of September 30, 1998. We have received commitments
from the holders of $2,025,020 of short-term senior term notes payable
to exchange their notes for 2,812,528 shares of common stock at a
price of $0.72 per share. The exchanges will
5
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occur on or before March 15, 1999, the date on which the remainder of
the notes will mature.
- Should we choose to make an acquisition of producing oil and gas
properties, it is likely that such an acquisition would require that
some portion of the purchase price be paid in cash and thus would
create the need for additional capital.
Our future capital needs might be especially urgent in connection with the
Louisiana Exploration Agreement. Under the terms of the Exploration Agreement,
we have made seismic fund payments totaling $16.4 million and have earned a 50%
interest in the seismic data. Zydeco is obligated under the terms of the
Exploration Agreement to develop prospects from its analysis of the seismic data
and to present those prospects to us for our election as to participation.
Should we elect to participate in a prospect proposed by Zydeco, we must make
payment to Zydeco as a reimbursement of prospect expenses within 45 days of the
date such expenses are billed by Zydeco. We currently do not have sufficient
capital to meet our future payment obligations under the Exploration Agreement
were we to elect to participate in prospects proposed under the Exploration
Agreement. Further, there can be no assurance that we will successfully secure
the necessary funds to do so.
Additional capital may be secured from a combination of funding sources.
These funding sources may include:
- borrowings from financial institutions,
- debt offerings (which would increase our leverage and add to our need
for cash to service such debt),
- additional offerings of our equity securities (which could cause
substantial dilution of our common stock), or
- sales of portions of our working interest in the prospects within the
Louisiana joint exploration program (which would reduce any future
revenues from the Louisiana joint exploration program).
Our ability to raise additional capital will depend on the results of our
operations and the status of various capital and industry markets at the time
such additional capital is sought. Accordingly, there can be no assurances that
capital will be available to us from any source or that, if available, it will
be on terms acceptable to us.
Because of Our Lack of Diversification, We Are Especially Subject to Oil and Gas
Industry Conditions, Including Volatility of Prices for Oil and Gas
As an independent energy company, our revenues and profits will be
substantially dependent on the oil and gas industry in general and the
prevailing prices for oil and gas in particular. Oil and gas prices have been
and are likely to continue to be volatile and subject to wide fluctuations in
response to any of the following factors:
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- relatively minor changes in the supply of and demand for oil and gas;
- political conditions in international oil producing regions;
- the extent of domestic production and importation of oil in certain
relevant markets;
- the level of consumer demand;
- weather conditions;
- the competitive position of oil or gas as a source of energy as compared
with other energy sources;
- the refining capacity of oil purchasers; and
- the effect of federal and state regulation on the production,
transportation and sale of oil.
It is likely that adverse changes in the oil market or the regulatory
environment would have an adverse effect on our ability to obtain capital from
lending institutions, industry participants, private or public investors or
other sources.
There is Intense Competition in the Oil and Gas Industry
The oil and gas industry is highly competitive. Most of our current and
potential competitors have significantly greater financial resources and a
significantly greater number of experienced and trained managerial and technical
personnel than we do. There can be no assurance that we or the Louisiana joint
exploration program will be able to compete effectively with such firms.
We Are Subject to Significant Operating Hazards and Uninsured Risks
Our oil and gas operations are subject to all of the risks and hazards
typically associated with the exploration for, and the development and
production of, oil and gas. Risks in drilling operations include cratering,
explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution
and other environmental risks. Our activities are also subject to perils
specific to marine operations, such as capsizing, collision and damage or loss
from severe weather. These hazards can cause personal injury and loss of life,
severe damage to and destruction of property and equipment, pollution or
environmental damage and suspension of operations. In accordance with customary
industry practices, we intend to maintain insurance against some, but not all,
of these risks and losses. The occurrence of a significant event not fully
insured or indemnified against could seriously harm us. Moreover, no assurance
can be given that we will be able to maintain adequate insurance in the future
at rates we consider reasonable.
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We Are Subject to Significant Exploration Risks
Our exploration activities involve significant risks. There can be no
assurance that the use of technical expertise as applied to geophysical or
geological data will ensure that any well we drill will discover oil or gas.
Further, there is no way to know in advance of drilling and testing whether any
prospect under the Louisiana joint exploration program will yield oil or gas in
sufficient quantities to make money for us. In addition, we are highly
dependent on seismic activity and the related application of new technology as a
primary exploration methodology. There can be no assurance that our efforts
under the Louisiana joint exploration program will be successful.
We Have a High Dependence on Lease Acquisition Activities
Both the United States Department of the Interior and the State of
Louisiana award oil and gas leases on a competitive bidding basis. Further,
non-governmental owners of the onshore mineral interests within the area covered
by the Louisiana joint exploration program are not obligated to lease their
mineral rights to the Louisiana joint exploration program except to the extent
they have granted lease options to the Louisiana joint exploration program.
Other major and independent oil and gas companies with financial resources
significantly greater than those of the Louisiana joint exploration program may
bid against us for the purchase of oil and gas leases. Accordingly, there can
be no assurance that the Louisiana joint exploration program or any other oil
and gas venture we are involved with will be successful in acquiring farmouts,
seismic permits, lease options, leases or other rights to explore or recover oil
and gas. Consequently, the proportion of the area covered by the Louisiana joint
exploration program that could be subsequently explored through drilling would
be reduced to the extent that the Louisiana joint exploration program is not
successful at such acquisitions.
There are Risks of Not Having Turnkey Contracts
We anticipate that any wells to be drilled in which we will have an
interest will be drilled by established industry contractors under turnkey
contracts that limit our financial and legal exposure. Under a turnkey drilling
contract, a negotiated price is agreed upon and the money placed in escrow. The
contractor then assumes all of the risk and expense, including any cost
overruns, of drilling a well to contract depth and completing any agreed upon
evaluation of the wellbore. Upon performance of all these items, the escrowed
money is released to the contractor.
On a non-turnkey basis, all risk and expense, including cost overruns, of
drilling a well to total depths lies with the operator. Circumstances may arise
where a turnkey contract is not economically beneficial to us or is otherwise
unobtainable from proven industry contractors. In such instances, we may decide
to drill wells subject to the usual drilling hazards such as cratering,
explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution
and other environmental risks. We would also be liable for any cost overruns
attributable to drilling problems that otherwise would have been covered by a
turnkey contract had one been negotiated.
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Existing and Future United States Governmental Regulation, Taxation and Price
Control Could Seriously Harm Us
Oil and gas production and exploration are subject to comprehensive
federal, state and local laws and regulations controlling the exploration for
and production and sale of oil and gas and the possible effects of such
activities on the environment. Failure to comply with such rules and
regulations can result in substantial penalties and may harm us. Present, as
well as future, legislation and regulations could cause additional expenditures,
restrictions and delays in our business, the extent of which cannot be predicted
and which may require us to limit substantially, delay or cease operations in
some circumstances. In most, if not all, areas where we may conduct activities,
there may be statutory provisions regulating the production of oil and natural
gas which may restrict the rate of production and adversely affect revenues. We
plan to acquire oil and gas leases in the Gulf of Mexico, which will be granted
by the federal government and administered by the U.S. Department of Interior
Minerals Management Service. The Department strictly regulates the exploration,
development and production of oil and gas reserves in the Gulf of Mexico. Such
regulations could seriously harm our operations in the Gulf of Mexico. The
federal government regulates the interstate transportation of oil and natural
gas, through the Federal Energy and Regulatory Commission. The FERC has in the
past regulated the prices at which oil and gas could be sold. Federal
reenactment of price controls or increased regulation of the transport of oil
and natural gas could seriously harm us. In addition, our operations are
subject to numerous laws and regulations governing the discharge of oil and
hazardous materials into the environment or otherwise relating to environmental
protection, including the Oil Pollution Act of 1990. These laws and regulations
have continually imposed increasingly strict requirements for water and air
pollution control, solid waste management, and strict financial responsibility
and remedial response obligations relating to oil spill protection. The cost of
complying with such environmental legislation could have a general harmful
effect on our operations.
We May Experience Year 2000 Problems
The Year 2000 presents significant issues for many computer systems.
Much of the software in use today may not be able to accurately process data
beyond the year 1999. Most computer systems process transactions using two
digits for the year of the transaction, rather than the full four digits, making
such systems unable to distinguish January 1, 2000 from January 1, 1900. Such
systems may encounter significant processing inaccuracies or become inoperable
when Year 2000 transactions are processed. Such matters could impact not only
our day-to-day operations but also our financial institutions, customers and
vendors as well as state, provincial and federal governments with jurisdictions
where we maintains operations.
We are currently addressing Year 2000 issues and are focussing on our
internal business systems and processes. To the extent necessary, we will
assess the readiness of any key business partners (financial institutions,
customers, vendors, oil and gas operators, etc.).
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It has been our strategy to use, wherever possible, industry-prevalent
products and processes with minimal customization. As a result, we do not
expect any extensive in-house hardware, software or process conversions in an
effort to be Year 2000 compliant nor do we expect our Year 2000 compliance
related costs to be material to our operations. Our goal is to be Year 2000
compliant by June 30, 1999 wherever possible and to have contingency plans in
place where compliance is not possible in a timely manner. While it is our goal
to be Year 2000 compliant, there can be no assurance that we will not be
seriously harmed as a result of a Year 2000 related issue. Additionally, there
are many variables and uncertainties associated with judgments regarding any
contingency plans developed by us.
Our business partners may present the area of greatest risk to us, in part
because of our limited ability to influence actions of third parties, and in
part because of our inability to estimate the level and impact of noncompliance
of third parties.
There is Only Limited Trading in Our Common Stock
During 1998, the average daily trading volume of our common stock on The
Nasdaq SmallCap Market was approximately 36,000 shares. The completion of this
offering of the common stock provides no assurance that the trading market for
the common stock will become more active.
We Have Not Paid Dividends
We have not paid any dividends since our inception and presently anticipate
that all earnings, if any, will be retained for development of our business and
that no dividends on our common stock will be declared in the foreseeable
future. Any future dividends will be subject to the discretion of our Board of
Directors and will depend on, among other things, future earnings, our operating
and financial condition, our capital requirements and general business
conditions.
Our Stockholders Could Experience Dilution Because of Additional Issuances of
Shares
We have 45,000,000 authorized shares of stock, consisting of (a) 40,000,000
shares of the common stock, and (b) 5,000,000 shares of preferred stock. As of
February 9, 1999, approximately 45.5% of the shares of the common stock remained
unissued. The Board of Directors has the power to issue any and all of such
shares without shareholder approval. It is likely that we will issue shares of
the common stock, among other reasons, in order to raise capital to sustain
operations, to exchange for or to repay our $4.0 million in senior short-term
notes payable and/or to finance future oil and gas exploration projects. In
addition, we have reserved 4,703,334 and 2/3 shares of the common stock for
issuance upon the exercise of outstanding warrants and 950,000 shares of the
common stock for issuance upon the exercise of stock options. As of February 9,
1999, there are 686,444 and 2/3 issued and outstanding options to purchase
common stock. Any issuance of common stock by us may result in a reduction in
the book value per share or market
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price per share of the outstanding shares of common stock and will reduce the
proportionate ownership and voting power of such shares.
We Depend on Key Personnel
We depend on our executive officers for our various activities. We do not
maintain "key person" life insurance policies on any of our personnel nor do we
have employment agreements with any of our personnel. The loss of the services
of any of these individuals could seriously harm us. In addition, our future
success will depend in part upon our ability to attract and retain additional
qualified personnel. We currently have eight full-time employees.
We Depend on Industry Partners
Because we have few employees and limited operating revenues, we will be
largely dependent upon industry partners for the success of our oil and gas
exploration projects for the foreseeable future.
We are Controlled by a Small Number of Principal Stockholders
William D. Forster and Charif Souki are the Co-Chairmen of the Board of
Directors. BSR Investments, Ltd. ("BSR") is an entity under the control of a
member of the immediate family of Charif Souki. Together, Mr. Forster and BSR
own approximately 29.8% of the outstanding common stock. Accordingly, it is
likely that Mr. Forster and BSR will effectively be able to elect all of our
directors and to control our management, operations and affairs, including the
ability to prevent or cause a change in control of the company.
Anti-Takeover Provisions of the Certificate of Incorporation, Bylaws and
Delaware Law Could Adversely Impact a Potential Acquisition by Third Parties
Our Certificate of Incorporation and Bylaws and the Delaware General
Corporation Law contain provisions that may discourage unsolicited takeover
proposals. These provisions, among other things, authorize the Board of
Directors to designate the terms of and issue new series of preferred stock,
limit the personal liability of directors, require us to indemnify directors and
officers to the fullest extent permitted by applicable law and impose
restrictions on business combinations with certain interested parties.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered
by this Prospectus. Based on the current exercise price of the warrants that
can be exercised for some of the shares offered by this Prospectus, we will not
receive any proceeds from the exercise of the warrants unless and until the
market value of our common stock increases beyond $1.50 per share. We expect to
use any such proceeds for ongoing activities related to the Louisiana joint
exploration project, working capital and/or general corporate purposes.
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SELLING STOCKHOLDERS
The following table sets forth certain information known to us with respect
to beneficial ownership of our common stock as of February 9, 1999 by each
Selling Stockholder.
<TABLE>
<CAPTION>
Amount of Shares Offered
Hereby(2)
----------------------------------
Shares Number Shares of Common
Name of Beneficially of Shares Stock Underlying Shares Beneficially
Selling Owned Prior of Common Warrants to Purchase Owned After
Stockholder To Offering(1) Stock Common Stock(3) the Offering(2)
----------- ---------------------- ------------ -------------------- ----------------------
Number Percent Number Percent
---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Alana Group The, Ltd. 562,500 2.6 375,000 187,500 0 *
Alba Limited 45,000 * 20,000 25,000 *
Arabella S.A. 855,000 3.9 380,000 475,000 2.1
Borenstein, Richard N. 75,833 * 40,000 35,833 *
BSR Investments, Ltd. 3,946,445 17.8 400,000 3,546,445 16.2
Cullman, Joseph F. III 237,917 1.1 20,000 217,917 *
Dulverton Holdings Limited 450,000 2.1 300,000 150,000 0 *
Forster, Gail Daly 132,917 * 20,000 112,917 *
Hellmold, Ralph O. 256,583 1.2 60,000 196,583 *
Israel, Robert I. 37,917 * 20,000 17,917 *
Kessler, Douglas W., P.C. 72,667 * 34,750 20,000 17,917 *
Lessman, Andrew 666,667 3.1 666,667 0 *
MM&B Holdings, L.L.C. 1,195,500 5.3 50,000 787,500 358,000 1.6
Moore, James E. 450,000 2.1 300,000 150,000 0 *
Revocable Trust u/d/t dtd. 7/8/94
Neel, John S. Jr. 98,015 * 40,000 58,015 *
Nomina Finance Limited BVI 450,000 2.1 300,000 150,000 0 *
Oakwood Holdings Limited 450,000 2.1 300,000 150,000 0 *
Olofson, Erik L. II 112,500 * 75,000 37,500 0 *
Robinson, Joe Sam Jr., M.D. 332,390 1.5 70,000 262,390 1.2
Rover Enterprises. 650,000 3.0 300,000 150,000 200,000 *
Salton, Albin 75,833 * 40,000 35,833 *
Smisson, Hugh F. III, M.D. 234,039 1.1 50,000 184,039 *
Wagstaff, Michael J. 36,667 * 20,000 16,667 *
</TABLE>
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules and
regulations of the Securities Exchange Commission and generally includes
voting or investment power with respect to securities. Information with
respect to beneficial ownership is based on information as of February 9,
1999 and assumes that there is outstanding an aggregate of 21,786,277
shares of common stock. Warrants to purchase shares of common stock which
are currently exercisable or will become exercisable within 60 days of
February 9, 1999 are deemed to be outstanding for purposes of the
individuals named in this chart. Except as indicated otherwise in the
footnotes below, and subject to community property laws where applicable,
Cheniere believes based on information furnished by the Selling
Stockholders that the persons named in the table above have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
(2) Assumes the sale of all Shares offered hereby and no other purchases or
sales of Cheniere's common stock. See "Plan of Distribution."
(3) All Warrants are immediately exercisable.
12
<PAGE>
ISSUANCE OF SECURITIES TO SELLING STOCKHOLDERS
The shares of common stock being registered pursuant to the registration
statement of which this Prospectus is a part include
- 2,616,667 shares issued in private placements during the period from
August 1998 to December 1998
- 50,000 shares issued in connection with the extension of the maturity
date of a short-term senior note
- 2,962,500 shares issuable upon the exercise of warrants issued in
private placements or in connection with the extension of the maturity
date of the note
- 34,750 shares issued in exchange for cancellation of a short-term senior
note
In the period from August 31, 1998 through December 15, 1998, we sold
1,950,000 units (each unit being comprised of one share of common stock and one
half warrant to purchase one share of common stock; adding up to 1,950,000
shares of common stock and warrants to purchase 975,000 shares of common stock)
to seven investors at a price of $0.67 per share pursuant to Regulation D
adopted by the Securities and Exchange Commission. Warrants issued in
connection with these sales of units are exercisable on or before the second
anniversary date of the date the units were sold at an exercise price of $2.00
per share.
In December 1998, we sold 666,667 shares of common stock to one investor at
a price of $0.75 per share pursuant to Regulation D.
In connection with extensions of the maturity date of short-term senior
term notes, we issued 50,000 shares of common stock and warrants to purchase
1,987,500 shares of common stock as follows:
- In September 1998 we issued 50,000 shares of common stock and warrants
to purchase 1,675,000 shares of common stock (of which warrants to
purchase 1,200,000 shares are exercisable on or before September 15,
2002 at an exercise price of $1.50 per share and warrants to purchase
475,000 shares are exercisable on or before September 15, 2003 at an
exercise price of $2.00 per share).
- In October 1998 we issued warrants to purchase 87,500 shares of its
common stock exercisable on or before October 15, 2003 at an exercise
price of $1.50 per share.
- In November 1998 we issued warrants to purchase 100,000 shares of its
common stock exercisable on or before November 15, 2003 at an exercise
price of $1.50 per share.
- In December 1998 we issued warrants to purchase 125,000 shares of its
common stock exercisable on or before December 15, 2003 at an exercise
price of $1.50 per share.
13
<PAGE>
In January 1999 we issued 34,750 shares in exchange for cancellation of a
$25,020 short term senior note (an effective exchange rate of $0.72 per share).
14
<PAGE>
DESCRIPTION OF SECURITIES
We have 45,000,000 authorized shares of stock, consisting of 40,000,000 shares
of the common stock, having a par value of $.003 per share, and 5,000,000 shares
of preferred stock, having a par value of $.0001 per share.
COMMON STOCK
As of February 9, 1999, there were 21,786,277 shares of the common stock
outstanding. All of such outstanding shares of common stock are fully paid and
nonassessable. Each share of the common stock has an equal and ratable right to
receive dividends when, as and if declared by the Board of Directors of Cheniere
out of assets legally available therefor and subject to the dividend obligations
of Cheniere to the holders of any Preferred Stock then outstanding.
As of February 9, 1999, Cheniere has received commitments from the holders
of $2,134,750 of its $4,000,000 short-term senior term notes payable to exchange
such notes payable for 2,826,042 shares of common stock at a price of $0.72 per
share, such exchange to occur on or before March 15, 1999.
In the event of a liquidation, dissolution or winding up of Cheniere, the
holders of common stock are entitled to share equally and ratably in the assets
available for distribution after payment of all liabilities, and subject to any
prior rights of any holders of Preferred Stock that at the time may be
outstanding.
The holders of common stock have no preemptive, subscription, conversion or
redemption rights, and are not subject to further calls or assessments of
Cheniere. There are no sinking fund provisions applicable to the common stock.
Each share of common stock is entitled to one vote in the election of directors
and on all other matters, submitted to a vote of stockholders. Holders of
common stock have no right to cumulate their votes in the election of directors.
See "Possible Anti-Takeover Provisions."
PREFERRED STOCK
As of the date of this Prospectus, there were no shares of Preferred Stock
outstanding. Preferred Stock may be issued from time to time in one or more
series, and the Board of Directors, without further approval of the
stockholders, is authorized to fix the dividend rates and terms, conversion
rights, voting rights, redemption rights and terms, liquidation preferences and
any other rights, preferences, privileges and restrictions applicable to each
series of Preferred Stock. The purpose of authorizing the Board of Directors to
determine such rights, preferences, privileges and restrictions is to eliminate
delays associated with a stockholder vote on specific issuances. The issuance
of Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of common stock and, under certain
circumstances, make it more difficult for a third party to gain control of
Cheniere.
15
<PAGE>
WARRANTS
Cheniere has issued and outstanding certain warrants described herein
(collectively, the "Warrants"). Cheniere is registering the common stock
issuable upon the exercise of certain of such Warrants pursuant to the
Registration Statement of which this Prospectus is a part.
Cheniere has issued and outstanding 141,666 and 2/3 warrants (collectively,
the "June Warrants"), each of which entitles the registered holder thereof to
purchase one share of common stock. The June Warrants are exercisable at any
time on or before June 14, 1999, at an exercise price of $3.00 per share
(subject to customary anti-dilution adjustments). The June Warrants were
originally issued by Cheniere Operating and were converted to warrants of
Cheniere following the Reorganization. The June Warrants were issued to a group
of 11 investors in connection with a private placement of unsecured promissory
notes of Cheniere Operating in the aggregate principal amount of $425,000. In
connection with the payment of an additional promissory note to one such
investor, Cheniere has issued to such investor an additional warrant to purchase
64,500 shares of the common stock (on the same terms as the June Warrants), in
accordance with the terms of the original Note Agreement, which expires on June
14, 1999.
In consideration of certain investment advisory and other services to
Cheniere, pursuant to warrant agreements each dated as of August 21, 1996,
Cheniere issued to C.M. Blair, W.M. Foster & Co., Inc. and Redliw Corp. warrants
to purchase 13,600 and 54,400 shares of common stock, respectively
(collectively, the "Adviser Warrants"). The Adviser Warrants are exercisable at
any time on or before May 15, 1999 at an exercise price of $3.00 per share
(subject to customary anti-dilution adjustments).
In connection with the December 1997 Bridge Financing, Cheniere issued
100,000 shares of common stock and four-year warrants to purchase 1,333,334
shares of common stock at $2-3/8 per share. Additional warrants to purchase
1,600,000 shares of Cheniere common stock were issued on September 15, 1998 in
consideration for the extension to that date. The notes were extended again in
September 1998 to a maturity date of December 15, 1998, which date was further
extended to January 15, 1999 at the option of Cheniere. In connection with the
extension to December 15, 1998, Cheniere offered two alternatives of
consideration. Holders of $3,000,000 of the notes elected to reduce the
exercise price of their warrants to $1.50. The holder of $1,000,000 of the
notes elected to reduce the exercise price of its warrants to $2.00 per share,
to extend the term of such warrants to five years from the latter of September
15, 1998 or the date of issue, to receive additional warrants to purchase as
many as 387,500 shares of common stock and to receive 50,000 shares of common
stock.
In conjunction with a private placement of common stock in March 1997
Cheniere issued 50,000 warrants to a financial advisor. The warrants were
issued in March 1998 at an exercise price of $3.125 per share and are
exercisable on or before March 31, 2000.
In conjunction with the issuance of $180,000 senior term notes payable in
June 1998, Cheniere issued warrants to purchase 83,334 shares of common stock at
an exercise price of $2.00 per share. Such warrants are exercisable
16
<PAGE>
on or before June 4, 2002 at an exercise price of $2.00 per share (subject to
customary anti-dilution adjustments).
In the period from August 31, 1998 through December 15, 1998, Cheniere sold
1,950,000 units, each unit consisting of one share of common stock and one half
warrant to purchase one share of common stock, in the aggregate, 1,950,000
shares of common stock and warrants to purchase 975,000 shares of common stock.
Each warrant is exercisable on or before the second anniversary of the date the
units were sold at an exercise price of $2.00 per share (subject to customary
anti-dilution adjustments).
The Warrants do not confer upon the holders thereof any voting or other
rights of a stockholder of Cheniere.
POSSIBLE ANTI-TAKEOVER PROVISIONS
The Amended and Restated Certificate of Incorporation of Cheniere (the
"Charter") contains certain provisions that might be characterized as anti-
takeover provisions. Such provisions may render more difficult certain possible
takeover proposals to acquire control of Cheniere and make removal of management
of Cheniere more difficult.
As described above, the Charter authorizes a class of undesignated
Preferred Stock consisting of 5,000,000 shares. Preferred Stock may be issued
from time to time in one or more series, and the Board of Directors, without
further approval of the stockholders, is authorized to fix the rights,
preferences, privileges and restrictions applicable to each series of Preferred
Stock. The purpose of authorizing the Board of Directors to determine such
rights, preferences, privileges and restrictions is to eliminate delays
associated with a stockholder vote on specific issuances. The issuance of
Preferred Stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of common stock and, under certain
circumstances, make it more difficult for a third party to gain control of
Cheniere.
Cheniere is incorporated under the laws of the State of Delaware. Section
203 of the Delaware General Corporation Law prevents an "interested stockholder"
(defined as a stockholder owning 15 percent or more of a corporation's voting
stock) from engaging in a business combination with such corporation for a
period of three years from the time such stockholder became an interested
stockholder unless (a) the corporation's board of directors had earlier approved
either the business combination or the transaction by which the stockholder
became an interested stockholder, or (b) upon attaining that status, the
interested stockholder had acquired at least 85 percent of the corporation's
voting stock (not counting shares owned by persons who are directors and also
officers), or (c) the business combination is later approved by the board of
directors and authorized by a vote of two-thirds of the stockholders (not
including the shares held by the interested stockholder). Cheniere is currently
subject to Section 203.
In addition, William D. Forster, Co-Chairman of the Board of Directors of
Cheniere, and BSR Investments, Ltd. ("BSR"), an entity under the control of a
member of the immediate family of Charif Souki, Co-Chairman of the Board of
17
<PAGE>
Directors of Cheniere, own in the aggregate approximately 30.8% of the
outstanding shares of the common stock. Accordingly, it is likely that Mr.
Forster and BSR will have the ability to effectively prevent or cause a change
in control of Cheniere.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the common stock is U.S. Stock
Transfer Corporation.
PLAN OF DISTRIBUTION
We have agreed to bear certain expenses of registration of the shares
offered by this Prospectus under federal and state securities laws.
Shares of common stock covered hereby may be offered and sold from time to
time by the Selling Stockholders. The Selling Stockholders will act
independently of Cheniere in making decisions with respect to the timing, manner
and size of each sale. The Selling Stockholders may sell the shares being
offered hereby: (i) on the Nasdaq SmallCap Market, or otherwise at prices and
at terms then prevailing or at prices related to the then current market price;
or (ii) in private sales at negotiated prices directly or through a broker or
brokers, who may act as agent or as principal or by a combination of such
methods of sale. The Selling Stockholders and any underwriter, dealer or agent
who participate in the distribution of such shares may be deemed to be
"underwriters" under the federal securities act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act. Cheniere has agreed to
indemnify the Selling Stockholders against certain liabilities arising under the
federal securities act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholders (and, if acting as agent for the
purchaser of such shares, from such purchaser). Usual and customary brokerage
fees will be paid by the Selling Stockholders. Broker-dealers may agree with
the Selling Stockholders to sell a specified number of shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the Selling Stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the Selling Stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or by a
combination of such methods of sale or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.
Under applicable rules and regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), any person engaged in the distribution of
the common stock may not simultaneously engage in market making activities with
respect to Cheniere for a period of five business days
18
<PAGE>
prior to the commencement of such distribution. In addition and without limiting
the foregoing, the Selling Stockholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without
limitation, Regulation M, which may limit the timing of purchases and sales of
shares of common stock by the Selling Stockholders.
The Selling Stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal.
In order to comply with the securities laws of certain states, if
applicable, the common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
common stock may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Cheniere will keep this Registration Statement or a similar registration
statement effective until the earliest to occur of (i) the date that all
securities registered pursuant to the Registration Statement of which this
Prospectus is a part have been disposed of in accordance with the plan of
disposition indicated herein or (ii) the date that all securities registered
pursuant to the Registration Statement of which this Prospectus is a part have
become eligible for sale pursuant to Rule 144(k) under the Securities Act. No
sales may be made pursuant to this Prospectus after such date unless Cheniere
amends or supplements this Prospectus to indicate that it has agreed to extend
such period of effectiveness. There can be no assurance that the Selling
Stockholders will sell all or any of the shares of common stock offered
hereunder.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Mayor, Day, Caldwell & Keeton, L.L.P., Houston, Texas, counsel to
Cheniere.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to Cheniere's Transition Report on Form 10-K for the transition period
from September 1, 1997 to December 31, 1997 have been so included in reliance on
the report (which contains an explanatory paragraph relating to Cheniere's
ability to continue as a going concern as described in Note 13 to the
consolidated financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The Registrant will bear no expenses in connection with any sale or other
distribution by the Selling Stockholders of the shares being registered other
than the expenses of preparation and distribution of this Registration Statement
and the Prospectus included in this Registration Statement. Such expenses are
set forth in the following table. All of the amounts shown are estimates except
the Securities and Exchange Commission ("SEC") registration fee.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $ 2,308
Legal fees and expenses 10,000
Accounting fees and expenses 2,000
Miscellaneous expenses 1,000
-------
Total $15,308
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Securities Act"). The Registrant's
Certificate of Incorporation and By-laws provide for indemnification of the
Registrant's directors, officers, employees and other agents to the extent and
under the circumstances permitted by the Delaware General Corporation Law. The
Registrant has also entered into agreements with its directors and officers that
will require the Registrant, among other things, to indemnify them against
certain liabilities that may arise by reason of their status or service as
directors to the fullest extent not prohibited by law. In addition, the
Registrant carries director and officer liability insurance.
In connection with this offering, the Selling Stockholders have agreed to
indemnify the Registrant, its directors and officers and each such person who
controls the Registrant, against any and all liability arising from inaccurate
information provided to the Registrant by the Selling Stockholders and contained
herein.
Item 16. Exhibits.
Exhibits.
4.1 Specimen Common Stock Certificate of Cheniere (Incorporated by
reference to Exhibit 4.1 of Cheniere's Registration Statement
under the Securities Act of 1933 on Form S-1 filed on August 27,
1996 (File No. 333-10905))
5.1 Opinion of Mayor, Day, Caldwell & Keeton, L.L.P.
23.1 Consent of Mayor, Day, Caldwell & Keeton, L.L.P. (included in
Exhibit 5.1)
II-1
<PAGE>
23.2 Consent of PricewaterhouseCoopers LLP (to be filed by amendment)
24.1 Powers of Attorney (included on signature page to original
registration statement filing)
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Cheniere Energy, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Houston, State of Texas, on February 10, 1999.
CHENIERE ENERGY, INC.
By: /s/ WALTER L. WILLIAMS
----------------------
Walter L. Williams
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
---------- ------ ------
<S> <C> <C>
/s/ WALTER L. WILLIAMS President, Chief Executive February 10, 1999
- ------------------------------------- Officer and Director
Walter L. Williams (Principal Executive Officer)
/s/ DON A. TURKLESON Chief Financial Officer February 10, 1999
- ------------------------------------- (Principal Financial and
Don A. Turkleson Accounting Officer)
*___________________ February 10, 1999
William D. Forster
*___________________ Co-Chairman of the Board February 10, 1999
Charif Souki
*___________________ Director February 10, 1999
Kenneth R. Peak
*___________________ Director February 10, 1999
Charles M. Reimer
*___________________ Director February 10, 1999
Efrem Zimbalist, III
*/s/ DON A. TURKLESON February 10, 1999
- -------------------------------------
Don A. Turkleson, attorney-in-fact
</TABLE>
II-3
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MAYOR, DAY, CALDWELL & KEETON, L.L.P.]
February 10, 1999
Cheniere Energy, Inc.
1200 Smith Street, Suite 1740
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel for Cheniere Energy, Inc., a Delaware corporation
("Cheniere"), in connection with the registration of up to an aggregate of
5,663,917(the "Shares") of Common Stock, par value $0.003 per share, of Cheniere
("Common Stock"), to be sold by certain selling stockholders of Cheniere as
described in Cheniere's Registration Statement on Form S-3, filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
("Registration Statement"). In such capacity, we have familiarized ourselves
with the Articles of Incorporation, as amended to date, and Bylaws of Cheniere,
as amended to date, and have examined all statutes and other records,
instruments and documents pertaining to Cheniere that we have deemed necessary
to examine for the purposes of this opinion.
Based upon our examination as aforesaid, we are of the opinion that:
1. Cheniere is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware; and
2. The Shares currently outstanding are, and the Shares underlying
warrants when delivered for sufficient consideration and pursuant to the
provisions of the warrants will be, duly authorized, validly issued, fully paid
and nonassessable shares of Common Stock.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of our name in the Registration Statement at each place in which it appears.
Sincerely,
/s/ Mayor, Day Caldwell & Keeton, L.L.P.
----------------------------------------
Mayor, Day, Caldwell & Keeton, L.L.P.
