John Griffin’s Blue Ridge Capital buys a stake in Cheniere Energy

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Blue Ridge Capital and Cheniere Energy

Blue Ridge Capital initiated new positions in Marathon Petroleum Corp. (MPC), Actavis Plc (ACT), Apple Inc. (AAPL), SanDisk Corp. (SNDK), and Cheniere Energy Inc. (LNG). Notable positions that were exited include Ralph Lauren Corp. (RL) and Tenet Healthcare Corp. (THC).

Blue Ridge started a new position in Cheniere Energy Inc. (LNG) that accounts for 1.78% of the fund’s portfolio. Cheniere is a Houston-based energy company primarily engaged in LNG-related businesses.

LNG

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Cheniere Energy is expected to benefit from the exports of LNGs, as it was the first to receive a natural gas export license from the Department of Energy. Cheniere Energy expects that global demand for natural gas and LNGs will increase significantly as nations seek more abundant, reliable, and environmentally clean fuel alternatives to oil and coal. As a result, the share of LNG in the global natural gas market is expected to increase as markets seek to improve the security of supply by accessing a wide portfolio of producers that can readjust deliveries to meet the needs of changing markets.

Cheniere owns and operates the Sabine Pass LNG-receiving terminal and Creole Trail Pipeline in Louisiana through a partial ownership interest and management agreements with Cheniere Energy Partners (CQP), which is a publicly traded partnership created in 2007. In December, Cheniere Energy launched a $665 million IPO of its wholly owned subsidiary Cheniere Energy Partners LP Holdings (CQH). CQH owns a 55.9% limited partner interest in Cheniere Partners (CQP) and its only business consists of owning Cheniere Partners units.

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The company’s shares were up in December last year after it announced three major contracts. Cheniere Energy’s subsidiary Corpus Christi Liquefaction signed a 20-year agreement with Indonesia’s state-owned company, Pertamina Corp., under which Pertamina will buy 0.8 million tons of LNG each year once the Corpus Christi project comes online. The Corpus Christi liquefaction project includes three LNG trains, each with an annual production capacity 4.5 million tons. The company believes LNG exports from the Corpus Christi Liquefaction Project could commence as early as 2018. Under the second contract, Corpus Christi Liquefaction, LLC, and Bechtel Oil, Gas and Chemicals, Inc., entered into two lump-sum turnkey contracts for the engineering, procurement, and construction of LNG trains and related facilities developed near Corpus Christi, Texas. The deal with Bechtel Oil is worth around $9.5 billion.

Cheniere Energy Partners is also constructing a liquefaction project adjacent to the Sabine Pass LNG terminal for up to six LNG trains with aggregate LNG export volumes of approximately 27 mtpa. The company anticipates that Train 1 will produce LNG by late 2015.

LNGH

The Houston-based energy company last month said its fourth-quarter loss widened to $135.2 million (or $0.61) per share from $94.3 million (or $0.44 per share) in the same period last year. Revenues fell to $66.42 million from $67.42 million last year. The company said in its annual filing that it will continue to incur significant capital and operating expenditures while it develops and constructs the Sabine Pass Liquefaction Project and the Corpus Christi Liquefaction Project. Cheniere expects that it will not begin to receive cash flows from operations under any LNG sale and purchase agreement until late 2015 at the earliest.

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