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Baupost nearly doubles position in Cheniere Energy

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Feb. 10 2015, Updated 1:06 p.m. ET

Baupost adds to Cheniere Energy position

According to a 13G filing in January, Seth Klarman’s The Baupost Group upped its stake in Cheniere Energy (LNG). The fund owns 10.01% stake in LNG with 24,807,230 shares. This is almost double the 11,199,030 shares in the fund’s 3Q14 filing in November.

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Overview of Cheniere Energy

Cheniere Energy, Inc. (LNG) is a Houston-based energy company engaged in the liquefied natural gas (or LNG) business.

Cheniere owns and operates the Sabine Pass LNG-receiving terminal and the Creole Trail Pipeline in Louisiana through a partial ownership interest and management agreements with Cheniere Energy Partners LP (CQP), a publicly traded partnership created in 2007.

Cheniere’s businesses

Let’s take a closer look at Cheniere’s businesses.

  • LNG terminals
    • Cheniere’s (CQP) Sabine Pass LNG terminal in Louisiana owns regasification facilities. Current facilities include five LNG storage tanks with a storage capacity of ~17 bcf (billion cubic feet). It also has 5.3 bcf per day of pipeline interconnections.
    • Sabine Pass LNG terminal. The company is planning a natural gas liquefaction and export facility, called the Sabine Pass liquefaction project, at the Sabine Pass LNG terminal. The project is one of the first projects to receive the necessary government permits to export liquefied natural gas.
    • Cheniere (LNG) is planning a second natural gas liquefaction and export facility, called the Corpus Christi liquefaction project, near Corpus Christi.
  • LNG and natural gas marketing
    •  Cheniere Energy operates its LNG and natural gas marketing through its subsidiary Cheniere Marketing, which is responsible for developing long-term, short-term, and spot LNG sale and purchase agreements.
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Cheniere gets FERC approval for second natural gas export terminal at Corpus Christi

Recent reports noted that Cheniere has received Federal Energy Regulatory Commission (or FERC) approval to build a second natural gas export terminal at Corpus Christi. Cheniere believes LNG exports from the Corpus Christi liquefaction project could commence as early as 2018.

The company also said it has entered into a note purchase agreement with EIG Management Company in which investment funds managed by EIG will purchase $1.5 billion of convertible notes. Cheniere said the proceeds will fund a portion of the costs of developing, constructing, and placing into service the Corpus Christi liquefaction project.

In December, Cheniere said it has engaged 18 financial institutions to assist in the structuring and arranging of up to $11.5 billion of debt facilities. The proceeds will be used to pay for the costs of development and construction of the Corpus Christi liquefaction project.

Baupost’s other positions

The Baupost Group added positions in PBF Energy (PBF) and Cheniere Energy (LNG). The fund boosted its biotech portfolio with additions of Atara Biotherapeutics (ATRA), Forward Pharma (FWP), and Paratek Pharmaceuticals (PRTK). However, it disposed of a stake in Aveo Pharmaceuticals (AVEO).

In the next part of this series, we’ll look at The Baupost Group’s addition to Atara Biotherapeutics (ATRA).

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