The earnings number came in at -$0.80/share versus my expectation of -$0.41/share. The lower earnings were due primarily to four factors:

1) Cheniere had a $9.7m (-$0.18/share) Marketing & Trading loss. This appears to be due, at least in part, to the fact that Cheniere’s LNG inventory is valued based on spot prices while their hedge value is based on the future month contracts whose price has not declined as much as spot prices. Therefore, it is possible Cheniere will recover some or all of this loss in the next one or two quarters when they sell their inventory and close out their hedges.
2) Cheniere’s interest expense was $61.557m versus my estimate of only $53.0m. This has a negative earnings impact of -$0.16/share.
3) Cheniere’s G&A charges were $15.557m versus my estimate of only $12.5m. This had a negative impact of -$0.06/share. Cheniere has stated that they would lower their G&A to only $30 to $40m per year (<$10m per quarter) but they continue to spend $15m+ each quarter.
4) DD&A was up from $12.8m to $14.3m due to the balance of the terminal going into service in 3Q. That had an impact of -$0.03/share.

Based on the above, my preliminary 4Q estimate would start around -$0.52/share. This estimate reflects; 1) higher interest expense that appears to be relatively constant, 2) the higher DD&A to be expected over a full quarter due to the 4 bcf/d now being in service and 3) the higher G&A burn rate.

There would be earnings upside if/when Cheniere recovers their marketing loss. This could improve the earnings number up to -$0.34/share.

As for the cash balance, their Cash and Restricted Cash dropped by $83.32m versus my estimate of $84.775m. Construction costs appeared to have been less than Cheniere’s previous estimate ($33.6m vs. $60m) while $20.8m of additional assets are now wrapped up in LNG inventory.

Based on the updated cash and restricted cash balances, I agree with Cheniere’s statement in the 10-Q when they say they have the cash and working capital to fund their operating expenses until August 2011 (<2 years).