Valuation Model for LNG Common Equity at YE2011

SCENARIO #1 - EXISTING DEBT REFINANCED

Method #1 - Enterprise Value Start: Distributions from Liquefaction project Less: LNG overhead costs1 Equals: FCF pre-tax Less: Taxes Equals: FCF after-tax Divide by: LNG cost of equity Equals: FCF perpetuity value in 2015 Discount at: LNG cost of equity Equals: FCF perpetuity value in 2011 Add: value of NOL tax shield Add: Unrestricted cash balance Less: par value of existing debt Less: PV of after-tax cash burn 2012-14 Less: PV of after-tax Commercial Bonus Pool cash pmnts Equals: Value of LNG equity in 2011 Start: Current LNG share count Add: Commercial Bonus Pool dilution Equals: Adjusted share count

SCENARIO #2 - EXISTING DEBT PAID OFF WITH SECONDARY PROCEEDS

Method #1 - Enterprise Value Start: Distributions from Liquefaction project Less: LNG overhead costs Equals: FCFF pre-tax Less: Taxes Equals: FCFF after-tax Divide by: LNG WACC after-tax Equals: FCFF perpetuity value in 2015 Discount at: LNG cost of equity Equals: FCF perpetuity value in 2011 Add: value of NOL tax shield Add: Unrestricted cash balance Less: par value of existing debt Less: PV of after-tax cash burn 2012-14 Less: PV of after-tax Commercial Bonus Pool cash pmnts Equals: Value of LNG equity in 2011 Start: Current LNG share count Add: Commercial Bonus Pool dilution Add: Share issuance to fund debt mat. Equals: Adjusted share count

dollars dollars dollars rate dollars rate dollars rate dollars dollars dollars dollars dollars dollars dollars shares shares shares

407,099,084 33,000,000 374,099,084 35% 243,164,405 11.72% 2,075,489,968 11.72% 1,488,587,976 297,500,000 162,600,000 502,630,000 120,680,079 37,476,173 1,287,901,723 82,722,458 17,874,622 100,597,080

dollars dollars dollars rate dollars rate dollars rate dollars dollars dollars dollars dollars dollars dollars shares shares shares

407,099,084 33,000,000 374,099,084 35% 243,164,405 11.72% 2,075,489,968 11.72% 1,488,587,976 297,500,000 162,600,000 37,476,173 1,911,211,802 82,722,458 17,874,622 70,128,604 170,725,684

Value per LNG share at YE2011

dollars

12.80

Value per LNG share at YE2011

dollars

11.19

Method #2 - Cash Flow to Equity Start: Distributions from Liquefaction project Less: Existing LNG debt interest costs Less: LNG overhead costs Equals: Pre-tax cash flow to equity Less: Taxes Equals: After-tax cash flow to equity Multiply by: Cash flow multiple Equals: Unadjusted LNG equity value in 2015 Discount at: LNG cost of equity Equals: FCFE perpetuity value in 2011 Add: value of NOL tax shield Add: Unrestricted cash balance Less: PV of after-tax cash burn 2012-2014 Less: PV of after-tax Commercial Bonus Pool cash pmnts Equals: Adjusted LNG equity value in 2011 Start: Current LNG share count Add: Commercial Bonus Pool dilution Equals: Adjusted share count

dollars dollars dollars dollars rate dollars multiple dollars rate dollars dollars dollars dollars dollars dollars dollars

407,099,084 33,659,175 33,000,000 340,439,909 35% 221,285,941 10.4x 2,309,874,123 11.72% 1,656,693,550 297,500,000 162,600,000 120,680,079 37,476,173 1,958,637,297 82,722,458 17,874,622 100,597,080

Method #2 - Cash Flow to Equity Start: Distributions from Liquefaction project Less: Existing LNG debt interest costs Less: LNG overhead costs Equals: Pre-tax cash flow to equity Less: Taxes Equals: After-tax cash flow to equity Multiply by: Cash flow multiple Equals: Unadjusted LNG equity value in 2015 Discount at: LNG cost of equity Equals: FCFE perpetuity value in 2011 Add: value of existing NOL tax shield in 2015 dollars Add: Unrestricted cash balance Less: PV of after-tax cash burn 2012-2014 Less: FV of after-tax Commercial bonus Pool cash pmnts Equals: Adjusted LNG equity value in 2011 Start: Current LNG share count Add: Commercial Bonus Pool dilution Add: Share issuance to fund debt mat. Equals: Adjusted share count

dollars dollars dollars rate dollars multiple dollars rate dollars dollars dollars

407,099,084 33,000,000 374,099,084 35% 243,164,405 10.4x 2,538,250,571 11.72% 1,820,490,263 297,500,000 162,600,000 37,476,173 2,243,114,090 82,722,458 17,874,622 70,128,604 170,725,684

shares shares shares

Value per LNG share at YE2011

1

dollars

19.47

Value per LNG share at YE2011

dollars

13.14

I forget where I got this number

Model Inputs
LIQUEFACTION PROJECT CAPACITY
Phase 1+2 4 2.0 14.0 Phase 1 2 1.0 7.0 Per train 1 0.5 3.5

DILUTION ASSUMPTIONS FOR SCENARIO #2

as of 10/26/2011

CAPITAL MARKET INPUTS

as of 10/26/2011

# Trains Bcf/d mtpa

Secondary offering terms Start: LNG share price Less: Offering discount to market price Less: Investment banking fees2 Equals: Net proceeds per share to LNG Dilution required to pay off existing debt
1

dollars rate rate dollars

11.93 11.61% 5.98% 9.91

Cheniere market rates Start: Sabine Pass weighted average YTM Add: Reoffer spread on new bond issuance Equals: Cost of new Liquefaction project debt Yield on CQP common units LNG current enterprise value Start: Share price Multiply by: Shares outstanding Equals: Market cap Add: Market value of existing debt Less: Unrestricted cash4 1 Equals: Enterprise value WACC buildup Start: Equity risk premium Multiply by: LNG beta3 Add: 10 year Treasury rate Equals: LNG cost of equity LNG weighted average cost of debt LNG WACC pre-tax Normalized tax rate LNG WACC after-tax LNG unlevered WACC Net operating loss carryforward4
1

rate rate rate rate

7.78% 0.15% 7.93% 9.58%

NATURAL GAS SPOT PRICE DECK

as of xx/xx/2011

US Henry Hub US Rockies (Opal) Canada (AECO hub) UK Natural Nat Gas Asia Contract LNG Ave

mmbtu 4.25 3.47 3.20 4.68 10.21

mcf 4.36 3.56 3.28 4.80 10.48

Start: Annual cash burn rate until COD3 4 Multiply by: Time to Liquefaction COD Equals: Cumulative cash burn Add: Undisc. Commercial Bonus Pool pmnts 2012-14 Add: Par value of existing debt maturities Equals: Total stock issuance required Divide by: Net secondary proceeds per share Equals: Share issuance required
1 2 3 4

dollars years dollars dollars dollars dollars dollars shares

50,000,000 3 150,000,000 42,648,848 502,630,000 695,278,848 9.91 70,128,604

dollars shares dollars dollars dollars dollars

11.93 82,722,458 986,878,924 488,050,113 162,600,000 1,312,329,036

Pricing of 6/6/11 secondary relative to last trade prior to announcement on 5/31/11 Calculated from company press release dated 6/6/11

Midpoint of burn rate estimate in April 2011 company presentation COD assumed 2015 per company press release dated 10/26/11

rate beta rate rate rate rate rate rate rate dollars

5.20% 1.83 2.20% 11.72% 10.81% 12.83% 35% 11.42% 850,000,000

TRANSPORTATION COSTS FROM U.S.

per mmbtu as of xx/xx/2011

LIQUEFACTION ECONOMICS

To Europe Japan India and China

min 0.75 2.00 1.50

max 1.00 3.00 2.50

ave 0.88 2.50 2.00

Construction costs Start: Capacity1 Multiply by: Construction costs per ton2 Equals: Total construction costs Total distributable cash flow

mtpa dollars dollars

9.0 700 6,300,000,000

UNITS OF CONVERSION
(y-axis per x-axis) 1 mmbtu 1 mcf 1 Bcf/d 1 short ton 1 metric tonne mmbtu 1.032 1,032,000 46.9 51.7 mcf 0.969 1,000,000 48.4 53.4 m 29.223 28.317 28,316,800 1,209 1,333
3

Start: Revenue per mmbtu3 Less: O&M per mmbtu Equals: Margin per mmbtu Multiply by: Capacity Equals: Total margin Less: Project debt interest5 Equals: Distributable cash flow Distributable cash flow by investor type6 Start: Common units Add: Subordinated units Add: General partner units Equals: Total
1 2 3 4 5 6

dollars dollars dollars mmbtu/a dollars dollars dollars

2.25 0.24 2.01 465,300,000 935,253,000 499,587,374 435,665,626

Assumes LNG sells its CQP common units to pay off the GSO loan, therefore the GSO loan is excluded from the enterprise value
2 3 4

Ibbotson 2010 SBBI Yearbook Bloomberg Swag estimate from 10-Q for 2011 Q2

dollars dollars dollars

28,566,541 357,862,058 49,237,026 435,665,626 -

Cheniere Energy Inc. press release dated 10/26/11 Estimate by VIC member dr123 on 8/4/11 From 8-K filed on BG contract 10/26/11

VIC writeup dated 11/26/10 by Siren81 Assumes construction costs are funded with 100% debt Assumes common and general partner units are already receiving maximum initial quarterly distributions from Sabine Pass LNG, L.P., and that LNG sells its CQP common units to pay off the GSO loan

Simplifying Assumptions

1. Construction costs for Sabine Liquefaction are funded with 100% debt 2. Interest costs during construction are accrued and not paid until COD 3. GSO term loan netted vs. LNG's ownership of CQP common units 4. Negative carry on GSO term loan vs. CQP collateral is ignored 5. Ignores positive value to LNG of management services contract 6. 7. 8. 9. Assumes LNG is a taxpayer and realizes full value of NOLs All sale and purchase agreements are signed by YE 2011 for purposes of calculating Long-Term Commercial Bonus Pool All sale and purchase agreements are perpetuities for purposes of modeling Liquefaction project cash flows Zero value assigned to Creole Trail Pipeline

10. CQP common units are already receiving maximum initial quarterly distributions 11. Spare gasification capacity of Sabine Pass is worthless

CQP units outstanding Common units Subordinated units General partner units

30,283,154 135,383,831 3,302,045

CQP Distribution Schedule2

Marginal Percentage Interest in Distributions Total Quarterly Distribution Target Amount Initial quarterly distribution First target distribution Second target distribution Third target distribution Thereafter $0.425 above $0.425 up to $0.489 above $0.489 up to $0.531 above $0.531 up to $0.638 above $0.638 Common and Subordinated Unitholders 98% 98% 85% 75% 50% General Partner 2% 2% 15% 25% 50%

Quarterly 0.425 0.489 0.531 0.638

Annual 1.700 1.956 2.124 2.552

Total Annual Distributions Initial quarterly distribution First target distribution Second target distribution Third target distribution

Common Max $ 51,481,362 59,233,849 64,321,419 77,282,609

Total Annual Distributions - Subordination Period Dist. to General Partner if Subordinated Total CQP Max Max Only Common is Maxed All CQP is Maxed $ 230,152,513 $ 281,633,875 $ 1,050,640 $ 5,747,630 264,810,773 324,044,623 5,905,844 6,613,156 287,555,257 351,876,676 7,510,962 11,524,694 345,499,537 422,782,146 15,845,091 35,159,851

Cumulative Cash Flow $ 287,381,505 330,657,778 363,401,371 457,941,997

Total Distributions Initial quarterly distribution First target distribution Second target distribution Third target distribution

Common Max $ 1.700 1.956 2.124 2.552

Annual Per Unit Distributions - Subordination Period General Partner Subordinated Max Common Max Total Max $ 1.700 $ 0.318 $ 1.741 1.956 1.789 2.003 2.124 2.275 3.490 2.552 4.799 10.648

1 2

Cheniere Energy Partners, L.P. 2011 Q3 form 10-Q, company press release dated 9/14/11 Cheniere Energy Partners, L.P. form S-1 filed December 21, 2006

2012 LONG-TERM COMMERCIAL BONUS POOL

(in thousands)

2013

Expected cash receipts1 Expected direct costs1 Expected interest payments1 on liquefaction project debt Expected cash payments to third party equity holders2 Margins Discount rate1,3 NPV of margins Cumulative NPV of margins Participation rate3 Bonus pool

$ 2,584,779 11.0% $ 284,326

LONG-TERM COMMERCIAL CASH AWARD

(in thousands)

Portion of bonus pool paid in cash3 Cash award Vesting schedule3 Discount rate1 NPV of cash awards Cumulative NPV of cash awards

25% 71,081 $ 14,216 $ 11.7% 14,216 14,216 11.7% 12,725

57,656

LONG-TERM COMMERCIAL EQUITY AWARD

(in thousands)

Portion of bonus pool paid in equity3 Equity award value Current LNG share price Number of LNG shares awarded

75% 213,244 11.93 17,875

1 2

See LNG Valuation Model tab Assumes LNG owns 11,963,488 of total CQP common units; $0.425/unit quarterly distribution 3 LNG Form 8-K filed 3/2/11

2014

2015

2016

2017

2018

2019

2020

2021

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522 15.0% 152,075

11.7% 362,099 $

11.7% 324,124 $

11.7% 290,132 $

15.0% 231,287 $

15.0% 201,119 $

15.0% 174,886 $

14,216 $ 11.7% 11,391

14,216 $ 11.7% 10,196

14,216 11.7% 9,127

ly distribution

2022

2023

2024

2025

2026

2027

2028

2029

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522 15.0% 49,714

15.0% 132,239 $

15.0% 114,990 $

15.0% 99,992 $

15.0% 86,949 $

15.0% 75,608 $

15.0% 65,746 $

15.0% 57,171 $

2030

2031

2032

2033

2034

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522

$ 1,046,925 111,672 499,587 31,143 404,522 15.0% 24,716

15.0% 43,229 $

15.0% 37,591 $

15.0% 32,687 $

15.0% 28,424 $

Last updated: October 26, 2011

CONSOLIDATED DEBT SECURITIES

(dollar figures in 000s except prices) Ranking

CUSIP

S&P

First Settle

Maturity Date

Coupon

Call

Face Value

Market Value

Ask Px

Bid YTM

Sabine Pass LNG, L.P. 1. Senior Secured 2. Senior Secured 3. Senior Secured 4. Senior Secured

144A w/Reg Rights 144A w/Reg Rights 144A w/Reg Rights 144A

785583AA3 785583AC9 785583AF2 785583AG0

B+ B+ B+ NA

09-Nov-06 07-Aug-07 07-Aug-07 15-Sep-08

30-Nov-13 30-Nov-13 30-Nov-16 30-Nov-16

7.250% 7.250% 7.500% 7.500%

MW +50 bps 24,998 25,466 MW +50 bps 525,003 522,377 MW +50 bps 1,481,970 ######## NA 183,500 188,546
2,215,470 2,196,131

101.875 99.500 98.500 102.750

99.127

7.64% 7.51% 7.86% 7.92%

7.78%

Cheniere Energy, Inc. 1. Unsecured, converts @ $35.42 2. Secured by various - Blackstone's loan

16411RAD1

NA

01-Feb-06 15-Aug-08

01-Aug-12 2012

2.250% 12.000%

MW +50 bps

204,630 255,100

190,050 NA

92.875 NA

12.48% NA

Cheniere Subsidiary Holdings, LLC 1. Secured by CQP subordinated units

31-May-07

31-May-12

9.750%

298,000
757,730

NA

NA

NA

2,973,200
1

Bloomberg

SIGNED MOU SUMMARY

Counterparty Morgan Stanley ENN Energy Trading Gas Natural Fenosa EDF Trading Sumitomo Basic Energy Endesa, Enel Trade

S&P Rating A/A2 BBB-/Ba1 BBB/Baa2 A/A3 A/A2 B-/NR A-/A2

mtpa 1.7 1.5 1.5 1.5 1.5 0.6 1.5 9.8

Term

Announcement Date 8-Nov-10 11-Nov-10 29-Nov-10 27-Jan-11 11-Feb-11 17-Feb-11

20 years

n/a

Company press releases; last updated xx/xx/xx

Pay Date 15-May-11 15-Aug-11 15-Nov-11 15-Feb-12 15-May-12 15-Aug-12 15-Nov-12 15-Feb-13 15-May-13 15-Aug-13 15-Nov-13 15-Feb-14 15-May-14 15-Aug-14 15-Nov-14 15-Feb-15 15-May-15 15-Aug-15 15-Nov-15 15-Feb-16 15-May-16 15-Aug-16 15-Nov-16 15-Feb-17 15-May-17 15-Aug-17 15-Nov-17 15-Feb-18 15-May-18 15-Aug-18 15-Nov-18 15-Feb-19 15-May-19 15-Aug-19 15-Nov-19 15-Feb-20 15-May-20 15-Aug-20

Amount Per Unit 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 0.425 Discount rate Value Current px NPV of residual value Future residual value 7.0% 12.01 16.00 3.99 7.59