Edgar Filing: CHENIERE ENERGY INC

As filed with the Securities and Exchange Commission on May 15, 2003

Registration No. 333-________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

CHENIERE ENERGY, INC.
(Exact Name of Registrant as specified in its charter)

Delaware(State or other jurisdiction of 95-4352386(I.R.S. Employer
incorporation or organization) Identification No.)

333 Clay Street, Suite 3400
Houston, Texas 77002-4102
(713) 659-1361
(Address, including zip
code, and telephone number, including area code, of
registrant's principal executive offices)

Charif Souki
President and Chairman of the Board
Cheniere Energy, Inc.
333 Clay Street, Suite 3400
Houston, Texas 77002-4102
(713) 659-1361
(Name, address, including zip
code, and telephone number, including area code,
of agent for service)

Copies to:
Michael Overman
Andrews & Kurth L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002
(713) 220-4200

Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement, as determined in
light of market conditions and other factors.

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. [_]

Proposed Proposed
maximum maximum
Title of each offering aggregate Amount of
class of securities to be Amount to be price offering registration
registered registered per share price fee

Common Stock, 1,542,892 $2.050/(1)/ $3,162,929/(1)/ $255.88
par value $.003
per share

Common Stock, par 1,870,000/(2)/ $2.275/(3)/ $4,254,250 $344.17
value $.003 per share,
to be issued upon
exercise of warrants

Total 3,412,892 $7,417,179 $600.05
-----

(1) Estimated solely for the purpose of computing the amount of the
registration fee, based on the average of the high and low prices for our
common stock as reported on The American Stock Exchange on May 13, 2003, in
accordance with Rule 457(c) under the Securities Act of 1933.

(2) Represents the number of shares issuable upon the exercise of warrants.

(3) Estimated solely for the purpose of computing the amount of the
registration fee, based on the exercise price of the warrants in accordance
with Rule 457(g).

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 said Section 8(a),
may determine.

The information in this prospectus is not complete and may be changed. The
selling stockholder 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.

Subject to Completion

Prospectus May __, 2003

CHENIERE ENERGY, INC.

3,412,892 SHARES OF COMMON STOCK

Par Value $0.003 per Share

This prospectus relates to offers and sales from time to time of up to 3,412,892
shares of common stock of Cheniere Energy, Inc. by selling stockholders listed
in this prospectus. Of these shares, 1,542,892 shares are held by the selling
stockholders and 1,870,000 are issuable upon the exercise of warrants held by
warrantholders. The selling stockholders may sell the shares of common stock at
various times and in various types of transactions, including sales in the open
market, sales in negotiated transactions and sales by a combination of these
methods. The securities offered by this prospectus were issued to the selling
stockholders in transactions exempt from registration under the Securities Act
of 1933, as amended. We will not receive any proceeds from such sales by the
selling stockholders 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 American Stock Exchange under the symbol LNG.
The last reported sales price of the common stock on The American Stock Exchange
on May 14, 2003 was $2.22 per share.

The principal executive offices of Cheniere are located at 333 Clay Street,
Suite 3400, Houston, Texas 77002-4102.

--------------------------------

You should carefully review and consider the information under the heading
"Cautionary Statement Regarding Forward-Looking Statements" beginning on page 12
and "Risk Factors" referred to on page 4 of the prospectus.

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 May __, 2003.

TABLE OF CONTENTS

Cheniere Energy, Inc. ............................................ 1
Risk Factors ..................................................... 4
Where You Can Find More Information ..............................11
Incorporation of Certain Documents by Reference ..................11
Cautionary Statement Regarding Forward Looking Statements ........12
Use of Proceeds ..................................................12
Selling Stockholder ..............................................13
Description of Securities ........................................13
Plan of Distribution .............................................15
Legal Matters ....................................................17
Experts ..........................................................17

-----------------------------

You should rely only on the information contained in this prospectus,
any prospectus supplement and the documents we have incorporated by reference.
We have not authorized anyone else to give you different information. These
securities are not being offered in any state or other jurisdiction that does
not permit the offer. We will disclose any material changes in our affairs in an
amendment to this prospectus, a prospectus supplement or a future filing with
the SEC incorporated by reference in this prospectus.

In this prospectus, "Cheniere," "we," "us" and "our" refer to Cheniere
Energy, Inc. and its wholly owned subsidiaries unless otherwise indicated.

CHENIERE ENERGY, INC.

SUMMARY

We are a Houston-based company engaged in oil and gas exploration, development
and exploitation and in the development of a liquefied natural gas (LNG)
receiving terminal business. The LNG receiving terminal business consists of
receiving deliveries of LNG from LNG ships, processing such LNG to return it to
a gaseous state and delivering such gas to pipelines for transportation to
purchasers. We have historically focused on evaluating and generating drilling
prospects using a regional and integrated approach with a large seismic database
as a platform. We expect that our active interpretation of seismic data and
generation of prospects will continue, though our participation in the drilling
of wells will be accomplished through farm-out arrangements and back-in
interests (a reversionary interest in oil and gas leases reserved by us),
whereby the capital costs of such activities are borne by industry partners. We
are currently focusing, and we expect to continue to focus, on the development
of our LNG receiving terminal business.

We were formed in 1996 to fund the acquisition of a proprietary seismic database
along the transition zone (the area approximately 3-5 miles on either side of
the Gulf of Mexico shore line) in Cameron Parish, Louisiana. The 228-square-mile
survey was acquired jointly by us and an industry partner and initial processing
was completed during 1997. Interpretation of the data yielded drilling prospects
located onshore and in the state and federal waters of offshore Louisiana. In
2001, we purchased all rights to the database and concurrently sold the database
to a seismic data marketing firm retaining an interest in the proceeds of any
licensing transactions. We subsequently sold our remaining interest in the
future licensing proceeds to the marketing company. We have retained a license
to the entire database and will continue to utilize it in our exploration
program.

On September 15, 2000 we reached an agreement with Warburg, Pincus Equity
Partners, L.P., a global private equity fund based in New York, to fund
exploration and development in the shallow waters offshore Louisiana through a
newly formed private corporation, Gryphon Exploration Company (Gryphon). We
contributed to Gryphon: (i) our license to seismic data covering the shallow
waters offshore Louisiana in the Gulf of Mexico; (ii) our interest in a Joint
Exploration Agreement with Samson Offshore Company; (iii) certain offshore
leases, including a prospect we were drilling offshore Louisiana, and (iv)
certain other assets, in exchange for all of the common stock of Gryphon and
cash. Warburg invested $25,000,000 and received voting preferred stock, with an
8% accruing dividend, convertible at any time, at Warburg's option, into shares
of Gryphon's common stock. Although we currently own 100% of Gryphon's issued
and outstanding common stock, in the event that Warburg converts all or any
portion of its Gryphon preferred stock to shares of Gryphon common stock, our
percentage ownership will be significantly reduced.

We have the option, under certain circumstances, to contribute to Gryphon our
proportionate share of an additional investment. To date, we have declined to
participate in such cash calls, and Warburg has elected to fund our
proportionate share of such cash calls reducing our percentage ownership on an
as-converted basis. Our ownership percentage will be further reduced if we
choose not to participate in future Gryphon cash calls.

As of March 31, 2003, Gryphon had ten wells on production. Depending on rig
availability, Gryphon anticipates drilling up to fourteen exploratory wells and
four development wells during 2003. Gryphon is also engaged in acquiring
drilling prospects through leasing at area-wide federal and state lease sales
and through farm-ins of leased acreage.

We also conduct our own exploration efforts. To ensure continued access to high
quality drilling prospects, we expanded beyond the Cameron area and into the
shallow waters of the Gulf of Mexico. In 2000, we acquired two licenses to
approximately 6,800 square miles of seismic data in the shallow waters offshore
Texas and the West Cameron area in the Gulf of Mexico in separate transactions
with Seitel Data Ltd. (Seitel) and with JEBCO Seismic, L.P. (JEBCO). We made the
commitment to fund the reprocessing of the entire seismic database at a cost of
approximately $8,500,000, payable in installments beginning in October 2000 and
continuing through the final delivery of reprocessed data, which occurred in
April 2003. The resulting new data set will provide us with a higher resolution
image of the subsurface than has previously been available. In July 2001, we
sold licenses to the Seitel and JEBCO seismic data to Gryphon. We retain one
license to all of the seismic data for use in its exploration program. In
connection with the transaction with Gryphon, we transferred 6,740 shares of
Gryphon common stock to Gryphon. In March 2002, we sold an additional 51,400
shares of our Gryphon common stock to Gryphon, subject to certain repurchase
options, in exchange for the payment or assumption of obligations related to the
various licenses for seismic data thereby further reducing our interest in
Gryphon on an as-converted basis.

Our existing data sets provide us with the framework with which to identify
potential drilling prospects which may then be acquired through leasing at the
area-wide federal and state lease sales and from private mineral rights owners
onshore, through farm-ins (agreements whereby a third party owner of lease
interests grants to us the right to earn an assignment of an interest in the
lease, typically by drilling one or more wells), and through participation in
industry prospects. We plan to continue to identify potential

drilling prospects and may participate in any drilling activities by selling
interests on a promoted basis to industry participants.

In 2000, we undertook a feasibility study to assess the long-term role of LNG in
the natural gas markets of the United States. In 2001, we assembled a team of
professionals with experience in the LNG business. In addition, we identified
three sites along the Texas Gulf Coast which we believed would serve as good
locations for LNG receiving terminals and we secured two of the sites through
long-term lease option agreements and the third site through an option to
purchase. In 2002, we engaged outside engineering, environmental and regulatory
consultants and substantially completed the project design and planning phase of
a project in Freeport, Texas, including the preparation of materials to be filed
with the Federal Energy Regulatory Commission (FERC). The design work, the
federal and state regulatory coordination, and the 13 resource reports which
comprise the environmental filing to the FERC were substantially completed
during the year. The FERC filing was submitted in March 2003. We have also
identified and secured a fourth potential site through a long-term lease option.

In August 2002, we entered into a Contribution Agreement with entities
controlled by Michael S. Smith providing for the formation of a limited
partnership, Freeport LNG Development, L.P. (Development) to develop the
Freeport LNG receiving terminal. Under the terms of the Contribution Agreement,
we contributed our site lease option at Freeport, our technical expertise and
know-how, and all of the work in progress related to the Freeport project in
exchange for a 40% interest in Development. Michael S. Smith, through a
controlled entity, Freeport LNG Investments, LLC (Investments), will pay certain
amounts to us in cash in installments and contribute up to $9,000,000 to fund
Freeport project expenses before any additional contributions may be required of
us. The transaction was consummated in February 2003. In March 2003, pursuant to
an existing option agreement, we sold an additional ten percent (10%) limited
partner interest in Development to a third party.

Cheniere has been publicly traded since July 3, 1996 under the name Cheniere
Energy, Inc. Our corporate offices are located at 333 Clay Street, Suite 3400,
Houston, Texas 77002, and our telephone number is (713) 659-1361.

Business Strategy

Our objective is to develop our LNG receiving terminal business and to expand
the net value of our assets by building an oil and gas reserve base in a
cost-efficient manner, through our investment in Gryphon and through
exploitation of our seismic database to facilitate identifying drilling
prospects.

We have assembled a team of professionals with extensive experience in the LNG
industry. We have researched the LNG opportunity, developed a plan to exploit
the opportunity and initiated the process of identifying and securing sites for
LNG receiving terminals as well as undertaking the necessary regulatory and
permitting work to advance the project. A substantial portion of the time and
attention of our employees is currently focused on developing LNG terminals.

The key to success in the exploration and production business is ensuring that
dollars invested add incremental reserve value. Simply put, the cost of finding
oil and gas must be less than the value received from the sale of those
reserves.

We are attempting to identify and acquire prospects. We employ a technical
approach in the prospect generation and evaluation process to manage the risk of
exploration drilling. That approach integrates 3D seismic, geologic and
engineering data over large areas. Our technical understanding is translated
into prospect capture in three ways: participation in industry prospects,
farm-ins (agreements whereby a third party owner of lease interests grants to us
the right to earn an assignment of an interest in the lease, typically by
drilling one or more wells) on industry acreage and purchase of open leases.

We operate on the Gulf of Mexico shelf (less than 300 feet of water depth) and
in adjacent onshore coastal regions. We have elected to operate in this area
because the Gulf is a proven producing area where improved technology can help
find previously undiscovered fields.

LNG Receiving Terminals

We believe that the demand for natural gas in the United States over the next
five to ten years will grow at a rate that domestic exploration activities will
not be able to satisfy and that the resulting imbalance will necessitate the
importation of natural gas into the United States in the form of LNG. The LNG
receiving capacity in the United States at present is quite limited. We believe
that additional LNG receiving capacity will be required, and we have undertaken
to secure sites which we believe will be viable locations for such facilities
considering such factors as deep water access, existing pipeline infrastructure
and governmental and regulatory

environments. We have identified four such sites and have secured three of them
through long-term lease options and have an option to purchase the third site.

We have been developing our LNG business since late 2000 and have made
substantial progress. After completing a U.S. gas market study and preliminary
terminal location study in 2000, we decided to focus on developing terminals on
the Texas and Louisiana Gulf Coast. Texas offers several important advantages,
including (i) it is the largest natural gas-consuming state in the United
States, (ii) the government and general population are familiar with and
supportive of the energy industry, (iii) with the expected decline in
production, Texas will have under-utilized intrastate and interstate pipelines
with access to premium Midwest, Northeast, Mid-Atlantic and Southeast markets,
and (iv) Texas has an extended coast providing a number of ports with adequate
facilities for such a terminal. Louisiana, the third largest gas consuming state
in the United States, offers otherwise identical advantages.

Initially, through our participation in Development, we plan to permit the
Freeport site in late 2003 or early 2004. We have commenced development of our
Freeport, Texas site by (i) completing a feasibility study, (ii) initiating the
preparation of forms and collection of information for the permitting and
Federal Energy Regulatory Commission related filings, (iii) meeting with local
agencies and planners and (iv) conduction preliminary discussions concerning the
financing of the project. In order to exploit the opportunity to develop an LNG
receiving terminal in Freeport, Development will need to obtain additional
equity or debt financing. Assuming prompt regulatory approvals and adequate
financing, and subject to all of the risks inherent in a new venture of this
type, construction of the first terminal could commence as early as 2004 with
LNG being imported in 2007. However, there can be no assurance whether or when
such regulatory approvals and financing may be obtained.

Technical Approach to Exploration

To be successful we must drill prospects with favorable risk/reward
characteristics. The technical approach we use to generate and evaluate drilling
prospects distinguishes us from many of our competitors. The approach is
regional and integrated, and it utilizes reprocessed 3D seismic data.

A regional 3D seismic approach to prospecting is distinguished from a postage
stamp approach, whereby a company owns scattered patches of 3D data coincident
with its leases. The understanding gained from each postage stamp cannot be
extended laterally as a means of identifying prospective drilling areas.
Regional 3D coverage, however, provides a blanket coverage that permits the
study of all of the successes (producing fields) and all of the failures (dry
holes) as a means of determining what works and what does not in a given area.

An interdisciplinary approach is critical in reducing the risk of dry holes.
Subsurface geology and field engineering data must be integrated together with
3D data interpretations to develop as complete a picture as is possible. This
approach is time consuming, but we have made a commitment to perform the
necessary technical work up front as a means of reducing dry hole expenditures.

Drilling Activities

Our exploration team generated and captured 16 prospects during 2001 and 2002
and sold interests in 14 of the prospects to industry partners, retaining
various overriding royalty interests and working interests ranging from an
overriding royalty interest (a share of the hydrocarbons produced from an oil
and gas property, free of the expense of production) of less than 1% to a
carried working interest (an agreement whereby we retain an interest in a well
but bear none, or only a portion of the cost of drilling the initial well) of
approximately 24%. Seven of the prospects sold during 2001 and 2002 have been
drilled by its industry partners, and we expect that the remaining prospects
sold during those years will be drilled by our industry partners during 2003,
but we do not serve as operator of the wells and do not control the timing of
such drilling activities.

All of our drilling activities have been conducted through arrangements with
independent contractors. We own no drilling equipment. During 2001, we did not
participate in the drilling of any wells. In 2002, we did not participate
directly in the drilling of any wells. Eight wells, however, were drilled during
the year by our industry partners on prospects generated by us. Six of the eight
wells were productive. We do not have a cost-bearing interest in the wells; we
hold overriding royalty interests (0.7% to 3.7%), some of which are convertible
into working interests of 8.4% at payout.

RISK FACTORS

WE ARE SUBJECT TO THE EXPENSES, DIFFICULTIES AND UNCERTAINTIES GENERALLY
ASSOCIATED WITH EARLY STAGE COMPANIES.

We have a limited operating history with respect to our oil and gas exploration
activities, and we have not yet started operating any LNG receiving facilities.
We face all of the risks inherent in the establishment and growth of any new
business. From our inception we have incurred losses and may continue to incur
losses, depending on whether we generate sufficient revenue either from
producing reserves acquired through acquisitions or drilling activities or from
the eventual commencement of LNG receiving operations. We may be unable to
implement and complete our business plan, and our business may be ultimately
unsuccessful. These factors make evaluating our business and forecasting our
future operating results difficult. Furthermore, any continued losses and any
delays in the implementation or completion of our business plan may have a
material adverse effect on our business, our results of operations, our
financial condition and the market price of our common stock.

OUR FUTURE GROWTH AND PROFITABILITY ARE HIGHLY DEPENDENT ON THE SUCCESS OF OUR
EXPLORATION PROGRAM AND THE DEVELOPMENT OF OUR LNG RECEIVING TERMINAL BUSINESS.

The primary focus of our operations has been identifying drilling prospects, but
we are also currently focusing on developing our LNG receiving facilities.
Almost all of our assets are represented by investments to date in our
exploration program, including the seismic data related thereto. Through our
drilling in 1999 through 2003, to date, we have established only limited proved
reserves (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). Furthermore, we
have achieved only limited oil and gas production as of the date of this
prospectus. Our future growth and profitability therefore depend heavily on the
success of our exploration program in locating additional proved reserves and
achieving additional oil and gas production or the development of our LNG
receiving facilities. Failure to locate such additional reserves and to achieve
additional production may have a material adverse effect on our business,
results of operations and financial condition.

FAILURE TO OBTAIN APPROVALS AND PERMITS FROM GOVERNMENTAL AND REGULATORY
AGENCIES WITH RESPECT TO OUR LNG PROJECT COULD HAVE A DETRIMENTAL EFFECT ON THE
PROJECT AND ON OUR COMPANY.

We are currently focusing on developing our LNG receiving facilities. The
transportation of LNG is highly regulated, and we have yet to obtain several
governmental and regulatory approvals and permits required in order to complete
and maintain our LNG project. We estimate that it may take two to three years of
work to obtain the approvals and permits necessary to proceed with the
construction and operation of an LNG receiving terminal. We have no control over
the outcome of the review and approval process. If we are unable to obtain the
approvals and permits, we may not be able to recover our investment in the
project. In addition, failure to obtain these approvals and permits may have a
material adverse effect on our business, results of operations and financial
condition.

FAILURE OF LNG TO BECOME A COMPETITIVE FACTOR IN THE UNITED STATES OIL AND GAS
INDUSTRY COULD HAVE A DETRIMENTAL EFFECT ON OUR ABILITY TO IMPLEMENT AND
COMPLETE OUR BUSINESS PLAN.

In the United States, due mainly to an abundant supply of natural gas, LNG has
not historically been a major energy source. Furthermore, LNG may not become a
competitive factor in the United States oil and gas industry. The failure of LNG
to become a competitive supply alternative to domestic natural gas and other
import alternatives may have a material adverse effect on our ability to
implement and complete our business plan as well as our business, results of
operations and financial condition.

WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING ON TERMS THAT ARE ACCEPTABLE
TO US, WHICH COULD HARM OUR ABILITY TO CONDUCT BUSINESS.

As of March 31, 2003, we had $2,388,445 of current assets and a working capital
deficit of $751,825. Because of our low level of current assets, we may need
additional capital for a number of purposes. If we are unable to obtain
additional financing, it could significantly harm our ability to conduct our
business, including our ability to take advantage of opportunities that come
from our exploration program and our ability to construct LNG terminals. Our
needs for additional financing include the following:

. Additional capital may be required to pay for our share of costs
relating to the drilling of prospects and development of those that
are successful, to exercise lease options, and to acquire additional
oil and gas leases. The total amount of our capital needs will be
determined in part by the number of prospects generated within our
exploration program, by the working interest that we retain in those
prospects and by our ability to identify partners willing to bear a
portion of drilling costs which would otherwise be attributable to us.

. We may need capital to fund our pro-rata share of the capital calls by
Gryphon that are approved by Gryphon's board of directors. If we
subscribe to our pro-rata portion of such capital calls but fail to
fund, we would lose our ability to subscribe to any future capital
calls and would suffer further dilution of our holdings in Gryphon. In
2002, Gryphon made cash calls in the aggregate amount of $30,000,000,
which were funded entirely by Warburg, in March, June, September and
November 2002. We declined to participate in these cash calls and our
interest in Gryphon has been reduced from 20.2% to 9.3% on an
as-converted basis, as of March 31, 2003. It is anticipated that
Gryphon will make cash calls for additional funds. Our share of such
future capital calls could total up to approximately $1,400,000. If we
elect not to fund our pro-rata portion of such capital calls, and
Warburg funds its portion, as they would be entitled to do, and as
they have since the formation of Gryphon, our ownership percentage of
Gryphon's common stock on an as-converted basis will be further
reduced (as low as 8%).

. We will need substantial additional funds to execute our plan for
developing and implementing an LNG receiving terminal business,
including engineering, environmental, marine, regulatory, construction
and legal work, including any such work involved in permitting and
FERC filings related to our development of a second and third
potential site. Such costs are estimated to be approximately
$3,000,000 per year for each terminal to be developed.

Additional capital could be obtained from a combination of funding sources, many
of which may have a material adverse effect on our business, results of
operations and financial condition. These potential funding sources include:

. cash flow from operating activities, which is sensitive to prices we
receive for our oil and natural gas,

. borrowings from financial institutions, which may subject us to
certain restrictive covenants, including covenants restricting our
ability to raise additional capital or pay dividends,

. 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 would cause
dilution of our common stock,

. sales of portions of our working interest in the prospects within our
exploration program, which would reduce future revenues from our
exploration program,

. sale to an industry partner of a participation in our exploration
program, which would reduce future revenues from our exploration
program,

. sale of all or a portion of our producing oil and gas properties,
which would reduce future revenues,

. additional sales of interests in our LNG projects, and

. arrangement of a business development loan from, or prepayment of
terminal use fees by, prospective sellers or purchasers of LNG.

Our ability to raise additional capital will depend on our results of operations
and the status of various capital and industry markets at the time such
additional capital is sought. Accordingly, capital may not become available to
us from any particular source or at all. Even if additional capital becomes
available, it may not be on terms acceptable to us. Failure to obtain additional
financing on acceptable terms may have a material adverse effect on our
business, results of operations and financial condition.

BECAUSE OF OUR LACK OF DIVERSIFICATION, FACTORS HARMING THE OIL AND GAS INDUSTRY
IN GENERAL, INCLUDING DOWNTURNS IN PRICES FOR OIL AND GAS, WOULD BE ESPECIALLY
HARMFUL TO US.

We are an independent energy company and are not actively engaged in any other
industry. Our revenues and results of operation are substantially dependent on
the oil and gas industry in general and the prevailing prices for oil and gas in
particular. Circumstances that harm the oil and gas industry in general will
have an especially harmful effect on us. 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:

. 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 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 and gas.

It is likely that adverse changes in the oil market or the regulatory
environment would have an adverse effect on our business, results of operations
and financial condition, including our ability to develop and implement our LNG
project and to obtain capital from lending institutions, industry participants,
private or public investors or other sources.

WE EXPERIENCE INTENSE COMPETITION IN THE OIL AND GAS INDUSTRY, WHICH MAY MAKE IT
DIFFICULT FOR US TO SUCCEED.

The oil and gas industry is highly competitive. If we are unable to compete
effectively, we will not succeed. A number of factors may give our competitors
advantages over us. For example, 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.
In addition, the businesses of such competitors are in many cases more
diversified than ours. We may not be able to compete effectively with such
companies. Moreover, the oil and gas industry competes with other industries in
supplying the energy and fuel needs of industrial, commercial and other
consumers. Increased competition causing over supply and depressed prices could
have a substantially negative impact on our operating revenues.

WE ARE SUBJECT TO FLUCTUATIONS IN ENERGY PRICES OR SUPPLY OF LIQUEFIED NATURAL
GAS THAT WOULD BE PARTICULARLY HARMFUL TO OUR LNG RECEIVING TERMINALS BUSINESS
BECAUSE OF ITS DEVELOPMENTAL STAGE.

If LNG prices are higher than prices of domestically produced natural gas or
natural gas derived from other sources, our ability to compete with such
suppliers may be negatively impacted. In addition, in the event the supply of
LNG is limited or restricted for any reason, our ability to profitably operate
an LNG receiving facility could be materially impacted. Revenues generated by an
LNG receiving terminal depend on the volume of LNG processed and the price of
the natural gas produced, both of which can be affected by the price of natural
gas and natural gas liquids.

WE ARE SUBJECT TO SIGNIFICANT OPERATING HAZARDS AND UNINSURED RISKS, ONE OR MORE
OF WHICH MAY CREATE SIGNIFICANT LIABILITIES FOR US.

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. In accordance with customary industry practices, we intend to maintain
insurance against some, but not

all, of these risks and losses. Moreover, we may not be able to maintain
adequate insurance in the future at rates we consider reasonable. The occurrence
of a significant event not fully insured or indemnified against could seriously
harm our business, results of operations and financial condition.

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 the event we complete the LNG receiving terminal, the operations of such
facility will be subject to the inherent risks normally associated with those
operations, including explosions, pollution, release of toxic substances, fires,
hurricanes and adverse weather conditions and other hazards, each of which could
result in damage to or destruction of our facilities or damage to persons and
property. In addition, our operations face possible risks associated with acts
of aggression on our assets. If any of these events were to occur, we could
suffer substantial losses. We will maintain insurance against these types of
risks to the extent and in the amounts that we believe are reasonable. Our
financial condition and operations could be adversely affected if a significant
event occurs that is not fully covered by insurance.

WE ARE SUBJECT TO SIGNIFICANT EXPLORATION RISKS, INCLUDING THE RISK THAT WE MAY
NOT BE ABLE TO FIND OR PRODUCE ENOUGH OIL AND GAS TO GENERATE ANY PROFITS.

Our exploration activities involve significant risks, including the risk that we
may not be able to find or produce enough oil and gas to generate any profits.
The wells we drill may not discover any oil or gas. Further, there is no way to
know in advance of drilling and testing whether any prospect 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. This methodology, however, requires greater
pre-drilling expenditures than traditional drilling strategies. Even when fully
used and properly interpreted, 3D seismic data can only assist us in identifying
subsurface reservoirs and hydrocarbon indicators, and will not allow us to
determine conclusively if hydrocarbons will in fact be present and recoverable.
If our exploration efforts are unsuccessful, our business and financial
condition will be substantially harmed.

WE MAY NOT BE ABLE TO ACQUIRE THE OIL AND GAS LEASES WE NEED TO SUSTAIN
PROFITABLE OPERATIONS.

In order to engage in oil and gas exploration in the areas covered by our 3D
seismic data, we must first acquire rights to conduct exploration and recovery
activities on such properties. We may not be successful in acquiring farm-outs
(agreements whereby the owner of lease interests grants to a third party the
right to earn an assignment of an interest in the lease, typically by drilling
one or more wells), seismic permits, lease options, leases or other rights to
explore for or recover oil and gas. Both the United States Department of the
Interior and the States of Texas and Louisiana award oil and gas leases on a
competitive bidding basis. Non-governmental owners of the onshore mineral
interests within the area covered by our exploration program are not obligated
to lease their mineral rights to us except where we have already obtained lease
options. In addition, other major and independent oil and gas companies with
financial resources significantly greater than ours may bid against us for the
purchase of oil and gas leases. If we are unsuccessful in acquiring these
leases, permits, options and other interests, the area covered by our 3D seismic
data that could be explored through drilling will be significantly reduced, and
our business, results of operations and financial condition will be
substantially harmed.

IF WE ARE UNABLE TO OBTAIN SATISFACTORY TURNKEY CONTRACTS, WE MAY HAVE TO ASSUME
ADDITIONAL RISKS AND EXPENSES WHEN DRILLING WELLS.

We anticipate that any wells drilled in which we 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.

Circumstances may arise, however, 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 on a day-rate basis. Under a
day-rate drilling contract, the operator pays an agreed sum for each day of
drilling required to reach contract depth. All risk and expense of drilling a
well to total

depths lies with the operator in day-rate contracts. The drilling of such test
wells would subject us 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. These liabilities, if incurred, may have a materially adverse
impact on our business and financial condition.

EXISTING AND FUTURE UNITED STATES GOVERNMENTAL REGULATION, TAXATION AND PRICE
CONTROLS COULD SERIOUSLY HARM US.

Oil and gas operations are subject to extensive federal, state and local laws
and regulations that regulate the discharge of materials into the environment or
otherwise relate to the protection of 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
areas where we plan to conduct activities, there are 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, if acquired, would 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 FERC. 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.

Our operations are also subject to extensive federal, state and local laws and
regulations governing the discharge of oil and hazardous materials into the
environment or otherwise relating to environmental protection. These laws and
regulations may require the acquisition of a permit before drilling commences,
restrict or prohibit the types, quantities and concentration of substances that
can be released into the environment or wastes that can be disposed of in
connection with drilling and production activities, prohibit drilling activities
on certain lands lying within wetlands or other protected areas and impose
substantial liabilities for pollution or releases of hazardous substances
resulting from drilling and production operations. Failure to comply with these
laws and regulations may also result in civil and criminal fines and penalties.
Moreover, state and federal environmental laws and regulations may become more
stringent.

Federal laws and regulations such as the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Clean Air Act ("CAA"), the Oil
Pollution Act of 1990 ("OPA") and the Clean Water Act ("CWA") and analogous
state laws 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.

THERE IS ONLY LIMITED TRADING IN OUR COMMON STOCK, WHICH MAKES OUR STOCK MORE
DIFFICULT TO SELL THAN THE STOCK OF COMPANIES WITH MORE ACTIVE MARKETS.

There is only limited trading in our common stock, which makes our stock more
difficult for an investor to sell than the stock of companies with more active
markets. For the year 2002, the average daily trading volume of our common stock
on The American Stock Exchange was approximately 17,000 shares. This offering of
the common stock is unlikely to make the trading market for our common stock any
more active.

WE HAVE NOT PAID DIVIDENDS AND DO NOT EXPECT TO DO SO IN THE FORESEEABLE FUTURE,
SO OUR STOCKHOLDERS WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR INVESTMENT
WITHOUT SELLING THEIR SHARES.

We have not paid dividends since our inception and do not expect to in the
foreseeable future, so our stockholders will not be able to receive a return on
their investments without selling their shares. We presently anticipate that all
earnings, if any, will be retained for development of our business. 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 IN THE VALUE OF THEIR SHARES BECAUSE
OF ADDITIONAL ISSUANCES OF SHARES.

Any issuance of common stock by us may result in a reduction in the book value
per share or market price per share of our outstanding shares of common stock
and will reduce the proportionate ownership and voting power of such shares. We
have 45,000,000 authorized shares of stock, consisting of 40,000,000 shares of
common stock, and 5,000,000 shares of preferred stock. As of May 14, 2003,
approximately 63% of the shares of the common stock remained unissued. Our 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 common stock,
among other reasons, in order to raise capital to sustain operations, and/or to
finance future oil and gas exploration projects. In addition, we have reserved
3,267,844 shares of the common stock for issuance upon the exercise of
outstanding warrants and 2,000,000 shares of the common stock for issuance upon
the exercise of stock options. As of May 14, 2003, there were 1,732,361 issued
and outstanding options to purchase common stock. To the extent that outstanding
warrants and options are exercised, the percentage ownership of common stock of
our stockholders will be diluted. Moreover, the terms upon which we will be able
to obtain additional equity capital may be adversely affected because the
holders of outstanding warrants and options can be expected to exercise them at
a time when we would, in all likelihood, be able to obtain any needed capital on
terms more favorable than the exercise terms provided by such outstanding
securities. In the event of the exercise of a substantial number of warrants and
options, within a reasonably short period of time after the right to exercise
commences, the resulting increase in the amount of the common stock in the
trading market could substantially adversely affect the market price of the
common stock or our ability to raise money through the sale of equity
securities.

WE DEPEND ON KEY PERSONNEL AND COULD BE SERIOUSLY HARMED IF WE LOST THEIR
SERVICES.

We depend on our executive officers for 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 on our ability to attract and retain additional qualified
personnel. Although we have agreements relating to compensation and benefits
with certain of our executive officers, we do not have any employment contracts
or other agreements with key personnel binding them to provide services for any
particular term. In addition, our future success will depend in part on our
ability to attract and retain additional qualified personnel. We currently have
14 full-time employees.

WE DEPEND ON INDUSTRY PARTNERS AND COULD BE SERIOUSLY HARMED IF THEY DO NOT
PERFORM SATISFACTORILY, WHICH IS USUALLY NOT WITHIN OUR CONTROL.

Because we have few employees and limited operating revenues, we are and will
continue to be largely dependent on industry partners for the success of our oil
and gas exploration projects. We could be seriously harmed if our industry
partners do not perform satisfactorily on projects that affect us. We often have
and will continue to have no control over factors that would influence the
performance of our partners.

WE ARE CONTROLLED BY A SMALL NUMBER OF PRINCIPAL STOCKHOLDERS WHO MAY EXERCISE A
PROPORTIONATELY LARGER INFLUENCE ON US THAN OUR STOCKHOLDERS WITH SMALLER
HOLDINGS.

We are controlled by a small number of principal stockholders who may do things
that are not in the interests of our stockholders with smaller holdings. BSR
Investments, Ltd. (BSR) is an entity controlled by the mother of Charif Souki,
our chairman. BSR owns approximately 9% of our outstanding common stock.
Accordingly, it is likely that BSR will have significant influence on the
election of our directors and on our management, operations and affairs,
including the ability to prevent or cause a change in control of our company.

ANTI-TAKEOVER PROVISIONS OF OUR CERTIFICATE OF INCORPORATION, BYLAWS AND
DELAWARE LAW COULD ADVERSELY IMPACT A POTENTIAL ACQUISITION BY THIRD PARTIES
THAT MAY ULTIMATELY BE IN THE FINANCIAL INTERESTS OF OUR STOCKHOLDERS.

Our certificate of incorporation, bylaws and the Delaware General Corporation
Law contain provisions that may discourage unsolicited takeover proposals. These
provisions could have the effect of inhibiting fluctuations in the market price
of our shares that could result from actual or rumored takeover attempts,
preventing changes in our management or limiting the price that investors may be
willing to pay for shares of common stock. These provisions, among other things,
authorize the board of directors to designate the terms of and to issue new
series of preferred stock, to limit the personal liability of directors, to
require us to indemnify directors and

officers to the fullest extent permitted by applicable law and to impose
restrictions on business combinations with some interested parties.

A SIGNIFICANT PORTION OF OUR VALUE IS DERIVED FROM OUR OWNERSHIP INTEREST IN
GRYPHON, OVER WHICH WE EXERCISE NO DAY-TO-DAY CONTROL.

We own 100% of the outstanding common stock of Gryphon (9.3% effective ownership
after giving effect to the conversion of Gryphon's preferred stock outstanding
at December 31, 2002) and a significant portion of our value is derived from
this investment. We do not exercise control over Gryphon and therefore do not
have the ability to effect a change of control of Gryphon. Accordingly,
Gryphon's management team could make business decisions without our consent that
could impair the value of our investment in Gryphon.

WE MAY HAVE TO TAKE ACTIONS THAT ARE DISRUPTIVE TO OUR BUSINESS STRATEGY TO
AVOID REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940.

The Investment Company Act of 1940 requires registration for companies that are
engaged primarily in the business of investing, reinvesting, owning, holding or
trading in securities. A company may be deemed to be an investment company if it
owns investment securities with a value exceeding 40% of the value of its total
assets (excluding government securities and cash items) on an unconsolidated
basis, unless an exemption or safe harbor applies. Securities issued by
companies other than majority-owned subsidiaries are generally counted as
investment securities for purposes of the Investment Company Act. Our equity
interests in Gryphon and Development could be counted as investment securities.
Therefore, we could be considered an investment company in the future if we do
not obtain an exemption or qualify for a safe harbor. As a result, fluctuations
in the value, or the income and revenues attributable to us from our ownership,
of interests in companies we do not control could cause us to be deemed an
investment company. Registration as an investment company would subject us to
restrictions that are inconsistent with our fundamental business strategy. We
may have to take actions, including buying, refraining from buying, selling or
refraining from selling securities or other assets, contrary to what we
otherwise deem to be in our best interest in order to continue to avoid
registration under the Investment Company Act.

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, N.W., Washington, D.C.
20549, and at the following regional offices of the Securities and Exchange
Commission: New York Regional Office, 233 Broadway, 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.

Cheniere provides public access to its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to these
reports filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. These reports may be accessed free of charge through
Cheniere's internet website (located at www.cheniere.com), where the Company
provides a link to the Securities and Exchange Commission's website (at
www.sec.gov).

Our common stock is quoted on The American Stock Exchange. You may also read our
reports, proxy and information statements and other information at the American
Stock Exchange, 86 Trinity Place, New York, New York 10006.

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 being offered. 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.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

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 other documents that have been
or will be filed with the Securities and Exchange Commission. 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
superseded by the information in this prospectus or in information incorporated
by reference in this prospectus. Also, 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 Annual Report on Form 10-K for the fiscal year ended December 31,
2002, as filed on March 27, 2003 (File No. 1-16383).

. Our definitive proxy statement on Schedule 14A, as filed on April 29,
2003 (File No. 1-16383).

. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2003, as filed on May 9, 2003 (File No. 1-16383).

We will provide you, without charge, a copy of the documents incorporated by
reference in this prospectus. We will not provide a copy of the exhibits to
documents incorporated by reference, unless those exhibits are specifically
incorporated by reference into those documents. You may obtain a copy of the
documents incorporated by reference in this prospectus at our website at
www.cheniere.com or by requesting them in writing or by telephone from:

Cheniere Energy, Inc.
333 Clay Street, Suite 3400
Houston, Texas 77002-4102
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 or other
jurisdiction 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. We will disclose any material changes in our
affairs in an amendment to this prospectus, a prospectus supplement or a future
filing with the SEC incorporated by reference in this prospectus.

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.

Statements, other than statements of historical facts, included in this
prospectus that address activities, events or developments that begin with words
such as "intend," "expect," "project," "believe" or "anticipate" are
forward-looking statements that are based on management's then current views and
assumptions regarding future events. 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;

. statements expressing beliefs and expectations regarding the
development of our LNG receiving terminal business; and

. statements about non-historical year 2003 information.

These statements reflect our plans and assumptions about future events and are
subject to uncertainties, many of which are outside our control. Actual results
could differ materially from estimates and other forward-looking statements. For
a further discussion of important factors that could affect us and cause
materially different results please see the discussion under the heading Risk
Factors beginning on page 4. The statements in this prospectus are made as of
May 15, 2003, and the events described in the forward-looking statements might
not occur or might occur to a materially different extent than described in this
filing. We undertake no duty to update or revise any of our forward-looking
statements contained in this prospectus, any accompanying prospectus supplement
or in any documents we have incorporated by reference, whether as a result of
new information, future events or otherwise.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares offered by this
prospectus. Warrants for which the underlying common stock is being registered
in this registration statement are exercisable at prices ranging from $1.06 to
$3.00 per share. The detailed terms of our warrants are set forth under
"Description of Securities - Warrants." We expect to use any proceeds we receive
from the exercise of warrants for ongoing activities related to oil and gas
exploration activities, development of our second and third LNG receiving
terminal sites, working capital and/or general corporate purposes.

SELLING STOCKHOLDERS

The following table sets forth information known to us with respect to
beneficial ownership of our common stock as of May 14, 2003 by each of the
selling stockholders. Beneficial ownership is determined in accordance with the
rules and regulations of the Securities and 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 May 14, 2003, on
which we date we had outstanding an aggregate of 14,840,285 shares of common
stock. Except as indicated otherwise in the footnotes below, and subject to
community property laws where applicable, we believe based on information
furnished by the selling stockholders that the persons named in the table below
have sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them. All warrants shown in the applicable column
are immediately exercisable. The table assumes the sale of all shares offered
hereby and no other purchases or sales of Cheniere's common stock by the selling
stockholders.

Cheniere Energy, Inc.
Selling Stockholders Table

Shares of
Shares Beneficially Common Stock Shares Beneficially
Owned Prior Underlying Owned After
to Offering Number of Warrants to the Offering
----------------------- Shares of Purchase ----------------------
Name of Selling Stockholder Number Percent Common Stock Common Stock Number Percent
------------------------------------------------------------------------------------------------------------------------------------

Aton Select Fund, Ltd. 150,000 1.0% 150,000 -
Bald Eagle Fund, Ltd. 8,698 * 2,500 6,198 *
Bank Insinger de Beaufort N.V. 37,500 * 37,500 -
Bernard, Bruce 75,000 * 75,000 -
Bock, Michael E. 75,000 * 6,250 68,750 *
Contango Oil & Gas Company 300,000 2.0% 150,000 150,000 -
Crest Financial Limited 750,000 5.1% 750,000 -
Delaware Charter Guarantee & Trust
Company TTEE FBO
Anthony J. Pace 81,000 * 20,000 61,000 *
Economides, Michael 75,000 * 75,000 -
Freeport LNG Investments, LLC 700,000 4.7% 700,000 -
Gross, Jonathan S. 103,834 * 334 103,500 *
Henry, William 50,000 * 50,000 -
Hughes, Jon C. 58,334 * 8,334 50,000 *
Kensington Partners, L.P. 128,444 * 18,334 110,110 *
McCain, Lon 37,500 * 6,250 31,250 *
MDC Group 163,500 1.1% 12,500 151,000 1.0%
MM & B Holdings, LLC, a Delaware limited
liability company 551,458 3.7% 250,000 301,458 2.0%
Morgens, Edwin H. 145,000 1.0% 20,000 125,000 *
Oligney, Ronald 75,000 * 75,000 -
Petrie, Thomas A. 145,833 1.0% 20,833 125,000 *
Pleyel Holdings, Limited 200,000 1.3% 200,000 -
Power Capital Partners LLC 50,000 * 50,000 -
Reimer, Charles M. 539,643 3.6% 232,500 307,143 2.1%
Robinson Jr., Joe Sam 149,455 1.0% 69,390 80,065 *
Souki, Charif 444,017 3.0% 250,000 194,017 1.3%
Sutton, Nicholas J. 58,333 * 8,333 50,000 *
Turkleson, Don A. 161,084 1.1% 4,000 157,084 1.1%
William E. Mayer Holdings, Inc. 145,834 1.0% 20,834 125,000 *
------------- --------- ------------- ------------
5,459,467 1,542,892 1,870,000 2,046,575
============= ========= ============= ============

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:

. 792,892 shares of common stock issued in a private placement in May
2003

. 750,000 shares of common stock issued pursuant to a settlement and
purchase agreement in April 2003

. 850,000 shares issuable upon the exercise of warrants issued pursuant
to the Freeport LNG Terminal sale

. 232,500 shares issuable upon the exercise of warrants representing the
replacement of stock options to our former president in connection
with the formation of Freeport

. 337,500 shares issuable upon the exercise of warrants issued in
consideration for consulting services

. 250,000 shares issuable upon the exercise of warrants to our president
and chief executive officer in connection with employment services

. 200,000 shares issuable upon the exercise of warrants issued in
conjunction with a bridge financing facility.

In May 2003, we issued 792,892 shares of common stock to seventeen investors at
a price of $1.50 per share pursuant to Regulation D adopted by the Securities
and Exchange Commission. The purchase price of the shares included cash of
$1,189,338 and the surrender of existing warrants to purchase 792,892 shares of
our common stock.

On April 15, 2003, we issued 750,000 shares of our common stock to satisfy a
closing requirement related to our February 2003 sale of a 60% interest in our
Freeport LNG project. The issuance was made pursuant to a contingent contractual
obligation related to our settlement and purchase agreement whereby we acquired
an option to lease the Freeport LNG terminal site.

In February 2003, we issued warrants to purchase 700,000 shares of common stock
to Freeport LNG Investments, LLC in connection with the formation of Freeport
LNG Development, L.P. The warrants are exercisable at any time on or before
February 12, 2013 at a price of $2.50 per share.

In February 2003, we issued warrants to purchase 300,000 shares of common stock
to Contango Oil & Gas Company in connection with the formation of Freeport LNG
Development, L.P. The warrants are exercisable at any time on or before February
26, 2013 at a price of $2.50 per share. Contango surrendered warrants to
purchase 150,000 shares of common stock in connection with its participation in
Cheniere's May 2003 private placement.

In February 2003, we issued to our former president warrants to purchase 241,250
shares of common stock in exchange for existing employee stock options to
purchase the same number of shares on substantially similar terms. In April
2003, warrants to purchase 8,750 expired.

In April 2002, we issued warrants to purchase 50,000 shares of common stock in
connection with the sale of oil and gas properties. The warrants are exercisable
at any time on or before April 22, 2007 at an exercise price of $2.50 per share.

In August 2002, we issued to a consultant who assisted in marketing our LNG
terminal capacity warrants to purchase 50,000 shares of common stock. The
warrants are exercisable at any time on or before August 26, 2007 at a price of
$1.20 per share.

In December 2002, we issued to a consultant who assisted in our investor
relations program warrants to purchase 12,500 shares of common stock. The
warrants are exercisable at any time on or before December 19, 2007 at a price
of $1.25 per share.

In February 2003, we issued to each of three consultants who provided certain
engineering and other services related to the Freeport LNG Terminal warrants to
purchase 75,000 shares of common stock. The warrants are exercisable at any time
on or before February 26, 2013 at a price of $2.50 per share.

In April 2003, we issued to our president and chief executive officer warrants
to purchase 250,000 shares of common stock in connection with his employment by
Cheniere. The warrants are exercisable at any time on or before April 16, 2008
at an exercise price of $1.80 per share.

In March 2002, we issued warrants to purchase 150,000 shares of common stock in
conjunction with a bridge financing facility. The warrants are exercisable on or
before March 7, 2012 at an exercise price of $2.50 per share. In May 2002, we
issued warrants to purchase an additional 50,000 shares of common stock in
conjunction with the March 2002 bridge financing facility. The warrants are
exercisable at any time on or before May 6, 2012 at an exercise price of $2.50
per share.

DESCRIPTION OF SECURITIES

We have 45,000,000 authorized shares of capital stock, consisting of 40,000,000
shares of common stock, having a par value of $0.003 per share, and 5,000,000
shares of preferred stock, having a par value of $0.0001 per share.

COMMON STOCK

As of May 14, 2003, there were 14,840,285 shares of common stock outstanding.
All of such outstanding shares of common stock are fully paid and nonassessable.
Each share of common stock has an equal and ratable right to receive dividends
when, as and if declared by the board of directors out of assets legally
available therefor and subject to the dividend obligations to the holders of any
preferred stock then outstanding.

In the event of our liquidation, dissolution or winding up, 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.

PREFERRED STOCK

As of the date of this prospectus, there are 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 some
circumstances, make it more difficult for a third party to gain control of
Cheniere.

WARRANTS

As of May 14, 2003, we have issued and outstanding warrants to purchase
3,427,010 shares of common stock.

The warrants do not confer upon the holders thereof any voting or other rights
of stockholders.

POSSIBLE ANTI-TAKEOVER PROVISIONS

Our amended and restated certificate of incorporation contains provisions that
might be characterized as anti-takeover provisions. Such provisions may render
more difficult possible takeover proposals to acquire control of Cheniere and
make removal of our management more difficult.

As described above, our certificate of incorporation 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 our 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 some
circumstances, make it more difficult for a third party to gain control of
Cheniere.

We are incorporated under the laws of the State of Delaware. Section 203 of the
Delaware General Corporation Law prevents an interested stockholder 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 at
least one of the following conditions is met:

. the corporation's board of directors had earlier approved either the
business combination or the transaction by which the stockholder
became an interested stockholder,

. upon attaining such 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 and
certain employee stock plans, or

. 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.

The Delaware General Corporation Law defines an interested stockholder as a
stockholder owning 15 percent or more of a corporation's outstanding voting
stock. Cheniere is currently subject to Section 203.

In addition, BSR Investments, Ltd., an entity controlled by the mother of Charif
Souki, the chairman of our board of directors, owns approximately 9% of the
outstanding shares of our common stock. Accordingly, it is likely that BSR
Investments 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 some expenses of registering of the shares offered by
this prospectus under federal and state securities laws.

We are registering the shares to be sold under this prospectus on behalf of the
selling stockholder. We will receive no proceeds from this offering. When used
below, the term "selling stockholders" includes the selling stockholder and its
pledgees, donees, transferees or other successors-in-interest selling shares
received from the selling stockholder as a gift, distribution or other
non-sale-related transfer after the date of this prospectus, if any.

Shares of common stock covered hereby may be offered and sold at any time and
from time to time by the selling stockholder. The selling stockholder will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholder may sell the shares being offered by
this prospectus:

. on The American Stock Exchange, or otherwise at prices and at terms
then prevailing or at prices related to the then-current market price;
or

. in private sales at negotiated prices directly or through one or more
brokers, who may act as agent or as principal.

The shares may be sold by one or more of, or a combination of, the following:

. a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;

. purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;

. an exchange distribution in accordance with the rules of such
exchange;

. ordinary brokerage transactions and transactions in which the broker
solicits purchasers; or

. privately negotiated transactions.

The selling stockholder and any underwriter, dealer or agent who participate, in
the distribution of such shares may be deemed to be an underwriter under the
Securities Act, and any discount, commission or concession received by such
persons and any profit on the resale of the shares purchased by them may be
deemed to be an underwriting discount or commission under the Securities Act. We
have agreed to indemnify the selling stockholder against some liabilities
arising under the Securities Act. Because selling stockholders may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, the
selling stockholders will be subject to the prospectus delivery requirements of
the Securities Act. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 promulgated under the Securities Act may
be sold under Rule 144 rather than pursuant to this prospectus.

The selling stockholders may enter into hedging transactions with broker-dealers
in connection with distributions of the shares or otherwise. In such
transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders also may sell shares short and redeliver the shares to
close out such short positions. The selling stockholders may enter into option
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The selling stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.

Any broker-dealer participating in such transactions as agent may receive
compensation in the form of commissions, discounts, or concessions from the
selling stockholder 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 stockholder. Broker-dealers may agree with the selling stockholder 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
stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the selling stockholder. These
transactions would be either at market prices prevailing at the time of sale or
at negotiated prices. These transactions may involve crosses and block
transactions and may involve sales to and through other broker-dealers,
including transactions of the nature described above. In connection with such
re-sales, the broker-dealers may pay to or receive from the purchasers of the
shares commissions computed as described above.

Under the rules and regulations of the Securities Exchange Act of 1934, the
selling stockholder may be a person engaged in the distribution of the common
stock and may not simultaneously engage in market making activities with respect
to our common stock for a period of five business days prior to the commencement
of the distribution. In addition, the selling stockholder will be subject to
applicable provisions, rules and regulations under the Securities Exchange Act
of 1934, including Regulation M, which may limit the timing of purchases and
sales of shares of common stock by the selling stockholder. We will make copies
of this prospectus available to the selling stockholders and have informed them
of the need for delivery of copies of this prospectus to purchasers at or prior
to the time of any sale of the shares.

The selling stockholder may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against some liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealer, 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-dealer
purchases shares as principal. The selling stockholders will bear all
commissions and discounts, if any, attributable to the sales of the shares.

To comply with the securities laws of some states, if applicable, the common
stock will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, some states prevent the common stock from being
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.

We will keep this registration statement or a similar registration statement
effective until the earlier to occur of:

. the date that all securities registered under this registration
statement have been disposed of in accordance with the plan of
disposition indicated above; or

. the date that all securities registered under this registration
statement have become eligible for sale under Rule 144(k) of the
Securities Act.

No sales may be made pursuant to this prospectus after the earlier of these two
dates unless we amend or supplement this prospectus to indicate that we have
agreed to extend such period of effectiveness.

In addition, upon being notified by a selling stockholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon
for us by Andrews & Kurth L.L.P., Houston, Texas.

EXPERTS

The consolidated financial statements incorporated in this prospectus by
reference to Cheniere's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002, have been so incorporated in reliance on the reports of Mann
Frankfort Stein & Lipp CPAs, L.L.P., PricewaterhouseCoopers LLP and KPMG LLP,
each independent accountants, given on the authority of each said firm as
experts in auditing and accounting.

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

We will bear no expenses in connection with any sale or other distribution by
the selling stockholder 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 registration fee.

SEC registration fee $ 600.00
Legal fees and expenses 15,000.00
Accounting fees and expenses 20,000.00
Miscellaneous expenses 1,400.00
----------
Total $37,000.00
==========

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 some circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933. Our certificate of incorporation and by-laws provide for
indemnification of our directors, officers, employees and other agents to the
extent and under the circumstances permitted by the Delaware General Corporation
Law. We have also entered into agreements with our directors and officers that
will require us, among other things, to indemnify them against some liabilities
that may arise by reason of their status or service as directors to the fullest
extent not prohibited by law. In addition, we carry director and officer
liability insurance.

In connection with this offering, the selling stockholder has agreed to
indemnify us, our directors and officers and each such person who controls us,
against any and all liability arising from inaccurate information provided to us
by the selling stockholder and contained herein.

Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of us pursuant to
the foregoing provisions, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission 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 us of expenses incurred or paid by a director, officer or
controlling person of us 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, us 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.

Item 16. Exhibits.

Exhibits.

3.1 Amended and Restated Certificate of Incorporation of Cheniere Energy, Inc.
(Cheniere) (Incorporated by reference to Exhibit 3.1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 0-9092) as
filed on August 16, 1999)

3.2 By-laws of Cheniere as amended through April 7, 1997 (Incorporated by
reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1998 (File No. 0-9092) filed on March 29, 1999)

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))

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5.1 Opinion of Andrews & Kurth L.L.P.

23.1 Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1)

23.2 Consent of Mann Frankfort Stein & Lipp CPAs, LLP

23.3 Consent of PricewaterhouseCoopers LLP

23.4 Consent of KPMG LLP

24.1 Power of attorney (see signature page)

Item 17. Undertakings.

Cheniere 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 any 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
of 1933, each such 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 Cheniere's annual report pursuant to Section 13(a) or Section
15(d) of the Securities 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.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, 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 the City of Houston, State of Texas, on May 15, 2003.

CHENIERE ENERGY, INC.

By: /s/ CHARIF SOUKI
----------------
Charif Souki
President and Chairman of the Board

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, Charles M.
Reimer and Don A. Turkleson, and each of them acting individually, as his or her
attorney-in-fact, each with full power of substitution, for him or her in any
and all capacities to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorney to any and all amendments to said Registration
Statement.

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.

Signature Title Date

/s/ CHARIF SOUKI President and Chairman of the Board May 15, 2003
----------------------------
Charif Souki

/s/ WALTER L. WILLIAMS Vice Chairman of the Board and Director May 15, 2003
----------------------------
Walter L. Williams

/s/ DON A. TURKLESON Chief Financial Officer May 15, 2003
---------------------------- (Principal Financial and Accounting Officer)
Don A. Turkleson

/s/ NUNO BRANDOLINI Director May 15, 2003
----------------------------
Nuno Brandolini

/s/ KEITH F. CARNEY Director May 15, 2003
----------------------------
Keith F. Carney

/s/ PAUL J. HOENMANS Director May 15, 2003
----------------------------
Paul J. Hoenmans

/s/ JOHN K. HOWIE Director May 15, 2003
----------------------------
John K. Howie

/s/ CHARLES M. REIMER Director May 15, 2003
----------------------------
Charles M. Reimer

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