Shares of Cheniere Energy Partners (CQP), have fallen from $15 to $11 in the past 24 hours due to the sell-off occurring within its parent company, Cheniere Energy (LNG), which owns 90% of CQP.

From what I can gather, the trouble is a sudden shift in the fundamental story.

The partnership, which owns 100% of the Sabine Pass terminal took its first delivery of liquefied natural gas yesterday. You'd think that would be great news.

However, this short-term good news is being overwhelmed by concerns the Sabine Pass terminal is in trouble because China and other Asian countries are contracting to buy in excess of 100% of the liquefied natural gas supply on the market. The market seems to believe that this development will delay the flow of liquefied natural gas to Sabine and other U.S. liquefied natural gas terminals, cutting into projected cash flow. Liquefied natural gas supply is tight, and it means fewer shipments to Sabine until this fundamental supply/demand equation changes.

The fear that Cheniere Energy won't have the cash flow to service its $3 billion-plus debt has investors bailing on CQP. When a company's debt exceeds the present value of its expected future cash flow, the business model gets called into question, and that's what seems to be happening to the Cheniere Energy story. If imports shrink, it makes it hard for the company to support the dividend payout. That's the rub.

This week also saw the resignation of Cheniere Energy President Stan Horton.

"Given the successful completion of construction at Sabine Pass Phase I and Creole Trail Pipeline and the reduction in staff, Stan has decided that this was a good time to leave Cheniere and pursue other interests," said Charif Souki, chairman and chief executive officer of Cheniere.

I don't know what to make of it just yet, but the market didn't like the news.

I'll try to get more information for you by tomorrow.

Bryan Perry

Editor The 25% Cash Machine