Cheniere Energy Inc · S-1/A · On 10/2/96

Filed On 10/2/96   ·   SEC File 333-10905   ·   Accession Number 899243-96-1283

Pre-Effective Amendment to Registration Statement (General Form)   ·   Form S-1
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Document/Exhibit                   Description                      Pages   Size 

 1: S-1/A       Pre-Effective Amendment to Registration Statement     78    385K 
                          (General Form)                                         
 2: EX-23.4     Consent of Independent Public Accountants              1      4K 

S-1/A   ·   Pre-Effective Amendment to Registration Statement (General Form)
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As filed with the Securities and Exchange Commission on October 2, 1996     

                                                      Registration No. 333-10905

SECURITIES AND EXCHANGE COMMISSION    
WASHINGTON, D.C. 20549  
POST-EFFECTIVE AMMENDMENT NO. 1 
TO  
FORM S-1  
REGISTRATION STATEMENT  
UNDER 
THE SECURITIES ACT OF 1933  

CHENIERE ENERGY, INC. 
(Exact name of registrant as specified in its charter)  

                                                        · Enlarge/Download Table
                                                                                              

           DELAWARE                                 1382                       95-4352386     
(State or other jurisdiction                  (Primary Standard             (I.R.S. Employer  
of incorporation or organization)  Industrial Classification Code Number)  Identification No.)

TWO ALLEN CENTER  
1200 SMITH STREET, SUITE 1710 
HOUSTON, TEXAS 77002-4312 
(713) 659-1361  

(Address, including zip code and telephone number, including area code, of  
registrant's principal executive offices) 

WILLIAM D. FORSTER  
PRESIDENT AND CHIEF EXECUTIVE OFFICER 
CHENIERE ENERGY, INC. 
TWO ALLEN CENTER  
1200 SMITH STREET, SUITE 1710 
HOUSTON TEXAS 77002-4312  
(713) 659-1361  

(Name, address, including zip code, and telephone number, including area code,
of agent for service) 

Copies of all communications, including all communications sent 
to the agent for service, should be sent to:  
CAMILLE ABOUSLEIMAN, ESQ. 
DEWEY BALLANTINE  
1301 AVENUE OF THE AMERICAS 
NEW YORK, NEW YORK 10019  
(212) 259-8000  

  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  From time to
time after the effective date of this Registration Statement.                   

 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, 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: [ ]                                             

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PROSPECTUS                                                                      
2,844,211 SHARES  

CHENIERE ENERGY, INC. 
COMMON STOCK  
(PAR VALUE $.003 PER SHARE) 

This Prospectus relates to 2,844,211 shares of issued and outstanding 
common stock of Cheniere Energy, Inc., a Delaware corporation (the "Company" or 
"Cheniere"), par value $.003 per share (the "Common Stock"). The Common Stock   
was originally issued by Cheniere to certain holders of shares of common stock  
of Cheniere Energy Operating Co., Inc., a wholly-owned subsidiary of Cheniere,  
and to an "accredited investor" (as defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended (the "Securities Act")), pursuant to         
Regulation D promulgated under the Securities Act. See "Description of Capital  
Stock".                                                                         
   The Common Stock (ticker symbol "CHEX") is traded on the over-the-counter
market and quoted on the OTC Bulletin Board (the "Bulletin Board"). On September
27, 1996, the last reported sale price of the Common Stock on the Bulletin Board
was $3.125 per share.                                                           

   The Common Stock has been registered for sale by Selling Stockholders (as
defined herein) and may be offered by Selling Stockholders from time to time in 
transactions in the over-the-counter market, in negotiated transactions or a    
combination of such methods of sale, in each such case, at fixed prices which   
may be changed, at market prices prevailing at the time of sale, at prices      
related to prevailing market prices, or at negotiated prices. The Selling       
Stockholders may effect such transactions by selling shares of the Common Stock 
to or through broker-dealers, and such broker-dealers may receive compensation  
in the form of discounts, concessions or commissions from Selling Stockholders  
and/or purchasers of the Common Stock for whom such broker-dealers may act as   
agents or to whom they sell as principals, or both (which compensation as to a  
particular broker-dealer might be in excess of customary commissions). To the   
extent required, shares of the Common Stock, the name of the Selling            
Stockholder, the public offering price, the names of any such agent, dealer or  
underwriter, and any applicable commission or discount with respect to any      
particular offer will be set forth in an accompanying Prospectus Supplement. See
"Selling Stockholders" and "Plan of Distribution".                              

    None of the proceeds from the sale of the Common Stock will be received by
the Company. The Company has agreed, among other things, to bear all expenses   
(other than underwriting discounts and commissions, fees and expenses of        
investment bankers and brokerage commissions) incurred in connection with the   
registration and sale of the Common Stock covered by this Prospectus, including,
without limitation, all registration, listing and qualification fees, printers  
and accounting fees and fees and disbursements of counsel to the Company.       

SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN  
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT  
IN THE SECURITIES OFFERED HEREBY. 

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE 
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR   
ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION  
TO THE CONTRARY IS A CRIMINAL OFFENSE.  

The date of this Prospectus is October ___,1996   

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SUMMARY 

The following summary is qualified in its entirety by the detailed    
information and financial statements and the notes thereto appearing elsewhere  
in this Prospectus.                                                             

THE COMPANY 

GENERAL                                                                         

Cheniere Energy, Inc., a holding company ("Cheniere," together with   
Cheniere Operating (as defined below), the "Company"), is the owner of 100% of  
the outstanding common stock of Cheniere Energy Operating Co., Inc. ("Cheniere  
Operating"). Cheniere Operating is a Houston-based company formed for the       
purpose of oil and gas exploration and exploitation. The Company is currently   
involved in a joint exploration program which is engaged in the exploration for 
oil and natural gas along the Gulf Coast of Louisiana, onshore and in the       
shallow waters of the Gulf of Mexico. The Company commenced its oil and gas     
activities through such joint program in April 1996.                            

   The Company is involved with one major project in the pre-drilling stage.
The Company has entered into a joint exploration program pursuant to an         
Exploration Agreement between the Company and Zydeco Exploration, Inc.          
("Zydeco"), an operating subsidiary of Zydeco Energy, Inc. (the "Exploration    
Agreement"), with regard to a new proprietary 3-D seismic exploration project in
southern Louisiana (the "3-D Joint Venture"). The Company has the right to earn 
up to a 50% participation in the 3-D Joint Venture. The Company believes that   
the 3-D seismic survey (the "Survey") is the first of its size within the       
Transition Zone of Louisiana, an area extending a few miles on either side of   
the Louisiana State coastline. The Survey is to be conducted over certain areas 
located within a total area of approximately 255 square miles running 5 miles   
south and generally 3 to 5 miles north of the coastline in the most westerly 28 
miles of West Cameron Parish, Louisiana (the "Survey AMI"). The 3-D Joint       
Venture does not currently have rights to survey the entire Survey AMI and the  
extent of the Survey AMI which the 3-D Joint Venture will be entitled to survey 
is dependent upon its ability to obtain survey permits and similar rights.      
Currently, the 3-D Joint Venture has permits and similar rights to survey       
approximately 67% of the Survey AMI and is attempting to acquire rights to      
Survey additional portions of the Survey AMI. There is no assurance that the 3-D
Joint Venture will successfully obtain rights to survey additional portions of  
the Survey AMI. The 3-D Joint Venture will survey specific sections selected by 
it within the areas covered by such permits and rights. A seismic data          
acquisition contract has been signed and the 3-D Joint Venture has begun to     
conduct the survey.                                                             

On July 26, 1996, the Company signed a Letter of Intent with Poseidon 
Petroleum, LLC ("Poseidon") to purchase Poseidon's 47% working interest in      
undeveloped reserves in the Bonito Unit of the Pacific Outer Continental Shelf, 
offshore Santa Barbara County, California (the "Poseidon Interest"). The parties
are conducting due diligence and are negotiating a definitive purchase and sale 
agreement and related documentation. The transactions contemplated in the Letter
of Intent may be terminated by either party upon the occurrence of certain      
events and there can be no assurance that the Company will successfully         
consummate such transactions. Moreover, if such transactions are consummated,   
the Company expects that development of the reserves will not occur for at least
five years. There can be no assurance that the Company will successfully develop
the reserves or that the reserves will yield sufficient quantities of oil and   
gas to be economically viable.                                                  

The Company has not yet established oil and gas production, nor has it
booked proven oil and gas reserves.                                             

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BUSINESS STRATEGY                                                               

     The Company's objective is to expand the net value of its assets by growing
its oil and gas reserves in a cost efficient manner. The Company intends to     
pursue this objective by following an integrated strategy that includes the     
following elements:                                                             

.  FOCUS ON FEW PROJECTS WITH LARGE RESERVE POTENTIAL.                        

Louisiana Gulf Coast Transition Zone. The Company's current activities are
focused within one area, the Transition Zone of Louisiana. The Company    
believes that the Transition Zone, including the westernmost 28 miles of  
   Louisiana coastline that are within the Survey AMI, has significant remaining
undiscovered reserves. The 3-D Joint Venture therefore plans to focus its 
   efforts on certain areas, all located within the Survey AMI. In addition, the
substantial infrastructure along the Gulf Coast and in the shallow Gulf of
  Mexico permits the Company to lower its operating costs compared to those in
other geographic regions and facilitates the timely development of oil and
  gas discoveries. The Company's officers and Zydeco have extensive experience
   both onshore and offshore in the Gulf Coast and believe the 3-D Joint Venture
 is well positioned to evaluate, explore and develop properties in the area.

  Offshore California. The Company has signed a Letter of Intent with Poseidon
to purchase Poseidon's 47% working interest in undeveloped reserves in the
Bonito Unit of the Pacific Outer Continental Shelf, offshore Santa Barbara
County, California. An independent reserve report is being prepared to    
determine an estimate of the volume of undeveloped oil and gas reserves   
attributable to the Poseidon Interest. The parties are conducting due     
diligence and are negotiating a definitive purchase and sale agreement and
  related documentation. The transactions contemplated in the Letter of Intent
 may be terminated by either party upon the occurrence of certain events and
 there can be no assurance that the Company will successfully consummate the
   transactions contemplated by the Letter of Intent with Poseidon. Moreover, if
such transactions are consummated, the Company expects that development of
the reserves will not occur for at least five years. There can be no      
   assurance that the Company will successfully develop the reserves or that the
 reserves will yield sufficient quantities of oil and gas to be economically
viable.                                                                   

 .  MAINTAIN A SIGNIFICANT WORKING INTEREST IN EACH PROJECT. The Company has the
 right to earn up to a 50% participation in the 3-D Joint Venture. Under the
  terms of the Exploration Agreement, the Company must timely meet its payment
 obligations to the 3-D Joint Venture in order to reach a 50% participation.
The Company does not intend to be an operator in the area, but intends to 
   maintain a significant working interest to better leverage its administrative
and technical resources and to better influence operator decisions.       

.  UTILIZE THE LATEST EXPLORATION, DEVELOPMENT AND PRODUCTION TECHNOLOGY. The 
Company intends to use the latest technology to enhance the efficiency and
   economy of its exploration, development and production efforts. These include
  the use of advanced 3-D seismic acquisition and processing techniques in the
Survey AMI.                                                               

.  CONTROL OVERHEAD COSTS. The Company plans to maintain a small, but         
experienced working staff, and to leverage their talents by focusing on a 
relatively few projects which have high reserve potential in which it can 
obtain a high working interest, and to employ outside consultants and seek
 industry partners with the appropriate geographic and technical experience.
   Currently, the Company has no employees other than its executive officers and
one administrative assistant.                                             

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RISK FACTORS  

An investment in the common stock, par value $.003 per share, of the  
Company (the "Common Stock") involves a significant degree of risk. The         
following factors, together with the information provided elsewhere in this     
Prospectus, should be considered carefully in evaluating an investment in the   
Common Stock of the Company.                                                    

FACTORS RELATING TO THE COMPANY                                                 

Limited Operating History                                                 

Cheniere Energy, Inc., a holding company ("Cheniere," together with   
Cheniere Operating (as defined below), the "Company"), is the owner of 100% of  
the outstanding common stock of Cheniere Energy Operating Co., Inc. ("Cheniere  
Operating"). The Company has a limited operating history with respect to its oil
and gas exploration activities which were commenced through a joint exploration 
program in April 1996 by Cheniere Operating. Following a reorganization with    
Bexy Communications, Inc. ("Bexy"), Cheniere Operating became a wholly-owned    
subsidiary of Cheniere. During the fiscal year ended August 31, 1996, the       
Company incurred net losses of $286,819. The Company is likely to continue to   
incur losses during 1997, and possibly beyond, depending on whether it generates
sufficient revenue from producing reserves acquired either through acquisitions 
or drilling activities.                                                         

Limited Assets                                                            

The Company has not yet established oil and gas production, nor has it
booked proven oil and gas reserves. Currently, the Company's primary asset is   
its interest in a joint exploration program pursuant to an Exploration Agreement
(the "Exploration Agreement") between the Company and Zydeco Exploration, Inc.  
("Zydeco") with regard to a new proprietary 3-D seismic exploration project in  
Southern Louisiana (the "3-D Joint Venture"). Therefore, the Company is highly  
dependent on the success of the 3-D Joint Venture and the Company's ability to  
acquire operating assets in the future. While the Company has signed a Letter of
Intent to purchase a working interest in undeveloped reserves in the Bonito Unit
of the Pacific Outer Continental Shelf, offshore Santa Barbara County, there is 
no assurance that the Company will successfully consummate the transactions     
contemplated by such Letter of Intent. Moreover, if such transactions are       
consummated, the Company expects that development of the reserves will not occur
for at least five years. There can be no assurance that the Company will        
successfully develop the reserves or that the reserves will yield sufficient    
quantities of oil and gas to be economically viable. See "Business and          
Properties."                                                                    

Need for Additional Financing                                             

The Company presently has no operating revenues and does not expect to
generate substantial operating revenues in the foreseeable future. It is        
expected that the Company will need substantial additional capital in order to  
sustain operations and to timely make required payments to the 3-D Joint Venture
and to holders of outstanding promissory notes of the Company. Such additional  
capital will also be necessary in order for the Company to acquire additional   
oil and gas leases, producing properties or to drill wells on potential         
prospects. Additional capital may be secured from a combination of funding      
sources that may include borrowings from financial institutions, debt offerings 
(which would increase the leverage of the Company and add to its need for cash  
to service such debt), additional offerings of the Company's equity securities  
(which could cause substantial dilution of the Common Stock), or sales of       
portions of the Company's interest in the 3-D Joint Venture (which would reduce 
any future revenues from the 3-D Joint Venture). The Company's ability to access
additional capital will depend on its results of operations and the status of   
various capital markets at the time such additional capital is sought.          
Accordingly, there can be no assurances that capital will be available to the   
Company from any source or that, if available, it will be on terms acceptable to
the Company. Should sufficient additional financing not be available, the       
Company will be unable to make required payments to the 3-D Joint Venture and/or
to holders of outstanding promissory notes of the Company. See "Management      
Discussion and Analysis of Financial Condition and Results of Operations -      
Liquidity and Capital Resources."                                               

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Timeliness of 3-D Joint Venture Payments                                  

  Under the terms of the Exploration Agreement, the Company is required to
make monthly payments to the 3-D Joint Venture aggregating, at least, $13       
million, $5 million of which has been paid by the Company to date. The Company's
potential participation in the 3-D Joint Venture could be significantly reduced 
in the event of a failure by the Company to make such required monthly payments 
when due. The Company has in the past failed to make such payments when due.    
While the Company has in such instances succeeded in obtaining waivers under,   
and amendments to, the Exploration Agreement extending the due dates for such   
payments, there can be no assurance that the Company will successfully obtain   
similar amendments should it fail to timely make required payments to the 3-D   
Joint Venture in the future. The Company currently does not have sufficient     
capital to meet its future payment obligations and there can be no assurance    
that the Company will successfully secure the necessary funds. See "Business and
Properties - 3-D Joint Venture Exploration Agreement."                          

   Potential Acquisition of Working Interest in California Offshore Oil Reserves

  On July 26, 1996 the Company signed a Letter of Intent to purchase a 47%
working interest in undeveloped reserves in the Bonito Unit of the Pacific Outer
Continental Shelf, offshore Santa Barbara County, California. The parties are   
currently conducting due diligence and are in the process of negotiating a      
definitive purchase and sale agreement. The transactions contemplated in the    
Letter of Intent may be terminated by either party upon the occurrence of       
certain events and there can be no assurance that the Company will consummate   
such transactions. Moreover, if such transactions are consummated, the Company  
expects that development of the reserves will not occur for at least five years.
There can be no assurance that the Company will successfully develop the        
reserves or that the reserves will yield sufficient quantities of oil and gas to
be economically viable. See "Business and Properties."                          

Lack of Liquidity of the Common Stock                                     

  There is currently limited liquidity in the trading of the Common Stock.
The completion of the offering of the Common Stock provides no assurance that   
the trading market for the Common Stock will become more active. The Company    
intends to apply for a Nasdaq SmallCap Market listing as soon as is practicable.
There can be no assurance that the Company will qualify for such listing.       

Possible Issuance of Additional Shares                                    

The Company's Certificate of Incorporation authorizes the issuance of 
20,000,000 shares of the Common Stock. As of September 27, 1996, approximately  
50% of the shares of the Common Stock remained unissued. The Company's Board of 
Directors has the power to issue any and all of such shares without shareholder 
approval. It is likely that the Company will issue shares of the Common Stock,  
among other reasons, in order to raise capital to sustain operations, make      
required payments to the 3-D Joint Venture and/or to finance future oil and gas 
exploration projects. In addition, the Company has reserved 309,666 and 2/3     
shares of the Common Stock for issuance upon the exercise of outstanding        
warrants and 319,444 and 2/3                                                    
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shares of the Common Stock for issuance upon the exercise of outstanding options
and has agreed to issue additional warrants to purchase 12,500 shares of the    
Common Stock. The Company has also agreed to issue 105,000 shares of the Common 
Stock in exchange for certain outstanding promissory notes of Cheniere Operating
(See "Management Discussion and Analysis of Financial Condition and Results of  
Operations - Liquidity and Capital Resources"). Any issuance of the Common Stock
by the Company may result in a reduction in the book value per share or market  
price per share of the outstanding shares of the Common Stock and will reduce   
the proportionate ownership and voting power of such shares. See "Description of
Capital Stock."                                                                 

Dependence on Key Personnel                                               

The Company is dependent upon its executive officers for its various  
activities. The Company does not maintain "key person" life insurance policies  
on any of its personnel nor does it have employment agreements with any of its  
personnel. The loss of the services of any of these individuals could materially
and adversely affect the Company. In addition, the Company's future success will
depend in part upon its ability to attract and retain additional qualified      
personnel. Other than its officers, the Company has only one full-time employee,
an administrative assistant.                                                    

Dependence on Industry Partners                                           

   The future success of the 3-D Joint Venture is largely dependent upon the
experience and performance of Zydeco. As the Company has few employees and      
limited operating revenues, the Company will be largely dependent upon industry 
partners for the success of its oil and gas exploration projects for the        
foreseeable future.                                                             

Control by Principal Stockholders                                         

   William D. Forster, President and Chief Executive Officer of the Company,
and BSR Investments, Ltd. ("BSR"), an entity under the control of a member of   
the immediate family of Charif Souki, Secretary and a director of the Company,  
own in the aggregate approximately 54.3% of the outstanding Common Stock.       
Accordingly, Mr. Forster and BSR will be able to elect all of the directors of  
the Company and to control the Company's management, operations and affairs,    
including the ability to effectively prevent or cause a change in control of the
Company.                                                                        

FACTORS RELATING TO THE 3-D JOINT VENTURE                                       

Ability to Obtain Permits                                                 

     The 3-D Joint Venture will conduct a 3-D seismic survey (the "Survey") over
certain areas located within a total area of approximately 255 square miles     
running 5 miles south and generally 3 to 5 miles north of the coastline in the  
most westerly 28 miles of West Cameron Parish, Louisiana (the "Survey AMI"). The
3-D Joint Venture does not currently have rights to survey the entire Survey AMI
and the extent of the Survey AMI which the 3-D Joint Venture will be entitled to
survey is dependent upon its ability to obtain survey permits and similar       
rights. Currently, the 3-D Joint Venture has rights to survey approximately 67% 
of the Survey AMI and is attempting to acquire rights to survey additional      
portions of the Survey AMI. There can be no assurance that the 3-D Joint Venture
will successfully obtain permits or rights to survey additional portions of the 
Survey AMI.                                                                     

Louisiana State Waters - Timing Risks                                     

Among certain other rights, the 3-D Joint Venture currently has the   
exclusive right to shoot and gather seismic data over 51,360 net acres of       
Louisiana State waters, located in the Western half of West Cameron Parish,     
Louisiana and constituting a sub-area of the Survey AMI and to nominate for     
lease any acreage in such State waters (the "Louisiana Seismic Permit"). The    
Louisiana Seismic Permit expires in August 1997, but may be extended at Zydeco's
option for an additional six months to February 1998 by payment of an additional
fee of $391,876.80. By December 1997, the 3-D Joint Venture is scheduled to     
complete the Survey, process and interpret the Survey data, nominate and bid for
leases, propose and contract for drilling, and commence drilling its first set  
of prospects. Under the terms of the Louisiana Seismic Permit, the 3-D Joint    
Venture will be liable to pay penalties of $783,753.60 in the event it fails to 
(i) complete the acquisition of                                                 

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the seismic data covering the entire area subject to the Louisiana Seismic      
Permit or (ii) provide access to such data to the State of Louisiana in a timely
manner. Under the terms of the Exploration Agreement, any such penalties payable
under the Louisiana Seismic Permit shall be borne equally by Zydeco and the     
Company. There can be no assurance that the 3-D Joint Venture will complete its 
scheduled activities within the time period required under the Louisiana Seismic
Permit. Failure of the 3-D Joint Venture to complete its scheduled activities   
within the term of the Louisiana Seismic Permit would materially and adversely  
affect the value of the Company's interest in the 3-D Joint Venture. See        
"Business and Properties - Permit and Lease Status within the Survey AMI."      

FACTORS RELATING TO THE OIL AND GAS INDUSTRY                                    

Operating Risks                                                           

   The oil and gas operations of the Company are subject to all of the risks
and hazards typically associated with the exploration for, and the development  
and production of, oil and gas. Risks in drilling operations include cratering, 
explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution   
and other environmental risks. The Company's 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 accordance with customary 
industry practices, the Company intends to maintain insurance against some, but 
not all, of such risks and some, but not all, of such losses. The occurrence of 
a significant event not fully insured or indemnified against could materially   
and adversely affect the Company's financial condition and operations. Moreover,
no assurance can be given that the Company will be able to maintain adequate    
insurance in the future at rates considered reasonable by the Company. See      
"Business and Properties - Operational Risks and Insurance."                    

Exploration Risks                                                         

   The Company's exploration activities involve significant risks. There can
be no assurance that the use of technical expertise as applied to geophysical or
geological data will ensure that any well will encounter hydrocarbons. Further, 
there is no way to know in advance of drilling and testing whether any prospect 
encountering hydrocarbons in the Survey AMI by the 3-D Joint Venture will yield 
oil or gas in sufficient quantities to be economically viable. In addition, the 
Company is highly dependent upon seismic activity and the related application of
new technology as a primary exploration methodology. There can be no assurance  
that the 3-D Joint Venture's efforts will be successful. See "Business and      
Properties."                                                                    

High Dependence upon Lease Acquisition Activities                         

Both the United States Department of the Interior and the State of    
Louisiana award oil and gas leases on a competitive bidding basis and non-      
governmental owners of the onshore mineral interests within the Survey AMI are  
not obligated to lease their mineral rights to the 3-D Joint Venture except to  
the extent they have granted lease options to the 3-D Joint Venture. Other major
and independent oil and gas companies having financial resources significantly  
greater than those of the 3-D Joint Venture may bid against the 3-D Joint       
Venture for the purchase of oil and gas leases. Accordingly, there can be no    
assurance that the 3-D Joint Venture or any other oil and gas venture of the    
Company will be successful in acquiring farmouts, seismic permits, lease        
options, leases or other rights to explore or recover oil and gas. Consequently,
the proportion of the Survey AMI which could be surveyed or subsequently        
explored through drilling would be reduced to the extent that the 3-D Joint     
Venture is not successful at such acquisitions. See "Business and Properties -  
Permit and Lease Status within the Survey AMI."                                 

Lack of Diversification; Oil and Gas Industry Conditions; Volatility of   
Prices for Oil and Gas                                                

   As an independent energy company, the Company's revenues and profits will
be substantially dependent on the oil and gas industry in general and the       
prevailing prices for oil and gas in particular. 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; market uncertainty; political conditions in      
international oil producing regions; the extent of domestic production and      
importation of oil in certain relevant markets; the level of consumer demand;   
weather conditions; the                                                         

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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. 
It is likely that adverse changes in the oil market or the regulatory           
environment would have an adverse effect on the Company's ability to obtain     
capital from lending institutions, industry participants, private or public     
investors or other sources.                                                     

Intense Competition in Oil and Gas Industry                               

The oil and gas industry is highly competitive. Most of the Company's 
current and potential competitors have significantly greater financial resources
and a significantly greater number of experienced and trained managerial and    
technical personnel than the Company and the 3-D Joint Venture. There can be no 
assurance that the Company or the 3-D Joint Venture will be able to compete     
effectively with such firms. See "Business and Properties - Competition and     
Markets."                                                                       

Risks of Turnkey Contracts                                                

     The Company anticipates that any wells established by it will be drilled by
proven industry contractors under turnkey contracts that limit the Company's    
financial and legal exposure. However, circumstances may arise where a turnkey  
contract is not economically beneficial to the Company or is otherwise          
unobtainable from proven industry partners. In such instances, the Company may  
decide to drill, or cause to be drilled, the applicable well(s) on either a     
footage or day rate basis and the drilling thereof will be subject to the usual 
drilling hazards such as cratering, explosions, uncontrollable flows of oil, gas
or well fluids, fires, pollution and other environmental risks. The Company     
would also be liable for any cost overruns attributable to downhole drilling    
problems that otherwise would have been covered by a turnkey contract had one   
been negotiated. See "Business and Properties - Operational Risks and           
Insurance."                                                                     

United States Governmental Regulation, Taxation and Price Control         

Oil and gas production and exploration are subject to comprehensive   
federal, state and local laws and regulations controlling the exploration for   
and production and sale of oil and gas and the possible effects of such         
activities on the environment. Failure to comply with such rules and regulations
can result in substantial penalties and may adversely affect the Company.       
Present, as well as future, legislation and regulations could cause additional  
expenditures, restrictions and delays in the Company's business, the extent of  
which cannot be predicted and which may require the Company to limit            
substantially, delay or cease operations in some circumstances. In most, if not 
all, areas where the Company may conduct activities, there may be statutory     
provisions regulating the production of oil and natural gas which may restrict  
the rate of production and adversely affect revenues. The Company plans to      
acquire oil and gas leases in the Gulf of Mexico, which will be granted by the  
Federal government and administered by the U.S. Department of Interior Minerals 
Management Service (the "MMS"). The MMS strictly regulates the exploration,     
development and production of oil and gas reserves in the Gulf of Mexico. Such  
regulations could have a material adverse affect on the Company's operations in 
the Gulf of Mexico. The Federal government regulates the interstate             
transportation of oil and natural gas, through the Federal Energy and Regulatory
Commission ("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 have a material adverse
affect on the Company. In addition, the Company's operations are subject to     
numerous laws and regulations governing the discharge of oil and hazardous      
materials into the environment or otherwise relating to environmental           
protection, including the Oil Pollution Act of 1990. These laws and regulations 
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 will have a general adverse affect
on the Company's operations. See "Business and Properties - Governmental        
Regulation."                                                                    

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THE COMPANY 

       Cheniere Energy, Inc., a holding company ("Cheniere," together with
Cheniere Operating (as defined below), the "Company"), is the owner of 100% of  
the outstanding common stock of Cheniere Energy Operating Co., Inc. ("Cheniere  
Operating"). Cheniere Operating is a Houston-based company formed for the       
purpose of oil and gas exploration and exploitation. Cheniere Operating was     
incorporated in Delaware in February 1996 under the name FX Energy, Inc.        

        On July 3, 1996 Cheniere Operating consummated the transactions (the
"Reorganization") contemplated in the Agreement and Plan of Reorganization (the 
"Reorganization Agreement") dated April 16, 1996 between Cheniere Operating and 
Bexy Communications, Inc., a publicly held Delaware corporation ("Bexy"). Under 
the terms of the Reorganization Agreement, Bexy transferred its existing assets 
and liabilities to Mar Ventures, Inc., its wholly-owned subsidiary ("Mar        
Ventures"), Bexy received 100% of the outstanding shares of Cheniere Operating  
and the former shareholders of Cheniere Operating received approximately 8.3    
million newly issued shares of Bexy common stock, representing 93% of the then  
issued and outstanding Bexy shares. Immediately following the Reorganization,   
the Original Bexy Stockholders held the remaining 7% of the outstanding Bexy    
stock. In accordance with the terms of the Reorganization Agreement, Bexy       
changed its name to Cheniere Energy, Inc.  Subsequently, the Company distributed
the outstanding capital stock of Mar Ventures to the original holders of Bexy   
common stock.                                                                   

     The Common Stock of the Company is traded on the over-the-counter
market and quoted on the OTC Bulletin Board (the "Bulletin Board") of the       
National Association of Securities Dealers (the "NASD") (ticker symbol "CHEX")  
with 10,039,594 shares outstanding as of September 27, 1996. The Company intends
to apply for a Nasdaq SmallCap Market listing as soon as is practicable.        

The Company's principal executive offices are located at Two Allen  
Center, 1200 Smith Street, Suite 1710, Houston, Texas 77002. The Company's      
telephone number is (713) 659-1361.                                             

USE OF PROCEEDS 

          All shares of Common Stock covered hereby are being registered for the
account of the Selling Stockholders and, accordingly, the Company will not      
receive any proceeds from the sale of the Common Stock by the Selling           
Stockholders.                                                                   

CAPITALIZATION  

          The following table sets forth the capitalization of the Company as of
August 31, 1996. All information set forth below should be read in conjunction  
with the financial data of the Company and related notes that appear elsewhere  
in this Prospectus.                                                             

                                                                · Download Table


                                                       

Shareholders' Equity                                   
    Common Stock - $.003 Par Value                     
    Authorized 20,000,000 shares;                      
    9,931,767 Issued and Outstanding(1)     $   29,795 

    Preferred Stock -                                  
    Authorized 1,000,000 shares;                    -- 
    None Issued and Outstanding                        

    Additional paid-in capital               5,626,840 

    Retained Deficit                        (1,230,180)
                                            ---------- 
Total Shareholders' Equity                  $4,426,455 
                                            ========== 

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(1)  In addition, (i) 209,666 and 2/3 shares of the Common Stock are reserved   
     for issuance upon exercise of outstanding warrants to purchase Common Stock
    at an exercise price of $3.00 per share, (ii) 100,000 shares of the Common
   Stock are reserved for issuance upon the exercise of outstanding warrants
  to purchase Common Stock at an exercise price of $3.125 per share, (iii)
    300,000 shares of the Common Stock are reserved for issuance upon exercise
    of outstanding options granted by the Board of Directors to certain of the
   Company's executive officers, at an exercise price of $3.00 per share and
  (iv) 19,444 and 2/3 shares of the Common Stock are reserved for issuance
     upon exercise of outstanding options granted to Buddy Young, at an exercise
price of $1.80 per share.                                             

MARKET PRICE AND DIVIDEND INFORMATION 

       From 1989 through December 1993, there was no public trading market
for the Bexy Common Stock. In December 1993, the common stock of Bexy began     
trading on the Bulletin Board. In connection with the Reorganization, the       
Company divested itself of the assets relating to the business of Bexy prior to 
the Reorganization and has shifted its focus to oil and gas exploration.        
Simultaneously with the Reorganization, each three outstanding shares of common 
stock of Bexy was converted to one share of Common Stock and the stockholders of
Cheniere Operating were issued shares of Common Stock equaling approximately 93%
of the then issued and outstanding shares of Bexy causing the existing          
stockholders of Bexy to be diluted to approximately 7%. On July 8, 1996, the    
Common Stock began trading on the Bulletin Board (ticker symbol "CHEX"). As the 
nature of the business and the Common Stock has changed as a result of the      
Reorganization, this section describes the market price of the Common Stock     
following the Reorganization on July 3, 1996.                                   

       The high ask and low bid prices of the Common Stock reported on the
Bulletin Board for the period from July 8, 1996 through September 27, 1996 were 
$6.00 and $3.00, respectively. These quotations reflect inter-dealer prices,    
without retail mark-up, mark-down or commission and may not reflect actual      
transactions.                                                                   

        As of September 27, 1996 there were 766 record holders of the Common
Stock which does not include holders who hold their shares of the Common Stock  
in "street name".                                                               

  The Company has not paid any dividends since its inception and
presently anticipates that all earnings, if any, will be retained for           
development of the Company's business and that no dividends on its Common Stock 
will be declared in the foreseeable future. Any future dividends will be subject
to the discretion of the Company's Board of Directors and will depend upon,     
among other things, future earnings, the operating and financial condition of   
the Company, its capital requirements and general business conditions.          

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SELECTED FINANCIAL DATA 

The following income statement data and balance sheet data have been  
derived from the financial statements prepared in accordance with generally     
accepted accounting principles. The financial statements of Cheniere Energy,    
Inc. and Subsidiary as of August 31, 1996 and for the year then ended have been 
audited by Merdinger, Fruchter, Rosen & Corso, P.C. This information should be  
read in conjunction with the financial statements and notes thereto and         
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations" included elsewhere in this Prospectus.                              

                                                                · Download Table


                                                        September 1, 1995 
                                                               to         
                                                         August 31, 1996  
                                                       -------------------
                                                                          
Net operating revenues                                $           --      
(Loss) from continuing operations                            (79,097)     
Loss) from continuing operations per share of common                      
 stock                                                        (0.008)     
(Loss) from discontinued operations                         (207,722)     
Net (loss) per share of common stock                           (0.03)     
Total Assets                                               5,145,310      
Long-term obligations                                             --      
Total Liabilities                                            718,855      
Total Shareholders' Equity                                 4,426,455      
Cash dividends declared per share of common stock                 --      


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

       Cheniere Operating was incorporated in Delaware in February of 1996
for the purpose of entering the oil and gas exploration and exploitation        
business, initially on the Louisiana Gulf Coast.                                

          In March of 1996, Cheniere Operating entered into discussion with Bexy
Communications, Inc. ("Bexy") for a reorganization in order to give it a        
presence in the public market.                                                  

    On April 16, 1996, the Reorganization Agreement was entered into
whereby the Cheniere Operating stockholders would acquire control of Bexy in    
consideration for the outstanding stock of Cheniere Operating.                  

         Under the terms of the Reorganization Agreement, Bexy transferred its
existing assets of approximately $224,000 and its liabilities of approximately  
$111,000 to Mar Ventures, Inc. ("Mar Ventures"), Bexy received 100% of the      
outstanding shares of Cheniere Operating and the former shareholders of Cheniere
Operating received approximately 8.3 million newly issued shares of Bexy common 
stock, representing 93% of the then issued and outstanding Bexy shares. Cheniere
Operating became a wholly-owned subsidiary of Bexy and the principal business   
became oil and gas exploration. Bexy then changed its name to Cheniere Energy,  
Inc. The Company distributed the outstanding capital stock of Mar Ventures to   
the original holders of Bexy common stock.                                      

   The reorganization was accounted for as the recapitalization of
Cheniere Operating and the issuance of stock for the net assets of Bexy.        

RESULTS OF OPERATIONS - AUDITED STATEMENTS YEAR ENDED AUGUST 31, 1996           

         The Company's operating results reflected a loss of $79,097, as there
were no revenues from continuing operations. General and Administrative expenses
of $73,814 comprised most of the loss.                                          

The Company incurred one time losses of $207,722 from the   
discontinuance of its former business in the television production and health   
information field. Total losses were $286,819.                                  

      The Company's balance sheet reflected current assets of $1,097,980
with liabilities of $718,855. Other assets reflect an investment of $4 million  
in the 3-D Joint Venture. After fiscal year end, in early September 1996, the   
Company made an additional payment of $1 million to the 3-D Joint Venture, such 
that an aggregate of $5 million has been paid by the Company to the 3-D Joint   
Venture to date.                                                                

  The Company's capital reflects sales of shares net of offering
expenses of $609,451 and distribution of net assets of $112,902.                

LIQUIDITY AND CAPITAL RESOURCES                                         

    At August 31, 1996, the Company had working capital of $379,125.
Operating expenses and capitalized costs were financed by the sale of common    
stock and Bridge Loan (as defined below) funding as revenues have yet to be     
generated. It is anticipated that future liquidity requirements, including the  
commitment to the 3-D Joint Venture which will amount to, at least, an          
additional $8 million, will be met by sale of equity, further borrowings and/or 
sales of portions of the Company's interest in the 3-D Joint Venture. At this   
time, no assurance can be given that such sale of equity, further borrowings or 
sales of portions of the Company's interest in the 3-D Joint Venture will prove 
to be successful. The Company has in the past failed to timely                  

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make certain payments due to the 3-D Joint Venture. While the Company has in    
such instances succeeded in obtaining waivers under, and amendments to, the     
Exploration Agreement extending the due dates for such required payments, there 
can be no assurance that the Company will successfully obtain similar amendments
should it fail to timely make required payments to the 3-D Joint Venture in the 
future. The Company currently does not have sufficient capital to meet its      
future payment requirements and there can be no assurance that the Company will 
successfully secure the necessary funds. See "Business and Properties -         
3-D Joint Venture Exploration Agreement."                                       

      Since its inception, the Company's primary source of financing for
operating expenses and payments to the 3-D Joint Venture has been the sale of   
its equity securities.                                                          

      In May and June 1996, Cheniere Operating raised $2,883,000, net of
offering costs, from the sale of shares of its common stock (which were         
exchanged for 2,000,000 shares of the Common Stock following the Reorganization)
to "accredited investors" (as defined in Rule 501(a) promulgated under the      
Securities Act of 1933, as amended (the "Securities Act")) pursuant to Rule 506 
of Regulation D promulgated under the Securities Act ("Regulation D"). The      
proceeds were used to fund Cheniere Operating's initial $3 million payment to   
the 3-D Joint Venture.                                                          

          In order to finance a $1 million payment made to the 3-D Joint Venture
on August 9, 1996, the Company sold Common Stock pursuant to Regulation D and   
Regulation S promulgated under the Securities Act ("Regulation S"). In July     
1996, the Company sold 50,000 shares of the Common Stock to an "accredited      
investor" pursuant to Rule 506 of Regulation D and the Company received proceeds
of $100,000 from such sale. In July and August 1996, the Company conducted an   
offering of Common Stock pursuant to Regulation S. The Company sold 508,400     
shares of the Common Stock and received proceeds of $915,000, net of placement  
fees, from such sale.                                                           

       In late August 1996, the Company raised $1,000,000 from the sale of
100,000 units, each consisting of five shares of the Common Stock and a warrant 
to purchase one share of the Common Stock, pursuant to Regulation S.  The       
proceeds were used to fund a $1 million payment to the 3-D Joint Venture made on
September 4, 1996.                                                              

   In September 1996, the Company raised $260,500 from the sale of
130,250 shares of the Common Stock to "accredited investors" (as defined in Rule
501(a) promulgated under the Securities Act) pursuant to Rule 506 of Regulation 
D.                                                                              

          In June 1996, Cheniere Operating borrowed $425,000 (the "Bridge Loan")
through a private placement of short term promissory notes with an initial      
interest rate of 8% (the "Notes"). The Notes were due on September 14, 1996. In 
connection with the placement of the Notes, Cheniere Operating issued warrants, 
which following the Reorganization, were exchanged for an aggregate of 141,666  
and 2/3 warrants to purchase shares of the Common Stock, to the holders of the  
Notes (the "Noteholders"), each of which warrants entitles the holder to        
purchase one share of the Common Stock at an exercise price of $3.00 per share  
at any time on or before June 14, 1999. The Company has satisfied all of its    
obligations under Notes in the aggregate principal amount of $210,000 by paying 
the accrued interest on such Notes and by agreeing to issue 105,000 shares of   
the Common Stock at a price of $2.00 per share to the holders of such Notes     
pursuant to Regulation D. In addition, prior to the maturity of the Notes, an   
individual Noteholder (the "Remaining Noteholder") purchased several outstanding
Notes following which such Noteholder held Notes in the aggregate principal     
amount of $215,000. In connection with a modification of the Bridge Loan        
arrangements as between the Remaining Noteholder and the Company, Cheniere      
Operating has issued a new promissory note to the Remaining Noteholder with an  
interest rate of 13% per annum in exchange for the Notes held by him. Such new  
promissory note is due on January 14, 1997. The Remaining Noteholder is also    
entitled to receive up to 21,500 additional warrants to purchase shares of the  
Common Stock for each month, or partial month, any amounts remain due and       
payable after September 14, 1996, up to a maximum aggregate number of 86,000    
such additional warrants. Such additional warrants will have an exercise price  
of $3.00 per share and will be exercisable for 3 years from the date of         
issuance.                                                                       

BUSINESS AND PROPERTIES 

GENERAL                                                                         

          The Company is currently involved in a joint exploration program which
is engaged in the exploration for oil and natural gas along the Gulf Coast of   
Louisiana, onshore and in the shallow waters of the Gulf of Mexico. The Company 
commenced its oil and gas activities in April 1996 through such joint           
exploration program, and since July 3, 1996 has been publicly traded under the  
name Cheniere Energy, Inc.                                                      

      The Company is involved with one major project in the pre-drilling
stage. The Company entered into a joint exploration program pursuant to an      
Exploration Agreement dated April 4, 1996 between FX Energy, Inc., now known as 
Cheniere Operating, and Zydeco Exploration, Inc. ("Zydeco"), an operating       
subsidiary of Zydeco Energy, Inc. (the "Exploration Agreement"), with regard to 
a new proprietary 3-D seismic exploration project in southern Louisiana (the "3-
D Joint Venture"). The Company has the right                                    

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to earn up to a 50% participation in the 3-D Joint Venture. The Company believes
that the 3-D seismic survey (the "Survey") is the first of its size within the  
Transition Zone of Louisiana, an area extending a few miles on either side of   
the Louisiana State coastline. The Survey is to be conducted over certain areas 
located within a total area of approximately 255 square miles running 5 miles   
south and generally 3 to 5 miles north of the coastline in the most westerly 28 
miles of West Cameron Parish, Louisiana (the "Survey AMI"). The 3-D Joint       
Venture does not currently have rights to survey the entire Survey AMI and the  
extent of the Survey AMI which the 3-D Joint Venture will be entitled to survey 
is dependent upon its ability to obtain survey permits and similar rights.      
Currently, the 3-D Joint Venture has permits and similar rights to survey       
approximately 67% of the Survey AMI and is attempting to acquire rights to      
survey additional portions of the Survey AMI. There can be no assurance that the
3-D Joint Venture will successfully obtain rights to survey additional portions 
of the Survey AMI. The 3-D Joint Venture will survey specific sections selected 
by it within the areas covered by such permits and rights. See "- Permit and    
Lease Status Within the Survey AMI." A seismic data acquisition contract has    
been signed and the 3-D Joint Venture has begun to conduct the Survey.          

         On July 26, 1996, the Company signed a Letter of Intent with Poseidon
Petroleum, LLC ("Poseidon") to purchase Poseidon's 47% working interest in      
undeveloped reserves in the Bonito Unit of the Pacific Outer Continental Shelf, 
offshore Santa Barbara County, California (the "Poseidon Interest"). The parties
are conducting due diligence and are negotiating a definitive purchase and sale 
agreement and related documentation. The transactions contemplated in the Letter
of Intent may be terminated by either party upon the occurrence of certain      
events and there can be no assurance that the Company will successfully         
consummate such transactions. Moreover, if such transactions are consummated,   
the Company expects that development of the reserves will not occur for at least
five years. There can be no assurance that the Company will successfully develop
the reserves or that the reserves will yield sufficient quantities of oil and   
gas to be economically viable.                                                  

          The Company has not yet established oil and gas production, nor has it
booked proven oil and gas reserves.                                             

BUSINESS STRATEGY                                                               

       The Company's objective is to expand the net value of its assets by
growing its oil and gas reserves in a cost efficient manner. The Company intends
to pursue this objective by following an integrated strategy that includes the  
following elements:                                                             

.  FOCUS ON FEW PROJECTS WITH LARGE RESERVE POTENTIAL.                        

Louisiana Gulf Coast Transition Zone. The Company's current activities are
focused within one area, the Transition Zone of Louisiana. The Company    
believes that the Transition Zone, including the westernmost 28 miles of  
   Louisiana coastline that are within the Survey AMI, has significant remaining
undiscovered reserves. The 3-D Joint Venture therefore plans to focus its 
   efforts on certain areas, all located within The Survey AMI. In addition, the
substantial infrastructure along the Gulf Coast and in the shallow Gulf of
  Mexico permits the Company to lower its operating costs compared to those in
other geographic regions and facilitates the timely development of oil and
  gas discoveries. The Company's officers and Zydeco have extensive experience
   both onshore and offshore in the Gulf Coast and believe the 3-D Joint Venture
 is well positioned to evaluate, explore and develop properties in the area.

  Offshore California. The Company has signed a Letter of Intent with Poseidon
to purchase Poseidon's 47% working interest in undeveloped reserves in the
Bonito Unit of the Pacific Outer Continental Shelf, offshore Santa Barbara
County, California. An independent reserve report is being prepared to    
determine an estimate of the volume of undeveloped oil and gas reserves   
attributable to the Poseidon Interest. The parties are conducting due     
diligence and are negotiating a definitive purchase and sale agreement and
  related documentation. The transactions contemplated in the Letter of Intent
 may be terminated by either party upon the occurrence of certain events and
  there can be no assurance that the Company will successfully consummate such
transactions. Moreover, if such transactions are consummated, the Company 
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 years. There can be no assurance that the Company will successfully develop
   the reserves or that the reserves will yield sufficient quantities of oil and
gas to be economically viable.                                            

 .  MAINTAIN A SIGNIFICANT WORKING INTEREST IN EACH PROJECT. The Company has the
 right to earn up to a 50% participation in the 3-D Joint Venture. Under the
  terms of the Exploration Agreement, the Company must timely meet its payment
 obligations to the 3-D Joint Venture in order to reach a 50% participation.
The Company does not intend to be an operator in the area, but intends to 
   maintain a significant working interest to better leverage its administrative
and technical resources and to better influence operator decisions.       

.  UTILIZE THE LATEST EXPLORATION, DEVELOPMENT AND PRODUCTION TECHNOLOGY. The 
Company intends to use the latest technology to enhance the efficiency and
   economy of its exploration, development and production efforts. These include
  the use of advanced 3-D seismic acquisition and processing techniques in the
Survey AMI.                                                               

.  CONTROL OVERHEAD COSTS. The Company plans to maintain a small, but         
experienced working staff, and to leverage their talents by focusing on a 
relatively few projects which have high reserve potential in which it can 
obtain a high working interest, and to employ outside consultants and seek
 industry partners with the appropriate geographic and technical experience.
   Currently, the Company has no employees other than its executive officers and
one administrative assistant.                                             

THE 3-D JOINT VENTURE EXPLORATION PROJECT 
IN WEST CAMERON PARISH, LOUISIANA TRANSITION ZONE 

        The Company's first exploration project is the 3-D Joint Venture, in
which the Company has the right to earn up to a 50% participation, in a new     
proprietary 3-D seismic exploration project that the Company believes will be   
the largest of its kind within the Louisiana Transition Zone. The Survey AMI    
covers approximately 255 square miles situated onshore and offshore over the    
most westerly 28 miles of the shoreline in West Cameron Parish, Louisiana.      

         The 3-D Joint Venture must obtain permits or similar rights to survey
the areas located within the Survey AMI. Currently, the 3-D Joint Venture has   
rights to Survey 51,360 net acres of Louisiana State Waters, pursuant to an     
exclusive permit, and certain privately held areas which together constitute    
approximately 67% of the Survey AMI and is attempting to acquire rights from    
additional private owners. There can be no assurance that the 3-D Joint Venture 
will successfully obtain rights to survey additional portions of the Survey AMI.
The 3-D Joint Venture intends to survey specific sections selected by it within 
the areas covered by its permits and similar rights. See "- Permit and Lease    
Status Within the Survey AMI." The Company believes that survey sites located   
within the Survey AMI have the potential for containing substantial undiscovered
oil and gas reserves, based on the number and size of existing fields in and    
around the Survey AMI, the low level of historical exploration in the Survey AMI
and the exploration success resulting from a speculative 3-D seismic survey shot
by an independent geophysical services company in the adjacent Federal offshore 
area. An acquisition contract with Grant Geophysical, Inc. has been signed and  
the 3-D Joint Venture has begun to conduct the Survey.                          

3-D Joint Venture Exploration Agreement                                         

       Under the terms of the Exploration Agreement, Cheniere Operating is
obligated to pay 100% of the Seismic Costs (as defined below) up to $13.5       
million (subject to adjustment as described in the following sentence) in       
accordance with a fixed schedule of monthly payments, and 50% of the excess of  
any such costs, to acquire a 50% working interest participation in the leasing  
and drilling of all Prospects (as defined below) generated by Zydeco within the 
Survey AMI. If premiums required for turnkey contracts cause total Seismic Costs
to exceed $13.5 million, Cheniere Operating will bear 100% of Seismic Costs only
up to $13 million, and Seismic Costs greater than $13 million will be borne     
equally by Cheniere Operating and Zydeco. "Seismic Costs" are defined in the    
Exploration Agreement to include the following, inter alia: acquiring and       
processing seismic data; turnkey contracts; legal costs; options to lease land  
and leases of land;                                                             

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and the cost of seismic permits including the seismic permit granted by the     
State of Louisiana discussed below. See "-Permit and Lease Status Within the    
Survey AMI-Offshore Area."                                                      

         Under the terms of the Exploration Agreement, Zydeco will perform, or
cause to be performed, all of the planning, land, geologic and interpretative   
functions necessary to the project and will design and oversee the acquisition  
and processing of seismic data, interpret results, acquire leases and generate  
Prospects. The term "Prospect" is defined in the Exploration Agreement as a     
block of acreage suitable for exploration and includes the leasehold, operating,
nonoperating, mineral and royalty interests, licenses, permits and contract     
rights relating thereto. Cheniere Operating has the right to review all data and
may elect to generate its own Prospects. Neither party to the 3-D Joint Venture 
is permitted to sell or license the data without the other party's approval.    

     As described above, under the terms of the Exploration Agreement,
Cheniere Operating is obligated to make payments for the Seismic Costs into a   
joint venture account (the "Joint Venture Account"). The Exploration Agreement  
originally provided for an initial installment of $3 million to be paid by May  
15, 1996, which was extended to June 14 1996 by agreement of the parties.       
Subsequent payments were due on the last day of each of the months of June 1996 
through February 1997. Each of the payments was required to be in the amount of 
$1 million with the exception of the payments at the end of September 1996 and  
February 1997 which were required to be for $2 million and $1.5 million,        
respectively (although the February 1997 payment may be reduced to $1.0 million 
under certain circumstances described above).                                   

        Cheniere Operating failed to timely make the $1 million payments due
on June 30, 1996 and July 30, 1996. Pursuant to the Second Amendment to the     
Exploration Agreement dated August 5, 1996, Cheniere Operating (i) was required 
to make the payment originally due on June 30, 1996 on or before August 9, 1996 
and such payment has been timely made and (ii) is required to make the payment  
originally due on July 30, 1996 on or before October 31, 1996. A failure by     
Cheniere Operating to make such payment on such date will be treated as a       
Discontinuance (as defined below). Other than as described above, all payments  
to the Joint Venture Account are due as scheduled, the next such payment being  
due on September 30, 1996. Cheniere Operating intends to make its future        
payments under the Exploration Agreement as and when they are due, however,     
neither Cheniere Operating nor the Company currently has sufficient capital to  
cover such payments and there can be no assurance that Cheniere Operating or the
Company will successfully secure the necessary funds.                           

          In the event Cheniere Operating fails to make a scheduled payment into
the Joint Venture Account within 30 days after the date such payment is due (a  
"Discontinuance"):                                                              

     (i)   The obligation and right of Cheniere Operating to make such
payments will terminate. Zydeco would have the right to complete the    
acquisition and processing of seismic data with the cooperation or      
 assistance of other companies. In addition, Cheniere Operating's Prospect
   ownership interest would be limited to the total amount of its contribution
   to the Joint Venture Account, divided by twice the amount of funds expended
for Seismic Costs, expressed as a percentage. For example, if Cheniere  
Operating made a total contribution of $3 million to the Joint Venture  
Account, prior to a Discontinuance, and total Seismic Costs were $13.5  
  million, Cheniere Operating's Prospect ownership interest would be limited
to 11.1%;                                                               

      (ii)  If following a Discontinuance, Zydeco contributes funds that
 otherwise were required to have been provided by Cheniere Operating under
   the terms of the Exploration Agreement, Zydeco shall be entitled to receive
   back such funds, together with interest thereon at the prime interest rate,
   from revenues attributable to Cheniere Operating's interest in any Prospect
  (including, without limitation, any working interest or overriding royalty
    interest revenues from production or front end proceeds attributable to such
interest when owned by Cheniere Operating under the applicable operating
agreement or proceeds from the sale or license of seismic data);        

        (iii) Subject to (iv) immediately below, if a Discontinuance occurs,
and Zydeco does not itself fund the deficient Seismic Costs, Zydeco may 
  sell, trade, farm-out, lease, sublease or otherwise trade (collectively, a
 "Trade") the aggregate (i.e., both that of Zydeco and Cheniere Operating)
Prospect                                                                

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    interests to any party on arms' length terms. For this purpose the aggregate
  Prospect interests includes all seismic data acquired, and revenues from a
  Trade include seismic data sale or license proceeds. Any revenues accruing
from a Trade shall be applied toward the cost of completing the project 
contemplated under the Exploration Agreement; and                       

        (iv)  Should Cheniere Operating have funded $8,000,000 or more prior
to the Discontinuance, then the parties will treat Cheniere Operating as
  having earned a vested Prospect ownership interest of 25%, which shall not
   be subject to any Trade, and any revenues from a Trade, which would in this
    instance cover a 75% Prospect ownership interest, shall be shared 33-1/3% by
Cheniere Operating and 66-2/3% by Zydeco.                               

          Prospect Expenses (as defined below) are to be borne equally by Zydeco
and Cheniere Operating; provided, however, that in the event of a               
Discontinuance, Cheniere Operating shall bear a percentage of the Prospect      
Expenses equal to its Prospect ownership interest. "Prospect Expenses" are      
defined in the Exploration Agreement as: lease bonuses and brokerage for leases;
delay or shut in rental payments on leases or interest acquired under the       
Exploration Agreement; engineering costs; and certain other costs related to    
Prospects. If Cheniere Operating fails to pay its share of Prospect Expenses    
within 30 days of receipt of a bill therefor, it will be deemed to have declined
to participate in the Prospect and will have no interest or liability related to
the Prospect in question.                                                       

      In the event that Zydeco incurs a contractual liability to a third
party in performing its undertakings under the Exploration Agreement, such      
contractual liability shall be treated as a Prospect Expense. In the event that 
Zydeco incurs a tort liability to a third party in performing its undertakings  
under the Exploration Agreement, and such liability is a result of gross        
negligence or willful malfeasance, such liability, and all attorneys fees and   
expenses relating thereto, shall be solely Zydeco's responsibility. In the event
that Zydeco incurs a tort liability to a third party in performing its          
undertakings under the Exploration Agreement, and such liability is not a result
of gross negligence or willful malfeasance, such liability, and all attorneys'  
fees and expenses relating thereto, shall be borne equally by the Company and   
Zydeco.                                                                         

Location and Hydrocarbon Potential of the Survey Area                           

          The Survey AMI, which contains the specific areas to be covered by the
Survey, lies within a highly prolific natural gas region. Nevertheless, the     
Transition Zone has been relatively less explored to date as compared to        
exclusively onshore or offshore regions because of the relatively high cost and 
logistical and technical difficulties associated with conducting modern seismic 
surveys over the diverse environments encountered along the coast. An additional
impediment has been the difficulty of negotiating with sophisticated landowners 
who control most of the area close to the Louisiana coastline. The paucity of   
modern seismic data has limited the drilling density: the spacing of exploration
wells testing the primary objective section, outside of the known fields, is    
less than one well per five square miles. However, recent declines in the cost  
of supercomputing workstations which can be employed in processing and          
interpreting seismic data have made projects such as this Transition Zone       
venture technically and economically feasible.                                  

      The Louisiana Transition Zone contains the Miocene Trend which has
produced many of the largest oil and gas fields in the continental United States
and its territorial waters. Objectives within the Miocene Trend have excellent  
reservoir characteristics and have historically exhibited multiple pay zones,   
which can allow a single strategically placed well bore to drain multiple       
reservoirs. Given the relatively low level of historical exploration and the    
high recovery factors characterizing the Louisiana Transition Zone, the Company 
believes that this zone has the potential for containing substantial undeveloped
oil and gas reserves. Miocene age reservoirs in fields overlapping the Survey   
AMI have produced in excess of 3 trillion cubic feet (tcf) of natural gas. Along
the northeast quadrant of the Survey AMI the Mud Lake and Second Bayou Fields   
have cumulatively produced more than 1.3 tcf of natural gas to date, with more  
than 250 billion cubic feet (bcf) having been produced from one well. In the    
southwestern quadrant of the Survey AMI, the West Cameron Block 17 Field in the 
State and Federal waters has cumulatively produced more than 980 bcf to date.   
Numerous other smaller, but still significant, oil and gas fields surround and  
overlay the area.                                                               

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         Immediately farther offshore of the Survey AMI, a successful industry
drilling program based on a spec 3-D survey provides an analogy that illustrates
the potential for new discoveries in this region resulting from 3-D seismic     
data. In 1989, a 3-D seismic survey shot by an independent geophysical services 
company along the shallow Federal waters in the western part of the Western     
Cameron area led to 4 new field discoveries which have produced approximately   
320 bcf of natural gas to date from 15 boreholes. The middle to lower Miocene   
reservoir section has excellent flow characteristics, as can be seen by the per 
well recoveries, 21 bcf of natural gas, in the area of the adjacent shoot. In   
addition to the volumes produced from these discoveries, additional reserves    
have been brought on through exploitation wells drilled into existing fields.   

The entire Survey AMI is located within an existing pipeline
infrastructure. As a result, it will generally be quicker and less costly to    
develop and connect reserves found onshore and in the shallow offshore areas to 
markets than would be the case for reserves found in deeper water areas. The    
Louisiana Gulf Coast/Gulf of Mexico region enjoys easy access to the premium-   
priced markets of the East Coast.                                               

Permit and Lease Status Within the Survey AMI                                   

        The 3-D Joint Venture will Survey only certain sections lying within
the Survey AMI. The area to be covered by the Survey is dependent upon the      
status of permits granting the 3-D Joint Venture the right to Survey certain    
areas and its ability to obtain such permits or similar rights in the future.   

       Offshore Area -- State Waters Exclusive Permit and Federal Offshore
Permits. On February 14, 1996, the State of Louisiana awarded Zydeco the        
exclusive right (the "Louisiana Seismic Permit") to shoot and gather seismic    
data over the 51,360 net unleased acres of Louisiana State waters (running out  
to a 3 1/2 mile limit located within the Survey AMI) in the western half of West
Cameron Parish. The term of the Louisiana Seismic Permit is for 18 months and   
may be extended at Zydeco's option for an additional 6 months by payment of an  
additional fee of $391,876.80. During this term Zydeco has the exclusive right  
to nominate blocks of acreage for leasing in the covered State waters.          

       The Survey AMI includes an area running southward over 1 1/2 to 2
miles of Federal waters. Zydeco's seismic contractor, Grant Geophysical, Inc.,  
has received approval from the U.S. Government to survey over 21,000 acres of   
Federal offshore leases located within the Survey AMI. Although Zydeco has no   
exclusive rights regarding leases in the Federal waters, several offshore lease 
blocks held by industry and covered by the Survey are scheduled to expire within
the next year and may then be available for leasing.                            

     Onshore Area -- Prospective Permits, Lease Options, and Farmouts.
Zydeco is in negotiations to obtain variously, farmouts, seismic permits or     
lease options, with owners of the mineral interests covering approximately      
85,000 additional acres of privately owned lands lying under the onshore portion
of the Survey AMI ("Onshore Area"). The outcome of these discussions will effect
the exact delineation of the areas which will be subject to the Survey within   
the Survey AMI. As of this date, seismic permits or options covering portions of
the Onshore Area have already been obtained.                                    

Technological Aspects of 3-D Seismic Shoot and Prospect Generation              

       The Company believes that recently developed seismic processing and
interpretation technology, including some key technology which Zydeco has       
licensed for use in Southern Louisiana on an exclusive basis, has now evolved to
a point where quality control for a Transition Zone survey will be improved     
significantly. The Survey will incorporate certain of these new techniques for  
the first time in a major seismic survey. Moreover, the Company believes that   
the areal extent of the Survey, which is unusually large for a shallow          
water/onshore seismic survey should permit better imaging of the subsurface,    
particularly of the deeper zones.                                               

        The design of the Survey has been led by Rudy Prince, Zydeco's Vice-
Chairman, who was formerly CEO and a founder of Digicon Geophysical Corp., a    
seismic services company. A primary objective of the Survey is to provide for   
accurate and consistent data sufficient for analysis of hydrocarbon indicators  
in a depth range of 8,000 - 20,000 feet at an attractive price. The design will 
employ technology referred to as "wavefield imaging", for which Zydeco has      
obtained an exclusive license for use in the Louisiana Transition               

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Zone (from Wavefield Imaging, Inc.). The approach combines a relatively lower   
density array of shots and receivers with 3-D prestack migration. Moreover, the 
Company believes that the use of a single type of shot, dynamite, and a single  
type of receiver, hydrophone, across the coastline, will simplify and improve   
seismic processing across the different Transition Zone environments.           

     Data Acquisition. The Company believes that use of similar source
(dynamite) and receiver (hydrophone) components laid out in a symmetrical array 
across the shoreline will eliminate the problems of integrating two different   
types of data sets (land and marine) and improve data consistency. A limited    
amount of airgun source data will be acquired in the Federal waters and around  
the few producing fields. A primary consideration in the design, the relatively 
deep zones of interest (8,000-20,000 feet), calls for long north-south transects
(up to 10 miles) to improve the quality of deep data.                           

  Data Transmission, Processing and Interpretation. Data will be
transferred daily from the field crew to Zydeco's headquarters in Houston, where
it will undergo nearly real-time processing. This procedure will allow Zydeco to
closely monitor 3-D data quality and make adjustments to the acquisition        
parameters if necessary. This new technology also significantly reduces the     
delay time between the Survey itself and ultimate drilling decisions. In        
combination with a reduced cost design for field data acquisition, Zydeco will  
employ a proven technology, 3-D prestack migration, seeking to obtain superior  
quality subsurface images. To maximize quality control and minimize delays      
Zydeco will process the data in-house. Having completed seismic processing,     
Zydeco will also employ state of the art Computer Aided Exploration (CAEX)      
interpretation techniques to locate and define drilling prospects.              

Schedule for the 3-D Joint Venture                                              

   While the Louisiana Seismic Permit, whose primary 18 month term
expires in August 1997, may be extended at Zydeco's option until February 1998  
by payment of an additional fee of $391,876.80, Zydeco presently plans to adhere
to the schedule summarized below:                                               

                                                                · Download Table


                                                                                   
April - Oct.   1996  Onshore Permitting and Lease Optioning                        
Sept. - Dec.   1996  Conduct Seismic Survey and Simultaneously Begin Processing &  
                     Interpretation of Data Received                               
1/st/ Quarter  1997  Continue Processing and Interpretation                        
2/nd/ Quarter  1997  Complete Interpretation and Identify Prospects                
3/rd/ Quarter  1997  Nominate and Bid Offshore Leases, and Lease Onshore           
4/th/ Quarter  1997  Propose, Contract for Drilling, and Commence Drilling of First
                     Group of Prospects                                            

          Under the terms of the Louisiana Seismic Permit, the 3-D Joint Venture
will be liable to pay penalties of $783,753.60 in the event it fails to (i)     
complete the acquisition of the seismic data covering the entire area subject to
such Permit or (ii) provide access to such data to the State of Louisiana in a  
timely manner. Under the terms of the Exploration Agreement, any such penalties 
payable under the Louisiana Seismic Permit shall be borne equally by Zydeco and 
the Company. There can be no assurance that the 3-D Joint Venture will complete 
its scheduled activities within the time period of the Louisiana Seismic Permit.
Failure of the 3-D Joint Venture to complete its scheduled activities within the
term of the Louisiana Seismic Permit would materially and adversely affect the  
value of the Company's interest in the Joint Venture.                           

         Zydeco and the Company have designated the entire Survey AMI (onshore
and offshore) as an area of mutual interest for five years ending May 15, 2001, 
during which period the two companies may continue to drill, test, and develop  
prospects within the Survey AMI. Any interest taken by either Zydeco or the     
Company, during such period, in any agreement or arrangement which creates or   
effects an interest in hydrocarbons in lands within the Survey AMI, or an       
acquisition of a contractual right to acquire such an interest shall be deemed  
taken for development under the Exploration Agreement. The party acquiring such 
an interest must offer to the other party the right, which may be waived by such
other party, to participate in the rights and obligations associated with such  
interest in proportion to their respective Prospect ownership interests.        

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COMPETITION AND MARKETS                                                         

        Competition in the industry is intense, particularly with respect to
the acquisition of producing properties and proved undeveloped acreage. The     
Company competes with the major oil companies and other independent producers of
varying sizes, all of which are engaged in the exploration, development and     
acquisition of producing and non-producing properties. Many of the Company's    
competitors have financial resources and exploration and development budgets    
that are substantially greater than those of the Company, which may adversely   
affect the Company's ability to compete.                                        

The availability of a ready market for and the price of any 
hydrocarbons produced by the Company will depend on many factors beyond the     
control of the Company, including the extent of domestic production and imports 
of foreign oil, the marketing of competitive fuels, the proximity and capacity  
of natural gas pipelines, the availability of transportation and other market   
facilities, the demand for hydrocarbons, the political conditions in            
international oil producing regions, the effect of federal and state regulation 
of allowable rates of production, taxation and the conduct of drilling          
operations and federal regulation of natural gas. In the past, as a result of   
excess deliverability of natural gas, many pipeline companies have curtailed the
amount of natural gas taken from producing wells, shut-in some producing wells, 
significantly reduced gas taken under existing contracts, refused to make       
payments under applicable "take-or-pay" provisions and have not contracted for  
gas available from some newly completed wells. The Company can give no assurance
that such problems will not arise again. In addition, the restructuring of the  
natural gas pipeline industry has eliminated the gas purchasing activity of     
traditional interstate gas transmission pipeline buyers.                        

          Producers of natural gas, therefore, have been required to develop new
markets among gas marketing companies, end users of natural gas and local       
distribution companies. All of these factors, together with economic factors in 
the marketing area, generally may affect the supply and/or demand for oil and   
gas and thus the prices available for sales of oil and gas.                     

GOVERNMENTAL REGULATION                                                         

 The Company's oil and gas exploration, production and related
operations are subject to extensive rules and regulations promulgated by Federal
and state agencies. Failure to comply with such rules and regulations can result
in substantial penalties. The regulatory burden on the oil and gas industry     
increases the Company's cost of doing business and affects its profitability.   
Because such rules and regulations are frequently amended or reinterpreted, the 
Company is unable to predict the future cost or impact of complying with such   
laws.                                                                           

        Production. In most, if not all, areas where the Company may conduct
activities, there may be statutory provisions regulating the production of oil  
and natural gas under which administrative agencies may promulgate rules in     
connection with the operation and production of both oil and gas wells,         
determine the reasonable market demand for oil and gas, and establish allowable 
rates of production. Such regulation may restrict the rate at which the         
Company's wells produce oil or gas below the rate at which such wells would be  
produced in the absence of such regulation, with the result that the amount or  
timing of the Company's revenues could be adversely affected.                   

          Regulation of Operations on Outer Continental Shelf. The Company plans
to acquire oil and gas leases in the Gulf of Mexico. The Outer Continental Shelf
Lands Act ("OCSLA") requires that all pipelines operating on or across the Outer
Continental Shelf (the "OCS") provide open-access, non-discriminatory service.  
Although the Federal Energy Regulatory Commission ("FERC") has opted not to     
impose the regulations of Order No. 509, in which the FERC implemented the      
OCSLA, on gatherers and other non-jurisdictional entities, the FERC has retained
the authority to exercise jurisdiction over those entities if necessary to      
permit non-discriminatory access to service on the OCS. In this regard, the FERC
recently issued a Statement of Policy ("Policy Statement") regarding the        
application of its jurisdiction under the Natural Gas Act of 1938 ("NGA") and   
the OCSLA over natural gas facilities and service on the OCS. In the Policy     
Statement the FERC concluded that facilities located in water depths of 200     
meters or more shall be presumed to have a primary purpose of gathering up to   
the point of interconnection with the interstate pipeline grid. FERC has        
determined that gathering facilities are outside of its jurisdiction. While it  
is not possible to determine what the actual impact                             

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of this new policy will be, since FERC has determined that it will no longer    
regulate the rates and services of OCS transmission facilities under the NGA, it
is possible that the Company could experience an increase in transportation     
costs associated with its OCS natural gas production and, possibly, reduced     
access to OCS transmission capacity.                                            

      Certain operations the Company conducts are on federal oil and gas
leases, which the Minerals Management Service (the "MMS") administers. The MMS  
issues such leases through competitive bidding. These leases contain relatively 
standardized terms and require compliance with detailed MMS regulations and     
orders pursuant to the OCSLA (which are subject to change by the MMS). For      
offshore operations, lessees must obtain MMS approval for exploration plans and 
development and production plans prior to the commencement of such operations.  
In addition to permits required from other agencies (such as the Coast Guard,   
the Army Corps of Engineers and the Environmental Protection Agency), lessees   
must obtain a permit from the MMS prior to the commencement of drilling. The MMS
has promulgated regulations requiring offshore production facilities located on 
the OCS to meet stringent engineering and construction specifications. The MMS  
has proposed additional safety-related regulations concerning the design and    
operating procedures for OCS production platforms and pipelines. The MMS has    
postponed its decision regarding the adoption of these regulations in order to  
gather more information on the subject. The MMS also has regulations restricting
the flaring or venting of natural gas, and has recently amended such regulations
to prohibit the flaring of liquid hydrocarbons and oil without prior            
authorization except under certain limited circumstances. Similarly, the MMS has
promulgated other regulations governing the plugging and abandonment of wells   
located offshore and the removal of all production facilities. To cover the     
various obligations of lessees on the OCS, the MMS generally requires that      
lessees post substantial bonds or other acceptable assurances that such         
obligations will be met. The cost of such bonds or other surety can be          
substantial and there is no assurance that the Company can continue to obtain   
bonds or other surety in all cases.                                             

       In addition, the MMS is conducting an inquiry into certain contract
agreements for which producers on MMS leases have received settlement proceeds  
that are royalty bearing and the extent to which producers have paid the        
appropriate royalties on those proceeds. The Company believes that this inquiry 
will not have a material impact on its financial condition, liquidity or results
of operations.                                                                  

        The MMS has recently issued a notice of proposed rulemaking in which
it proposes to amend its regulations governing the calculation of royalties and 
the valuation of natural gas produced from federal leases. The principal feature
in the amendments, as proposed, would establish an alternative market-index     
based method to calculate royalties on certain natural gas production sold to   
affiliates or pursuant to non-arm's-length sales contracts. The MMS has proposed
this rulemaking to facilitate royalty valuation in light of changes in the gas  
marketing environment. Recently, the MMS announced its intention to reconsider  
the proposal and reopen the comment period. The Company cannot predict what     
action the MMS will take on these matters, nor can it predict at this stage of  
the rulemaking proceeding how the Company might be affected by amendments to the
regulations.                                                                    

          Additional proposals and proceedings that might affect the oil and gas
industry are pending before the FERC and the courts. The Company cannot predict 
when or whether any such proposals may become effective. In the past, the       
natural gas industry has been heavily regulated. There is no assurance that the 
regulatory approach currently pursued by the FERC will continue indefinitely.   

     Bonding and Financial Responsibility Requirements. The Company is
required to obtain bonding, or otherwise demonstrate financial responsibility,  
at varying levels by governmental agencies in connection with obtaining state or
federal leases or acting as an owner or operator on such leases or of oil       
exploration and production related facilities. These bonds may cover such       
obligations as plugging and abandonment of unproductive wells, removal and      
closure of related exploration and production facilities and pollution          
liabilities. The costs of such bonding and financial responsibility requirements
can be substantial and there can be no assurance that the Company will be able  
to obtain such bonds and/or otherwise demonstrate financial responsibility in   
all cases.                                                                      

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    Natural Gas Marketing and Transportation. The FERC regulates the
transportation and sale for resale of natural gas in interstate commerce        
pursuant to the NGA and the Natural Gas Policy Act of 1978 ("NGPA"). In the     
past, the Federal government has regulated the prices at which oil and gas could
be sold. Deregulation of wellhead sales in the natural gas industry began with  
the enactment of the NGPA in 1978. In 1989, Congress enacted the Natural Gas    
Wellhead Decontrol Act (the "Decontrol Act"). The Decontrol Act removed all NGA 
and NGPA price and nonprice controls affecting wellhead sales of natural gas    
effective January 1, 1993. While sales by producers of natural gas can currently
be made at uncontrolled market prices, Congress could reenact price controls in 
the future.                                                                     

        On April 8, 1992, the FERC issued Order No. 636, as amended by Order
No. 636-A (issued in August 1992) and Order No. 636-B (issued in November 1992) 
as a continuation of its efforts to improve the competitive structure of the    
interstate natural gas pipeline industry and maximize the consumer benefits of a
competitive wellhead gas market. Interstate pipelines were required by FERC to  
"unbundle," or separate, their traditional merchant sales services from their   
transportation and storage services and to provide comparable transportation and
storage services with respect to all gas supplies whether purchased from the    
pipeline or from other merchants such as marketers or producers. The pipelines  
must now separately state the applicable rates for each unbundled service (e.g.,
for natural gas transportation and for storage). This unbundling process has    
been implemented through negotiated settlement in individual pipeline services  
restructuring proceedings. Ultimately, Order Nos. 636, et al., may enhance the  
competitiveness of the natural gas market. Order Nos. 636, et al. have recently 
been substantially affirmed by the U.S. Court of Appeals for the D.C. Circuit.  

       It is unclear what impact, if any, increased competition within the
natural gas industry under Order No. 636 will have on the Company's activities. 
Although Order No. 636 could provide the Company with additional market access  
and more fairly applied transportation service rates, Order No. 636 could also  
subject the Company to more restrictive pipeline imbalance tolerances and       
greater penalties for violations of these tolerances.                           

     The FERC has announced its intention to re-examine certain of its
transportation-related policies, including the appropriate manner in which      
interstate pipelines release transportation capacity under Order No. 636, and   
the use of the market-based rates for interstate gas transmission. While any    
resulting FERC action would affect the Company only indirectly, the FERC's      
current rules and policy statements may have the effect of enhancing competition
in natural gas markets by, among other things, encouraging non-producer natural 
gas marketers to engage in certain purchase and sale transactions. The Company  
cannot predict what action the FERC will take on these matters, nor can it      
accurately predict whether the FERC's actions will achieve the goal of          
increasing competition in markets in which the Company's natural gas is sold.   
However, the Company does not believe that it will be treated materially        
differently than other natural gas producers and marketers with which it        
competes.                                                                       

          Recently, the FERC issued a policy statement on how interstate natural
gas pipelines can recover the costs of new pipeline facilities. While this      
policy statement affects the Company only indirectly, in its present form, the  
new policy should enhance competition in natural gas markets and facilitate     
construction of gas supply laterals.                                            

Oil Sales and Transportation Rates. The FERC regulates the  
transportation of oil in interstate commerce pursuant to the Interstate Commerce
Act. Sales of crude oil, condensate and gas liquids by the Company are not      
regulated and are made at market prices. However, the price a company receives  
from the sale of these products is affected by the cost of transporting the     
products to market. Effective as of January 1, 1995, the FERC implemented       
regulations establishing an indexing system for transportation rates for oil    
pipelines, which would generally index such rates to inflation, subject to      
certain conditions and limitations. These regulations could increase the cost of
transporting crude oil, liquids and condensate by pipeline. The Company is not  
able to predict with certainty what effect, if any, these regulations will have 
on it, but other factors being equal, the regulations may tend to increase      
transportation costs or reduce wellhead prices for such commodities.            

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        Environmental. The Company's operations are subject to numerous 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 various permits before drilling      
commences, restrict the types, quantities and concentration of various          
substances that can be released into the environment in connection with drilling
and production activities, limit or prohibit drilling activities on certain     
lands lying within wilderness, wetlands and other protected areas, and impose   
substantial liabilities for pollution resulting from the Company's operations.  
In particular, under the Federal Oil Pollution Act of 1990 ("OPA 90"), certain  
persons (including owners, operators, and demise charters of vessels, owners and
operators of onshore facilities, and lessees, permittees and holders of rights  
of use and easements in areas in which offshore facilities are located          
("responsible parties")) may be held liable for various costs and damages. These
include removal costs and damages, damages to natural resources and damages for 
lost profits, impairment to earning capacity, and destruction of or injury to   
real or personal property. Liability can arise when oil is discharged or poses a
substantial threat of discharge into United States waters. Liability under OPA  
90 is strict, joint and several, unless one of the specific defenses to         
liability applies, including an act of God, an act of war or an act or omission 
of a third party. OPA 90 also requires certain responsible parties to establish 
and maintain evidence of financial responsibility sufficient to meet the maximum
amount of liability to which the responsible party could be subject under the   
liability limitation provisions. Moreover, the recent trend toward stricter     
standards in environmental legislation and regulation is likely to continue. In 
addition, legislation has been proposed in Congress from time to time that would
reclassify certain oil and gas exploration and production wastes as "hazardous  
wastes" which would make the reclassified wastes subject to much more stringent 
handling, disposal and clean-up requirements. If such legislation were to be    
enacted, it could have a significant impact on the operating costs of the       
Company, as well as the oil and gas industry in general. State initiatives to   
further regulate the disposal of oil and gas wastes are also pending in certain 
states, and these various initiatives could have a similar impact on the        
Company. See "Risk Factors -- United States Governmental Regulation, Taxation   
and Price Control."                                                             

         The Comprehensive Environmental Response, Compensation, and Liability
Act ("CERCLA"), also known as the "Superfund" law, imposes liability, without   
regard to fault or the legality of the original conduct, on certain classes of  
persons that are considered to have contributed to the release of a "hazardous  
substance" into the environment. These persons include the owner or operator of 
the disposal site or sites where the release occurred and companies that        
disposed or arranged for the disposal of the hazardous substances found at the  
site. Persons who are or were responsible for releases of hazardous substances  
under CERCLA may be subject to joint and several liability for the costs of     
cleaning up the hazardous substances that have been released into the           
environment and for damages to natural resources, and it is not uncommon for    
neighboring landowners and other third parties to file claims for personal      
injury and property damage.                                                     

OPERATIONAL RISKS AND INSURANCE                                                 

    The Company anticipates that any wells established by it will be
drilled by proven industry contractors under turnkey contracts that limit the   
Company's financial and legal exposure. However, circumstances may arise where  
the Company is unable to secure a turnkey contract on satisfactory terms. In    
this case, the Company may decide to drill, or cause to be drilled, the         
applicable test well(s) on either a footage or day rate basis and the drilling  
thereof will be subject to the usual drilling hazards such as cratering,        
explosions, uncontrollable flows of oil, gas or well fluids, fires, pollution   
and other environmental risks. The Company's 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 accordance with customary 
industry practices, the Company intends to maintain insurance against some, but 
not all, of such risks and some, but not all, of such losses. The occurrence of 
a significant event not fully insured or indemnified against could materially   
and adversely affect the Company's financial condition and operations. Moreover,
no assurance can be given that the Company will be able to maintain adequate    
insurance in the future at rates it considers reasonable.                       

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MAR VENTURES INC.                                                               

       Prior to the Reorganization, the existing assets and liabilities of
Bexy were transferred to its wholly-owned subsidiary, Mar Ventures, Inc. ("Mar  
Ventures"). As part of such Reorganization, the stock of Mar Ventures has been  
distributed to the Original Bexy Stockholders. Buddy Young, the former President
and chief executive officer of Bexy, has agreed to indemnify the Company, the   
former shareholders of Cheniere Operating and their respective officers,        
directors, attorneys and other agents from and against all claims which they may
suffer, incur, or pay arising under or incurred in connection with: (i) the     
operation of the business of Bexy prior to the closing of the Reorganization;   
(ii) any error or omission with respect to a material fact stated or required to
be stated in the proxy materials filed by Bexy in connection with the           
Reorganization or the registration statement filed by Mar Ventures in connection
with the distribution of its common stock to the Original Bexy Stockholders; and
(iii) certain taxes.                                                            

YOUNG CONSULTING AGREEMENT                                                      

       Pursuant to a Consulting Agreement dated as of July 3, 1996 between
Cheniere and Buddy Young, the former President and chief executive officer of   
Bexy, the Company engaged Mr. Young as a consultant to provide management of the
Company with advice regarding the management and business of the Company. Mr.   
Young agreed to provide such consulting services to the Company for 2 years     
ending on July 3, 1998 at a rate of $75,000 per year. Mr. Young is no longer an 
employee of the Company and serves only in the capacity of a consultant.        

EMPLOYEES                                                                       

        The Company has one full-time employee, an administrative assistant,
other than its executive officers.                                              

PROPERTIES                                                                      

     The Company subleases its Houston, Texas headquarters from Zydeco
under a month-to-month sublease covering approximately 1,395 square feet at a   
monthly rental of $1,100. The Company believes that this arrangement gives it   
the necessary flexibility to adapt to the changing space requirements of its    
business.                                                                       

LEGAL PROCEEDINGS                                                               

The Company is not involved in any litigation.              

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MANAGEMENT  

THE COMPANY                                                                     

       The executive officers and directors of the Company are as follows:

                                                                · Download Table

Name                   Age                  Title                
----                   ---                  -----                
                                                                 
William D. Forster...   49  President, Chief Executive Officer   
                            and Director                         
Walter L. Williams...   68  Vice Chairman and Director           
Keith F. Carney......   40  Chief Financial Officer and Treasurer
Charif Souki.........   43  Secretary and Director               
Efrem Zimbalist III..   49  Director                             

      William D. Forster, 49, is currently President and Chief Executive
Officer of Cheniere. Mr. Forster was an investment banker with Lehman Brothers  
from 1975 to 1990 (11 years as a Managing Director), initially in the oil and   
gas department for seven years, and then in various other areas. In 1990, he    
founded his own private investment bank, W. Forster & Co. Inc. In 1994, he      
became active again in the oil and gas business when he began to work together  
with BSR Investments, Ltd., a Paris-based private investment company, to provide
financing for small energy companies. Mr. Forster is a director of Equity Oil   
Company, a Nasdaq National Market company, and he serves on the Board of        
Trustees of Mystic Seaport Museum. He holds a Bachelor of Arts degree in        
economics from Harvard College and a Master of Business Administration degree   
from Harvard Business School.                                                   

         Walter L. Williams, 68, is currently Vice-Chairman of Cheniere. Prior
to joining Cheniere, Mr. Williams spent 32 years as a founder and later Chairman
and Chief Executive Officer of Texoil, Inc., a publicly held Gulf Coast         
exploration and production company. Prior to that time he was an independent    
petroleum consultant. He received a Bachelor of Science degree in petroleum     
engineering from Texas A&M University in 1949 and is a Registered Engineer in   
both the states of Louisiana and Texas. He serves on the board of directors of  
Texoil, Inc. and has served as a Director and Member of the Executive Committee 
of the Board of the Houston Museum of Natural Science.                          

 Keith F. Carney, 40, is currently Chief Financial Officer and
Treasurer of Cheniere. Prior to joining Cheniere, Mr. Carney was a securities   
analyst in the oil & gas exploration/production sector with Smith Barney, Inc.  
from 1992-1996. From 1982-1990 he was employed by Shell Oil as an exploration   
geologist, with assignments in the Gulf of Mexico, the Middle East and other    
areas. He received a Master of Science degree in geology from Lehigh University 
in 1982 and a Master of Business Administration/Finance degree from the         
University of Denver in 1992.                                                   

  Charif Souki, 43, is currently the Secretary and a Director of
Cheniere. Mr. Souki is an independent investment banker with twenty years of    
experience in the industry. In the past few years he has specialized in         
providing financing for promising microcap and small capitalization companies   
with an emphasis on the oil and gas industry. He holds a Bachelor of Arts degree
from Colgate University and a Master of Business Administration from Columbia   
University.                                                                     

     Efrem Zimbalist III, 49, a director of Cheniere, is President and
Chief Executive Officer of Times Mirror Magazines, a division of Times Mirror   
Co., and a Vice President of Times Mirror Co. He formerly served as vice        
president, strategic development for Times Mirror Co. from 1993 to 1995.        
Previously he served as Chairman and Chief Executive Officer of Correia Art     
Glass, Inc., a family owned business. He also served five years as a senior     
engagement manager at the management consulting firm of McKinsey and Co., Inc.  
in Los Angeles. Mr. Zimbalist received a Bachelor of Arts degree in economics   
from Harvard College and a Master's degree in business administration from      
Harvard Business School.                                                        

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DIRECTOR COMPENSATION                                                           

 Directors receive no remuneration for serving on the board of
directors of the Company.                                                       

EXECUTIVE COMPENSATION                                                          

          Simultaneously with the reorganization of Bexy with Cheniere Operating
(the "Reorganization"), all of the officers of Bexy resigned from their         
respective offices and were replaced by the current officers of the Company. As 
the Company has divested itself of the assets relating to the business of Bexy  
prior to the Reorganization and has shifted to a new business, this section     
describes the compensation to be received by the executive officers of the      
Company following the Reorganization on July 3, 1996. The Company presently has 
no employment agreement with any of the Executive Officers.                     

    William D. Forster, President and Chief Executive Officer of the
Company, and Charif Souki, Secretary of the Company, have not received any      
compensation in the form of salary or options and the Company does not currently
intend to pay any such compensation to such officers until the Company has      
raised significant additional capital. The Company provides an apartment for the
use of Mr. Forster and Mr. Souki during times they are in Houston at a total    
cost of $4,800 per month.                                                       

       Walter L. Williams, Vice Chairman of the Company, began receiving a
salary of $120,000 per year on September 1, 1996. By resolution of the Board of 
Directors of the Company dated July 3, 1996, the Company granted to Mr. Williams
certain options to purchase shares of the Common Stock as described below. In   
addition, the Company granted 30,000 shares of the Common Stock to Mr. Williams 
on July 3, 1996, which shares have not yet been issued. Keith F. Carney, Chief  
Financial Officer and Treasurer of the Company, began receiving a salary of     
$90,000 per year on July 16, 1996, the date of his appointment as an officer of 
the Company. By resolution of the Board of Directors of the Company dated July  
23, 1996, the Company granted to Mr. Carney certain options to purchase shares  
of Common Stock as described below.                                             

OPTION GRANTS IN LAST FISCAL YEAR 

  The following table sets forth certain information with respect to
individual grants of stock options made during the fiscal year ended            
August 31, 1996 to each of the named executive officers.                        

                                                        · Enlarge/Download Table

                                                                        Potential Realizable Value at  
                                                                           Assumed Annual Rates of     
                                                                         Stock Price Appreciation for  
                                      Individual Grants                     Option Terms($)/(1)/       
                      -----------------------------------------------  ------------------------------- 
                                                                                                       

                       Number of                                                                       
                      Securities    % of Total  Exercise                                               
                      Underlying     Options    or Base                                                
                        Options     Granted to   Price     Expiration        5%              10%       
                      Granted(#)    Employees    ($/sh)       Date     Appreciation($)  Appreciation($)
                      -----------   ----------  --------   ----------                                  
Name                                                                                                   
--------------------                                                                                   
William D. Forster..            -            -         -            -            -                -    
Walter L. Williams..  75,000/(2)/         25.0      3.00       6/1/01       76,522          173,601    
                      75,000/(3)/         25.0      3.00       6/1/01       91,598          213,461    
Keith F. Carney.....  37,500/(4)/         12.5      3.00      7/16/01       38,261           86,801    
                      37,500/(4)/         12.5      3.00      7/16/01       45,799          106,731    
                      37,500/(4)/         12.5      3.00      7/16/01       53,714          128,654    
                      37,500/(4)/         12.5      3.00      7/16/01       62,024          152,769    

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____________________                                                        
  /(1)/ The indicated dollar amounts are the result of calculations based on the
    exercise price of each option and assume five and ten percent annual
     appreciation rates set by the Securities and Exchange Commission over
   the term of the option and, therefore, are not intended to forecast
   possible future appreciation, if any, of the Company's stock price.
 /(2)/ Each of these stock options vest and become exercisable on June 1, 1997
and expire five years from the date of grant.                   
 /(3)/ Each of these stock options vest and become exercisable on June 1, 1998
and expire five years from the date of grant.                   
/(4)/ The Company granted Mr. Carney 150,000 stock options on July 23, 1996.
       The options vest and become exercisable in equal annual installments of
        25% each on the first through fourth anniversaries of July 16, 1996, and
expire on the fifth anniversary of the date of grant.           

AGGREGATED OPTION EXERCISED IN LAST FISCAL YEAR 
AND FISCAL YEAR-END OPTION VALUE  

      The following table sets forth certain information with respect to the
outstanding stock options as of August 31, 1996 for each of the named       
executive officers.                                                         

                                                                · Download Table

                         Number of Securities        Value of Unexercised   
                        Underlying Unexercised       In-the-Money Options   
                        Options at 8/31/96 (#)          at 8/31/96 ($)      
                      --------------------------  --------------------------
                      Exercisable  Unexercisable  Exercisable  Unexercisable
                      -----------  -------------  -----------  -------------
                                                                            
Name                                                                        
----                                                                        
William D. Forster..            -              -            -              -
Walter L. Williams..            -        150,000            -    37,500/(1)/
Keith F. Carney.....            -        150,000            -    37,500/(1)/
                      -----------        -------  -----------    -----------

/(1)/ Market value of underlying securities at fiscal year-end 8/31/96      
($3.25), minus the exercise price.                              

CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT                          

        BSR Investments, Ltd. ("BSR"), an entity holding approximately 25.9%
of the outstanding shares of the Common Stock, is under the control of a member 
of the immediate family of Charif Souki, Secretary and a director of the        
Company. Mr. Souki has been engaged, from time to time, as a consultant to BSR. 
In addition, BSR has in the past provided certain financial advisory and other  
services to the Company on an arm's length basis. Mr. Souki disclaims beneficial
ownership of all shares held by BSR.                                            

DIRECTOR LIABILITY                                                              

        The Amended and Restated Certificate of Incorporation of the Company
eliminates the liability of directors of the Company to the Company or its      
stockholders (in their capacity as directors but not in their capacity as       
officers) to the fullest extent permitted by Section 102 of the Delaware General
Corporation Law, as the same may be amended from time to time (the "DGCL").     
Specifically, under Section 102 of the DGCL, directors of the Company will not  
be personally liable for monetary damages for breach of a director's fiduciary  
duty as a director, except for liability (i) for any breach of the director's   
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions  
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for unlawful payments or dividends or unlawful stock repurchases  
or redemption as provided in Section 174 of the DGCL or (iv) for any transaction
from which the director derived an improper personal benefit.                   

DESCRIPTION OF CAPITAL STOCK  

        The Company has 21,000,000 authorized shares of stock, consisting of
(a) 20,000,000 shares of the Common Stock, having a par value of $.003 per      
share, and (b) 1,000,000 shares of preferred stock, having a par value of $.0001
per share (the "Preferred Stock").                                              

   The shares of the Common Stock being registered pursuant to the
registration statement of which this prospectus is a part include (i) 794,211   
shares issued in connection with the Reorganization to the initial subscribers  
for common stock of Cheniere Operating and their transferees, other than shares 
held by BSR Investments, Ltd. and William D. Forster, (ii) 2,000,000 shares     
issued in connection with the Reorganization to holders of common stock of      
Cheniere Operating issued in May and June 1996 pursuant to Regulation D and     
(iii) 50,000 shares issued in July 1996 pursuant to Regulation D.               

COMMON STOCK                                                                    

 As of September 27, 1996, there were 10,039,594 shares of the
Common Stock outstanding. All of such outstanding shares of Common Stock are    
fully paid and nonassessable. Each share of the Common Stock has an equal and   

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ratable right to receive dividends when, as and if declared by the Board of     
Directors of the Company out of assets legally available therefor and subject to
the dividend obligations of the Company to the holders of any Preferred Stock   
then outstanding.                                                               

        In the event of a liquidation, dissolution or winding up of the Company,
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 the
Company. 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.       

      In accordance with the Reorganization Agreement and a letter agreement
dated July 3, 1996 between Buddy Young and Cheniere, the Company agreed not to  
engage in any reverse split or any transaction that has the effect of a reverse 
split, resulting in the combination of shares of the Common Stock without the   
prior written consent of Mr. Young for a period of 18 months, ending on January 
3, 1998.                                                                        

PREFERRED STOCK                                                                 

    As of the date of this Prospectus, there were 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 certain       
circumstances, make it more difficult for a third party to gain control of the  
Company.                                                                        

WARRANTS                                                                        

        The Company has issued and outstanding certain warrants described herein
(collectively, the "Warrants"). The Company is not registering such Warrants or 
the Common Stock underlying such Warrants pursuant to the registration statement
of which this prospectus is a part.                                             

The Company has issued and outstanding 141,666 and 2/3 warrants 
(collectively, the "June Warrants"), each of which entitles the registered      
holder thereof to purchase one share of Common Stock. The June Warrants are     
exercisable at any time on or before June 14, 1999, at an exercise price of     
$3.00 per share (subject to customary anti-dilution adjustments). The June      
Warrants were originally issued by Cheniere Operating and were converted to     
warrants of Cheniere following the Reorganization. The June Warrants were issued
to a group of 11 investors in connection with a private placement of unsecured  
promissory notes of Cheniere Operating in the aggregate principal amount of     
$425,000. In connection with the issuance of a new promissory note to one such  
investor, the Company has agreed to issue to such investor up to 21,500         
additional warrants to purchase shares of the Common Stock (on terms similar to 
the June Warrants) for each month, or partial month after September 14, 1996 any
amounts remain due and payable on such new promissory note, up to a maximum     
aggregate number of 86,000 such additional warrants. (See "Management Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and  
Capital Resources.")                                                            

     In consideration of certain investment advisory and other services to
the Company, pursuant to warrant agreements each dated as of August 21, 1996,   
the Company issued to C.M. Blair, W.M. Foster & Co., Inc. and Redliw Corp.      
warrants to purchase 13,600 and 54,400 shares of Common Stock, respectively     
(collectively the "Adviser Warrants"). The Adviser Warrants are exercisable at  
any time on or before May 15, 1999 at an exercise price of $3.00 per share      
(subject to customary anti-dilution adjustments).                               

       In connection with the July and August 1996 placement of 508,400 shares
of the Common Stock pursuant to Regulation S promulgated under the Securities   
Act of 1933, as amended (the "Securities Act"), the Company agreed to issue     
warrants to purchase 12,500 shares of Common Stock to one of two distributors   
who placed the shares. Such warrants are exercisable on                         

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or before the second anniversary of the sale of the shares of Common Stock at an
exercise price of $3.125 per share (subject to customary anti-dilution          
adjustments).                                                                   

In late August 1996, the Company sold 100,000 units pursuant to 
Regulation S, each such unit consisting of 5 shares of the Common Stock and a   
warrant to purchase one share of the Common Stock. Each such warrant is         
exercisable on or before September 1, 1999 at an exercise price of $3.125 per   
share (subject to customary anti-dilution adjustments).                         

       The Warrants do not confer upon the holders thereof any voting or other
rights of a stockholder of the Company.                                         

POSSIBLE ANTI-TAKEOVER PROVISIONS                                               

    The Amended and Restated Certificate of Incorporation of the Company
(the "Company's Charter") contains certain provisions that might be             
characterized as anti-takeover provisions. Such provisions may render more      
difficult certain possible takeover proposals to acquire control of the Company 
and make removal of management of the Company more difficult.                   

As described above, the Company's Charter authorizes a class of 
undesignated Preferred Stock consisting of 1,000,000 shares. 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 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 certain       
circumstances, make it more difficult for a third party to gain control of the  
Company.                                                                        

    The Company is incorporated under the laws of the State of Delaware.
Section 203 of the Delaware General Corporation Law prevents an "interested     
stockholder" (defined as a stockholder owning 15 percent or more of a           
corporation's voting stock) 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 (a) the corporation's board of directors had      
earlier approved either the business combination or the transaction by which the
stockholder became an interested stockholder, or (b) upon attaining that 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), or (c) 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). Although the Company  
is not currently subject to Section 203, the Company intends to apply for       
listing on the Nasdaq SmallCap Market as soon as practicable. See "The Company".
If and when the Company becomes so listed, and if the Company does not amend its
Certificate of Incorporation or By-laws to exclude the application of Section   
203, such section will apply to the Company and thus may inhibit an interested  
stockholder's ability to acquire additional shares of Common Stock or otherwise 
engage in a business combination with the Company.                              

      In addition, William D. Forster, President and Chief Executive Officer
of the Company, and BSR Investments, Ltd. ("BSR"), an entity under the control  
of a member of the immediate family of Charif Souki, Secretary and a director of
the Company, own in the aggregate approximately 54.3% of the outstanding shares 
of the Common Stock. Accordingly, Mr. Forster and BSR have the ability to       
effectively prevent or cause a change in control of the Company.                

TRANSFER AGENT AND REGISTRAR                                                    

   The Transfer Agent and registrar for the Common Stock is U.S. Stock
Transfer Corporation.                                                           

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SELLING STOCKHOLDERS  

     The Registration Statement has been filed under the Securities Act of
1933, as amended (the "Securities Act") to afford the holders of the Common     
Stock listed in the table below (in such capacity, the "Selling Stockholders")  
the opportunity to sell such Common Stock in a public transaction. The Company  
will from time to time supplement or amend this Prospectus to (i) add any holder
of the Common Stock or (ii) reflect any additional required information         
concerning any Selling Stockholders or concerning any transfers other than an   
open market transfer effected through a broker.                                 

                                                        · Enlarge/Download Table

                                  Beneficial Ownership                          Beneficial Ownership            
                                   on the Date Hereof                               After Sale*                 
                                  --------------------                          --------------------            
                                                                                                                
                                  Number of     Percent of  Number of Shares    Number of             Percent of
Name                              Shares          Class      to be Offered       Shares                 Class   
----                              ---------     ----------  ----------------    ---------             ----------
Apex Investment Fund Ltd.         403,400          4.0           70,000       333,400                    3.3    
Bemel & Ross Profit Sharing        10,000           **           10,000             0                      0    
Charles M. Blair, IRA              50,000           **           50,000             0                      0    
Robert Bowden                      10,000           **           10,000             0                      0    
Martin Brander                     30,000           **           30,000             0                      0    
Jacqueline B. Brandwynne          100,000           **          100,000             0                      0    
Cinco de Mayo, Ltd.                50,000           **           50,000             0                      0    
Ronald W. Cochran                  20,000           **           20,000             0                      0    
Codell Holdings, Ltd.             250,000          2.5          250,000             0                      0    
Joseph F. Cullman III             200,000          2.0          200,000             0                      0    
Murray A. Decoteau, DDS           100,000           **          100,000             0                      0    
Delaware Charter Guarantee         20,000           **           20,000             0                      0    
Peter T. Dixon, Trustee for U/Art  35,000           **           35,000             0                      0    
16 u/w for W. Palmer Dixon FBO                                                                                  
Peter Dixon                                                                                                     
Peter T. Dixon, Trustee for U/Art  35,000           **           35,000             0                      0    
16 u/w for W. Palmer Dixon FBO                                                                                  
Palmer Dixon                                                                                                    
Bryan Ezralow TTEE of the Bryan    30,000           **           30,000             0                      0    
Ezralow 1994 Trust                                                                                              
Marc Ezralow                       30,000           **           30,000             0                      0    
Marshall Ezralow TTEE of the       40,000           **           40,000             0                      0    
Ezralow Family Trust                                                                                            
Allen Finkelstein                  30,000           **           30,000             0                      0    
Gail Daly Forster/1/              120,000          1.2          120,000             0                      0    
Gail Daly Forster and John        100,000           **          100,000             0                      0    
Marshall Forster TTEEs u/a 8/22/78                                                                              
by William H. Forster/2/                                                                                        
William Franzblau                  10,000           **           10,000             0                      0    
Ralph O. Hellmold                  20,000           **           20,000             0                      0    
Beth Hoemke                        20,000           **           20,000             0                      0    
Sandra J. Kessler                 150,000          1.5          150,000             0                      0    
Sole and Separate Property                                                                                      
Ted Koutsoubos                    100,000           **          100,000             0                      0    
Andrew Lessman                    100,000           **          100,000             0                      0    
Michael Marcus                     40,000           **           40,000             0                      0    
Arden Merback                      20,000           **           20,000             0                      0    
Eli Moshen                         20,000           **           20,000             0                      0    
Ostis Ventures, Ltd.              148,000          1.5          144,211         3,789                     **    
Alan, Mark & Charlen J. Mark       10,000           **           10,000             0                      0    
Brooke A. Peterson                 20,000           **           20,000             0                      0    
Pierre Phillippine                 30,000           **           30,000             0                      0    
Bert Rogel, Esq. in trust for      90,000           **           90,000             0                      0    
Estate of Sharon Heinz Tingle                                                                                   
Wayne A. Root                      10,000           **           10,000             0                      0    
Alan Sturm                        150,000          1.5          150,000             0                      0    
Diana Venegas                      50,000           **           50,000             0                      0    
Vincente Holdings, Ltd.           250,000          2.5          250,000             0                      0    
Vivaldi, Ltd.                     130,000          1.3          130,000             0                      0    
Michael J. Wagstaff                10,000           **           10,000             0                      0    
William Forster Family Trust/3/   120,000          1.2          120,000             0                      0    


___________________________                                                     

*  Assumes the sale of all shares of the Common Stock being offered by
the registration statement of which this Prospectus is a part.  

**  Less than 1%                                                        

  (1)  Gail Daly Forster is the mother of William D. Forster, President, Chief
Executive Officer and a director of the Company.                

   (2)  Gail Daly Forster and John Marshall Forster TTEEs u/a 8/22/78 by William
      H. Forster is a trust for the benefit of Mr. Forster's mother of which
       trust Mr. Foster ia a 20% remainderman. Mr. Foster disclaims beneficial
ownership of the shares of the Common Stock held by such trust. 

(3)  The William Forster Family Trust is a trust for the benefit of the   
     descendants of Mr. Forster's father. Mr. Forster disclaims beneficial
ownership of the shares of Common Stock held by such trust.     

       The Company has agreed, among other things, to bear all expenses (other
than underwriting discounts and commissions, fees and expenses of investment    
bankers and brokerage commissions) incurred in connection with the registration 
and sale of the Common Stock covered by this Prospectus, including, without     
limitation, all registration, listing and qualification fees, printers and      
accounting fees and fees and disbursements of counsel to the Company.           

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PRINCIPAL STOCKHOLDERS  

The following table sets forth certain information regarding the
ownership of the Common Stock, of: (i) each person known by the Company to own  
beneficially five percent or more of the outstanding Common Stock immediately   
prior to the offering; (ii) each of the Company's directors; (iii) each of the  
executive officers of the Company; and (iv) all directors and executive officers
of the Company as a group.                                                      

                                                        · Enlarge/Download Table

                                                                      SHARES BENEFICIALLY       
                                                                         OWNED PRIOR TO         
                                                                          THE OFFERING          
                                                              ----------------------------------
                  NAME OF BENEFICIAL OWNER                                          PERCENTAGE  
                  ------------------------                                          OF SHARES   
                                                                     NUMBER         OUTSTANDING 
                                                                     ------         ----------- 

                                                                                                
William D. Forster                                               2,846,211/(1)/          28.3%  
BSR Investments, Ltd.                                            2,602,000               25.9   
Charif Souki                                                             0/(2)/                 
Walter L. Williams                                                  30,000/(3)/(4)         .3   
Keith F. Carney                                                          0/(3)/             -   
Efrem Zimbalist III                                                 20,000                 .2   
All directors and executive officers as a group (5 persons)..    2,896,211/(1)/(2)/      28.9   

      (1) Does not include 100,000 shares held by a trust for the benefit of
Mr. Forster's mother of which trust Mr. Forster is a 20%
           remainderman and of which shares he disclaims beneficial ownership.

       (2) Does not include 2,602,000 shares held by BSR Investments, Ltd., an
     entity under the control of a member of Mr. Souki's immediate
         family, of which shares Mr. Souki disclaims beneficial ownership.

     (3) Does not include 150,000 shares of the Common Stock issuable upon
           the exercise of options, not exercisable within 60 days of the date
        of this Prospectus, held by each of Mr. Williams and Mr. Carney.

        (4) The 30,000 shares of the Common Stock held by Mr. Williams have been
granted by the Company, but have not yet been issued.   

PLAN OF DISTRIBUTION  

        The shares of the Common Stock offered hereby are being offered directly
by the Selling Stockholders. The sale of the Common Stock may be effected by the
Selling Stockholders from time to time in transactions in the over-the-counter  
market, in negotiated transactions or a combination of such methods of sale, in 
each such case, at fixed prices which may be changed, at market prices          
prevailing at the time of sale, at prices related to prevailing market prices,  
or at negotiated prices. The Selling Stockholders may effect such transactions  
by selling Common Stock to or through broker-dealers, and such broker-dealers   
may receive compensation in the form of underwriting discounts, concessions or  
commissions from Selling Stockholders and/or purchasers of Common Stock for whom
such broker-dealers may act as agents or to whom they sell as principals, or    
both (which compensation as to a particular broker-dealer may be in excess of   
customary commissions). The Company will keep this Registration Statement or a  
similar registration statement effective until the earliest to occur of (i) the 
date that all securities registered pursuant to the Registration Statement of   
which this Prospectus is a part have been disposed of in accordance with the    
plan of disposition indicated herein, (ii) the date that all securities         
registered pursuant to the Registration Statement of which this Prospectus is a 
part have become eligible for sale pursuant to Rule 144(k) under the Securities 
Act, or (iii) September 17, 1998.                                               

  At the time a particular offer of the Common Stock is made, to the
extent required, a supplemental Prospectus will be distributed which will set   
forth the number of shares of the Common Stock being offered and the terms of   
the offering including the name or names of any underwriters, dealers or agents,
the purchase price paid by any underwriter for the Common Stock purchased from  
the Selling Stockholders,                                                       

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any discounts, commissions and other items constituting compensation from the   
Selling Stockholders and any discounts, commissions or concessions allowed or   
reallowed or paid to dealers.                                                   

     In order to comply with certain state securities laws, if applicable,
the Common Stock will be sold in such jurisdictions only through registered or  
licensed brokers or dealers. In addition, in certain states the Common Stock may
not be sold unless the Common Stock has 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 by the Company and the Selling    
Stockholder.                                                                    

        The Selling Stockholders and any brokers-dealers, agents or underwriters
that participate with Selling Stockholders in the distribution of Common Stock  
may be deemed to be "underwriters" as defined in the Securities Act in which    
event all brokerage commissions or discounts and other compensation received by 
such Selling Stockholders, brokers-dealers, agents or underwriters may be deemed
underwriting compensation under the Securities Act. In addition, any of the     
shares of Common Stock that qualify for sale pursuant to Rule 144 may be sold   
under Rule 144 rather than pursuant to this Prospectus.                         

        Under applicable rules and regulations under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), any person engaged in the distribution
of the Common Stock may not simultaneously engage in market making activities   
with respect to the Company for a period of nine business days prior to the     
commencement of such distribution. In addition and without limiting the         
foregoing, the Selling Stockholders will be subject to applicable provisions of 
the Exchange Act and the rules and regulations thereunder, including, without   
limitation, Rules 10b-6 and 10b-7, which provisions may limit the timing of     
purchases and sales of shares of Common Stock by the Selling Stockholders.      

        The Company agreed to register the Common Stock under the Securities Act
and to indemnify and hold the Selling Stockholders harmless against certain     
liabilities under the Securities Act that could arise in connection with the    
sale by the Selling Stockholders of the Common Stock.                           

See "Selling Stockholders".                                     

LEGAL MATTERS 

       Certain legal matters in connection with the Common Stock being offered
hereby will be passed upon for the Company by Dewey Ballantine, New York, New   
York.                                                                           

EXPERTS 

       The audited financial statements of Cheniere Operating included in this
prospectus and elsewhere in the registration statement, to the extent and for   
the periods indicated in their reports, have been audited by Merdinger,         
Fruchter, Rosen & Corso, P.C., independent public accountants, as indicated in  
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said     
reports.                                                                        

      The audited financial statements of Bexy Communications, Inc. included
in this Prospectus and elsewhere in the registration statement, to the extent   
and for the periods indicated in their reports, have been audited by Farber &   
Hass, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as 
experts in accounting and auditing in giving said reports.                      

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AVAILABLE INFORMATION 

        The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other      
information with the Commission. The reports, proxy statements and other        
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary    
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's  
Regional Offices at 7 World Trade Center, New York, New York 10048 and the      
Northwestern Atrium Center, 500 West Madison Street, Room 1400, Chicago,        
Illinois 60661. Copies of such material also can be obtained from the Public    
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.   
20549 at prescribed rates.                                                      

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INDEX TO FINANCIAL STATEMENTS 
----------------------------- 

CONTENTS                                                                        
--------                                                                        

CHENIERE ENERGY, INC. AND SUBSIDIARY                                            
------------------------------------                                            

Independent Auditors' Report                      F-1                           

Consolidated Balance Sheet                        F-2                           

Consolidated Statement of Operations              F-3                           

Consolidated Statement of Stockholders' Equity    F-4                           

Consolidated Statement of Cash Flows              F-5 - F-6                     

Notes to Consolidated Financial Statements        F-7 - F-13                    

BEXY COMMUNICATIONS, INC.                                                       
-------------------------                                                       

Unaudited Balance Sheet May 31, 1996              F-14                          

Statement of Operations                           F-15                          

Statement of Cash Flows                           F-16                          

Notes to Financial Statements                     F-17 - F-18                   

Independent Auditors' Report - August 3, 1995     F-19                          

Balance Sheet                                     F-20                          

Statement of Operations                           F-21                          

Statement of Shareholders' Equity                 F-22 - F-23                   

Statement of Cash Flows                           F-24 - F-25                   

Notes to Financial Statements                     F-26 - F-28                   

Independent Auditors' Report - August 31, 1994    F-29                          

Balance Sheet                                     F-30                          

Statements of Operations                          F-31                          

Statements of Shareholders' Equity                F-32                          

Statements of Cash Flows                          F-33 - F-34                   

Notes to Financial Statements                     F-35 - F-37                   

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INDEPENDENT AUDITOR'S REPORT  

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF                                   
CHENIERE ENERGY, INC. AND SUBSIDIARY                                            

We have audited the accompanying consolidated balance sheet of CHENIERE ENERGY, 
INC. AND SUBSIDIARY as of August 31, 1996 and the related consolidated          
statements of operations, stockholders' equity, and cash flows for the year then
ended.  These consolidated financial statements are the responsibility of the   
Company's management.  Our responsibility is to express an opinion on these     
consolidated financial statements based on our audit.                           

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable 
assurance about whether the financial statements are free of material           
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audit provides a reasonable basis for our opinion.          

In our opinion, the consolidated financial statements referred to above present 
fairly, in all material respects, the financial position of CHENIERE ENERGY,    
INC. AND SUBSIDIARY as of August 31, 1996 and the results of its operations and 
its cash flows for the year then ended in conformity with generally accepted    
accounting principles.                                                          

               MERDINGER, FRUCHTER, ROSEN & CORSO, P.C
    Certified Public Accountants

New York, New York                                                              
September 16, 1996                                                              

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CHENIERE ENERGY, INC. AND SUBSIDIARY  
CONSOLIDATED BALANCE SHEET  
AUGUST 31, 1996 

                                                                · Download Table


                                                                       
    ASSETS                                                             
CURRENT ASSETS                                                         
  Cash                                                     $ 1,093,180 
  Prepaid Expenses                                               4,800 
                                                           ----------- 

  TOTAL CURRENT ASSETS                                       1,097,980 
                                                           ----------- 

PROPERTY AND EQUIPMENT, NET                                     46,830 
                                                           ----------- 

OTHER ASSETS                                                           
  Investment                                                 4,000,000 
  Security Deposit                                                 500 
                                                           ----------- 

  TOTAL OTHER ASSETS                                         4,000,500 
                                                           ----------- 

  TOTAL ASSETS                                             $ 5,145,310 
                                                           =========== 

    LIABILITIES AND STOCKHOLDERS' EQUITY                               
CURRENT LIABILITIES                                                    
  Accounts Payable                                         $   275,975 
  Accrued Expenses and Taxes Payable                            16,929 
  Loans Payable                                                425,000 
  Advance from Officers                                            961 
                                                           ----------- 

    TOTAL LIABILITIES                                          718,855 
                                                           ----------- 

STOCKHOLDERS' EQUITY                                                   
  Common Stock--$.003 Par Value                                        
   Authorized 20,000,000 shares;                                       
   9,931,767 Issued and Outstanding                             29,795 
  Preferred Stock - Authorized                                         
   1,000,000 shares; None Issued                                       
   and Outstanding.                                                 -- 
  Additional Paid-in-Capital                                 5,626,840 
  Retained Deficit                                          (1,230,180)
                                                           ----------- 

   TOTAL STOCKHOLDERS' EQUITY                                4,426,455 
                                                           ----------- 

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $ 5,145,310 
                                                           =========== 

The accompanying notes are an integral part of the financial statements.        

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CHENIERE ENERGY, INC. AND SUBSIDIARY  
CONSOLIDATED STATEMENT OF OPERATIONS  
FOR THE YEAR ENDED AUGUST 31, 1996  

                                                                · Download Table


                                                                    
Revenue                                                  $       -- 

General and Administrative Expenses                          73,814 
Interest Expense                                              7,083 
                                                         ---------- 

Loss from Operations Before Other Income                    (80,897)

Interest Income                                               1,800 
                                                         ---------- 

Loss From Continuing Operations Before Income Taxes         (79,097)

Provision for Income Taxes                                       -- 
                                                          ----------

Loss From Continuing Operations                             (79,097)
                                                          ----------

Discontinued Operations                                             

  Loss From operations of discontinued                              
  business (less applicable income taxes                            
  of $0)                                                   (149,080)

  Loss on disposal of business (less                                
  applicable income taxes of $0)                            (58,642)
                                                          ----------

  Loss From Discontinued Operations                        (207,722)
                                                           ---------

Net Loss                                                 $ (286,819)
                                                          ==========

Loss Per Share                                           $     (.03)
                                                          ==========


The accompanying notes are an integral part of the financial statements.        

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CHENIERE ENERGY, INC. AND SUBSIDIARY  
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY  
FOR THE YEAR ENDED AUGUST 31, 1996  

                                                        · Enlarge/Download Table


                                    Common Stock         Additional                     Notes          Total     
                             -------------------------    Paid-In       Retained      Receivable    Stockholders'
                                Shares        Amount      Capital       Deficit      Stockholders      Equity    
                             -------------  ----------  ------------  ------------  --------------  ------------ 
                                                                                                                 

Balance - September 1, 1995     1,558,947   $ 133,654    $  992,831   $(  943,361)       $(46,674)   $  136,450  

Sales of Shares - Prior to                                                                                       
  Reorganization                  244,512      13,750       123,750             -               -       137,500  

Exchange of Shares - Due to                                                                                      
  Reverse Split                (1,202,514)   (145,601)      145,601             -               -             -  

Sale of Shares - At Time of                                                                                      
  and  Subsequent to the                                                                                         
  Reorganization                9,330,822      27,992     5,087,011             -               -     5,115,003  

Expenses Related                                                                                                 
  to Offering                           -           -    (  609,451)            -               -   (   609,451) 

Repayment of Receivable                 -           -             -             -          16,439        16,439  

Distribution of Net Assets              -           -    (  112,902)            -          30,235   (    82,667) 

Net Loss                                -           -             -   (   286,819)              -   (   286,819) 
                             ------------   ---------    ----------   -----------   -------------    ----------  

Balance - August 31, 1996       9,931,767   $  29,795    $5,626,840   $(1,230,180)  $           -    $4,426,455  
                             ============   =========    ==========   ===========   =============    ==========  


The accompanying notes are an integral part of this report. 

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CHENIERE ENERGY, INC. AND SUBSIDIARY  
CONSOLIDATED STATEMENT OF CASH FLOWS  
FOR THE YEAR ENDED AUGUST 31, 1996  

                                                                · Download Table
                                                                   
CASH FLOWS FROM OPERATING ACTIVITIES                               
  Net Loss                                             $  (286,819)
  Adjustments to Reconcile Net Loss to                             
   Net Cash Provided by Operating Activities:                      
  Depreciation                                               4,503 
  (Increase) in Accounts Receivable                         (5,600)
  (Increase) in Prepaid Expenses                            (4,800)
  Decrease in Inventory                                      2,700 
  (Increase) in Security Deposit                              (500)
  Decrease in Other Assets                                   2,122 
  Increase in Accounts Payable                             279,514 
  (Decrease) in Accrued Expenses and Taxes Payable          11,949 
  Increase in Advance from Officers                            961 
                                                       ----------- 

NET CASH PROVIDED BY OPERATING ACTIVITIES                    4,030 
                                                       ----------- 

CASH FLOWS FROM INVESTING ACTIVITIES:                              
  Purchase of Furniture, Fixtures and Equipment            (50,999)
  Investment                                            (4,000,000)
                                                       ----------- 

NET CASH USED BY INVESTING ACTIVITIES                   (4,050,999)
                                                       ----------- 

CASH FLOWS FROM FINANCING ACTIVITIES:                              
  Sale of Common Stock                                   5,252,503 
  Offering Costs                                          (609,451)
  Proceeds of Loan                                         425,000 
  Notes Receivable                                          16,439 
  Notes Payable                                             (7,519)
  Distribution                                             (50,957)
                                                       ----------- 

NET CASH PROVIDED BY FINANCING ACTIVITIES                5,026,015 
                                                       ----------- 

NET INCREASE IN CASH                                       979,046 

CASH - BEGINNING OF PERIOD                                 114,134 
                                                       ----------- 

CASH - AUGUST 31, 1996                                 $ 1,093,180 
                                                       =========== 


The accompanying notes are an integral part of the financial statements.        

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CHENIERE ENERGY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 1996

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                               
Cash paid for interest       $        -                               
Cash paid for income taxes   $        -                               

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:                                 

During the year, the Company distributed the assets and liabilities of its      
discontinued operations.  The net noncash distribution was $61,945.             

The accompanying notes are an integral part of the financial statements.        

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CHENIERE ENERGY, INC. AND SUBSIDIARY  
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996 

NOTE 1 - NATURE OF OPERATIONS                                                   

Cheniere Energy, Inc., a holding company ("Cheniere," together with Cheniere  
Operating (as defined below), the "Company"), is the owner of 100% of the     
outstanding common stock of Cheniere Energy Operating Co., Inc. ("Cheniere    
Operating").  Cheniere Operating is a Houston-based company formed for the    
purpose of oil and gas exploration and exploitation.  The Company is currently
 involved in a joint exploration program which is engaged in the exploration for
oil and natural gas along the Gulf Coast of Louisiana, onshore and in the     
shallow waters of the Gulf of Mexico.  The Company commenced its oil and gas  
activities through such joint program in April 1996.                          

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             

Basis of Consolidation                                                        
----------------------                                                        

The consolidated financial statements include the accounts of Cheniere Energy,
Inc. and its 100% owned subsidiary, Cheniere Energy Operating Co., Inc.       
Accordingly, all references herein to Cheniere Energy, Inc. or the "Company"  
include the consolidated results of its subsidiary.  All significant          
intercompany accounts and transactions have been eliminated in consolidation. 

Property and Equipment                                                        
----------------------                                                        

 Property and equipment are recorded at cost.  Repairs and maintenance costs are
 charged to operations as incurred.  Depreciation is computed using the straight
line method calculated to amortize the cost of assets over their estimated    
useful lives, generally seven years.  Upon retirement or other disposition of 
property and equipment the cost and related depreciation will be removed from 
the accounts and the resulting gains or losses recorded.                      

Concentration of Credit Risk                                                  
----------------------------                                                  

The Company places its cash in what it believes to be credit-worthy financial 
institutions.  However, cash balances exceed FDIC insured levels at various   
times during the year.                                                        

Cash Equivalents                                                              
----------------                                                              

 The Company classifies all investments with original maturities of three months
or less as cash equivalents.                                                  

Income Taxes                                                                  
------------                                                                  

Income taxes are provided for based on the liability method of accounting     
pursuant to Statement of Financial Accounting Standards (SFAS) No. 109,       
"Accounting for Income Taxes".  Deferred income taxes are recorded to reflect 
the tax consequences on future years of differences between the tax bases of  
assets and liabilities and their financial reporting amounts at each year-end.

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CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)                 

Use of Estimates                                                              
----------------                                                              

The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions   
that affect the reported amounts of assets and liabilities and disclosure of  
contingent assets and liabilities at the date of the financial statements and 
the reported amounts of revenues and expenses during the reporting period.    
Actual results could differ from those estimates.                             

NOTE 3- PROPERTY AND EQUIPMENT                                                  

Property and equipment at August 31, 1996 consist of the following:           

                                                                · Download Table


                                                       
Furniture and Fixtures                          $26,006
Office Equipment                                 24,427
                                                -------
                                                 50,433
Less Accumulated Depreciation                     3,603
                                                -------
Property and Equipment - Net                    $46,830
                                                =======

NOTE 4 - REORGANIZATION                                                         
--------------                                                

On July 3, 1996 Cheniere Operating consummated the transactions (the          
 "Reorganization") contemplated in the Agreement and Plan or Reorganization (the
 "Reorganization Agreement") dated April 16, 1996 between Cheniere Operating and
Bexy Communications, Inc., a publicly held Delaware corporation ("Bexy").     
Under the terms of the Reorganization Agreement, Bexy transferred its existing
 assets and liabilities to Mar Ventures, Inc., its wholly-owned subsidiary ("Mar
Ventures"), Bexy received 100% of the outstanding shares of Cheniere Operating
and the former shareholders of Cheniere Operating received approximately 8.3  
million newly issued shares of Bexy common stock, representing 93% of the then
issued and outstanding Bexy shares.  Immediately following the Reorganization,
the Original Bexy Stockholders held the remaining 7% of the outstanding Bexy  
stock.  In accordance with the terms of the Reorganization Agreement, Bexy    
changed its name to Cheniere Energy, Inc.  Subsequently, the Company          
distributed the outstanding capital stock of Mar Ventures to the original     
holders of Bexy common stock.                                                 

NOTE 5 - INVESTMENT IN JOINT VENTURE                                            
---------------------------                                   

The Company has entered into a joint exploration program pursuant to an       
Exploration Agreement between the Company and Zydeco Exploration, Inc.        
("Zydeco"), an operating subsidiary of Zydeco Energy, Inc. (the "Exploration  
Agreement"), with regard to a new proprietary 3-D seismic exploration project 
in southern Louisiana (the "3-D Joint Venture").  The Company has the right to
earn up to a 50% participation in the 3-D Joint Venture.  The Company believes
that the 3-D seismic survey (the "Survey") is the first of its size within the
Transition Zone of Louisiana, an area extending a few miles on either side of 
the Louisiana State coastline.                                                

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CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996 

NOTE 5 - INVESTMENT IN JOINT VENTURE (CONTINUED)                                
---------------------------------------                       

 The Survey is to be conducted over certain areas located within a total area of
 approximately 255 square miles running 5 miles south and generally 3 to 5 miles
north of the coastline in the most westerly 28 miles of West Cameron Parish,  
Louisiana (the "Survey AMI"). The 3-D Joint Venture does not currently have   
rights to survey the entire Survey AMI and the extent of the Survey AMI which 
the 3-D Joint Venture will be entitled to survey is dependent upon its ability
to obtain survey permits and similar rights. Currently, the 3-D Joint Venture 
has permits and similar rights to survey approximately 67% of the Survey AMI  
 and is attempting to acquire rights to Survey additional portions of the Survey
AMI. There is no assurance that the 3-D Joint Venture will successfully obtain
rights to survey additional portions of the Survey AMI, nor that it will be   
successful in acquiring farmouts, lease options (other than those already     
obtained), leases, or other rights to explore or recover oil and gas.         

Under the terms of the Exploration Agreement, the Company is required to make 
monthly payments to the 3-D Joint Venture aggregating, at least, $13 million. 
The Company's potential participation in the 3-D Joint Venture could be       
significantly reduced in the event of a failure by the Company to make such   
required monthly payments when due.                                           

NOTE 6 - NOTES PAYABLE                                                          
-------------                                                 

In June 1996, Cheniere Operating borrowed $425,000 through a private placement
of short term promissory notes with an initial interest rate of 8% (the       
"Notes").  The Notes are due on September 14, 1996 (the "Maturity Date").  In 
 connection with the placement of the Notes, Cheniere Operating issued warrants,
 which, following the Reorganization, were exchanged for an aggregate of 141,666
and 2/3 warrants to purchase shares of the Common Stock, to the holders of the
Notes (the "Noteholders"), each of which warrants entitles the holder to      
purchase one share of the Common Stock at an exercise price of $3.00 per share
at any time on or before June 14, 1999.  A failure by the Company to pay all  
amounts due and payable under the Notes by the Maturity date constitutes an   
event of default thereunder.  In such an event of default, the interest rate  
applicable to any outstanding Notes would increase to 13%.  In addition, the  
holders of such outstanding Notes would be entitled to receive up to an       
aggregate of 42,500 additional warrants (on similar terms) for each month, or 
partial month, any amounts remain due and payable following the Maturity date,
up to a maximum aggregate number of 170,000 such additional warrants.  The    
proceeds from the placement of the Notes were applied toward professional     
expenses and used for working capital.                                        

NOTE 7-  INCOME TAXES                                                           
------------                                                  

At August 31, 1996, the Company had net carryforward losses of approximately  
$1,020,000. A valuation allowance equal to the tax benefit for deferred taxes 
 has been established due to the uncertainty of realizing the benefit of the tax
carryforward.                                                                 

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CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996 

NOTE 7- INCOME TAXES (CONTINUED)                                                
-----------------------                                         

Deferred tax assets and liabilities reflect the net tax effect of temporary   
 differences between the carrying amount of assets and liabilities for financial
reporting purposes and amounts used for income tax purposes.  Significant     
components of the Company's deferred tax assets and liabilities at August 31, 
1996 are as follows:                                                          

Deferred Tax Assets                                                           
Loss Carryforwards                         $  347,000                       

Less:  Valuation Allowance                    (347,000)                       
                    ----------

Net Deferred Tax Assets                     $        -                        
                    ==========

Net operating loss carryforwards expire starting in 2006 through 2011.  Per   
year availability is subject to change of ownership limitations under Internal
Revenue Code Section 382.                                                     

NOTE 8 - WARRANTS                                                               
--------                                                      

The Company has issued and outstanding certain warrants described herein.     

The Company has issued and outstanding 141,666 and 2/3 warrants (collectively,
the "June Warrants"), each of which entitles the registered holder thereof to 
purchase one share of Common Stock.  The June Warrants are exercisable at any 
time on or before June 14, 1999, at an exercise price of $3.00 per share      
(subject to customary anti-dilution adjustments).  The June Warrants were     
originally issued by Cheniere Operating and were converted to warrants of     
Cheniere following the Reorganization.  The June Warrants were issued to a    
group of 11 investors in connection with a private placement of unsecured     
promissory notes of Cheniere Operating in the aggregate principal amount of   
$425,000.  The notes mature on September 14, 1996 (the "Maturity Date").  In  
the event that the Company fails to pay all amounts due and payable under the 
Notes by the Maturity Date, in addition to an increase in the applicable      
interest rate, the holders of any outstanding Notes would be entitled to      
 receive up to an aggregate of 42,500 additional warrants (on similar terms) for
each month, or partial month, any amounts remain due and payable following the
Maturity Date, up to a maximum aggregate number of 170,000 such additional    
warrants.                                                                     

In consideration of certain investment advisory and other services to the     
Company, pursuant to warrant agreements each dated as of August 21, 1996, the 
Company issued warrants to purchase 13,600 and 54,400 shares of Common Stock, 
 (collectively the "Adviser Warrants").  The Adviser Warrants are exercisable at
any time on or before May 15, 1999 at an exercise price  of $3.00 per share   
(subject to customary anti-dilution adjustments).                             

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CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996 

NOTE 8- WARRANTS (CONTINUED)                                                    
--------------------                                            

In connection with the July and August 1996 placement of 508,400 shares of    
 Common Stock, the Company agreed to issue warrants to purchase 12,500 shares of
Common Stock to one of two distributors who placed the shares.  Such warrants 
are exercisable on or before the second anniversary of the sale of the shares 
of Common Stock at an exercise price of $3.125 per share (subject to customary
anti-dilution adjustments).                                                   

In late August 1996, the Company sold 100,000 units, each such unit consisting
of 5 shares of Common Stock and a warrant to purchase one share of Common     
Stock. Each such warrant is exercisable on or before September 1, 1999 at an  
exercise price of $3.125 per share (subject to customary anti-dilution        
adjustments).                                                                 

The Warrants do not confer upon the holders thereof any voting or other rights
of a stockholder of the Company.                                              

NOTE 9- STOCK OPTIONS                                                           
-------------                                                   

 The Company has granted certain options to purchase shares of Common Stock to 2
executives.  Such options aggregate 300,000 shares at an exercise price of    
$3.00 per share.  The options vest and are exercisable as follows:            

1)  75,000 options vest and become exercisable on June 1, 1997 and expire     
June 1, 2001.                                                         

2)  75,000 options vest and become exercisable on June 1, 1998 and expire June
1, 2001.                                                              

 3)  150,000 options vest and become exercisable in equal annual installments of
25% each on the first through fourth anniversary of July 16, 1996 and 
expire July 16, 2001.                                                 

In addition, the Company has granted options to the former President of the   
Company.  The holder   has the option to acquire 19,444 and 2/3 shares of     
Common Stock at an exercise price of $1.80 per share.  The options expire     
November 11, 2003.                                                            

NOTE 10- COMMON STOCK RESERVED                                                  
---------------------                                         

The Company has reserved 322,166 and 2/3 share of Common Stock for insurance  
upon the exercise of outstanding warrants (See Note 8).                       

The Company has reserved 319,444 and 2/3 shares of Common Shares for insurance
upon the exercise of outstanding options (See Note 9).                        

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CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996 

NOTE 11- DISCONTINUED OPERATIONS                                                
-----------------------                                       

As of March 1, 1996, the Company decided to discontinue its then present      
operations in the television productions and health information business.  The
 assets and liabilities relating to the discontinued operations were distributed
 on July 3, 1996.  No assets or liabilities from the discontinued operations are
included in the consolidated balance sheet as of August 31, 1996.             

Revenues, related losses and income tax benefit associated with the           
discontinued business are as follows:                                         

For the period September 1, 1995 to February 29, 1996:                        

Revenue                                   $  42,258                   
                       =========

Loss From Operations (Net of Income                                   
Tax Benefit of $0)                        $(149,080)                  
                       =========

For the period March 1, 1996 to July 3, 1996:                                 

Revenue                                   $   7,500                   
                       =========

Loss on Disposal (Net of Income tax                                   
Benefit of $0)                            $ (58,642)                  
                       =========

The Loss on Disposal consists of the loss from operations during the period of
disposal.                                                                       

NOTE 12- COMMITMENTS AND CONTINGENCIES                                          
-----------------------------                                 

1)  The Company subleases its Houston, Texas headquarters from Zydeco under a 
month-to-month sublease.                                              

2)  On July 26, 1996, the Company signed a Letter of Intent with Poseidon     
    Petroleum, LLC ("Poseidon") to purchase Poseidon's 47% working interest in
  undeveloped reserves in the Bonito unit of the Pacific Outer Continental
Shelf, offshore Santa Barbara County, California. The parties are     
     conducting due diligence and are negotiating a definitive purchase and sale
    agreement and related documentation.  The transactions contemplated in the
   Letter of Intent may be terminated by either party upon the occurrence of
certain events and there can be no assurance that the Company will    
    successfully consummate such transactions.  Moreover, if such transactions
    are consummated, the Company expects that development of the reserves will
not occur for at least five years.  There can be no assurance that the
  Company will successfully develop the reserves or that the reserves will
yield sufficient quantities of oil and gas to be economically viable. 

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CHENIERE ENERGY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1996 

NOTE 13 - SUBSEQUENT EVENTS                                                     
-----------------                                           

Effective as of September 14, 1996, certain of the note holders described in  
Note 6 converted their notes into common stock at a price of $2 per share.  As
a result, 105,000 shares were issued to retire $210,000 of notes.             

In addition, an individual note holder has purchased the promissory notes of  
 the remaining note holders.  The holder thus holds notes totaling $215,000.  As
per the terms of the notes, the interest rate on these outstanding notes has  
increased to 13% per annum, effective September 14, 1996.  The holder of the  
notes is also entitled to receive up to an aggregate of 21,500 additional     
 warrants (as described in Note 6) for each month, or partial month, any amounts
remain due and payable after September 14, 1996, up to a maximum aggregate    
number of 86,000 such additional warrants.                                    

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BEXY COMMUNICATIONS INC.  
CONSOLIDATED BALANCE SHEET (UNAUDITED)  
MAY 31, 

                                                        · Enlarge/Download Table


ASSETS                                                                        1996         1995   
                                                                          ------------  ----------
                                                                                                  
  Cash                                                                    $    63,541   $  78,397 
  Accounts Receivable                                                          68,800      63,620 
  Program Inventory, Net                                                       52,756     511,244 
  Furniture and Fixtures, (Net of Accumulated Depreciation of $3,464 and          622       1,258 
   $2,262)                                                                                        
  Other Assets                                                                  4,600      12,121 
                                                                          -----------   --------- 

    Total Assets                                                          $   190,319   $ 666,640 
                                                                          ===========   ========= 

LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES                                                  
  Accounts Payable and Accrued Expenses                                        39,849   $  64,502 
  Accrued Interest Expense to Related Party                                    37,209      38,924 
  Note Payable                                                                      -     180,000 
  Note Payable to Related Party                                                     -      76,219 
  Deposits                                                                      2,000       2,000 
  Deferred Income                                                              16,000           - 
                                                                          -----------   --------- 

    Total Liabilities                                                          95,058     361,648 
                                                                          -----------   --------- 

STOCKHOLDERS' EQUITY                                                                              
  Common Stock, Par Value $.01, 25,000,000                                                        
  Shares Authorized, 1,803,459 and 1,490,951 Shares                                               
  Issued and Outstanding                                                      147,404     130,289 
  Contributed Capital                                                       1,116,581     915,828 
  Accumulated Deficit                                                      (1,138,489)   (659,910)
                                                                          -----------   --------- 
  Notes Receivable from Stockholders                                       (   30,235)   ( 81,212)
                                                                          -----------   --------- 

    Total Stockholders' Equity                                                 95,261     304,995 
                                                                          -----------   --------- 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $   190,319   $ 666,640 
                                                                          ===========   ========= 

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BEXY COMMUNICATIONS INC.  
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)  

                                                        · Enlarge/Download Table


                                                     For the                       For the           
                                                Three Months Ended            Nine Months Ended      
                                           May 31, 1996   May 31, 1995   May 31, 1996   May 31, 1995 
                                           -------------  -------------  -------------  -------------
                                                                                                     
REVENUE                                      $    7,500     $   45,689     $   49,758     $  101,867 

  Cost of Programs and                                                                               
    Distribution Fees                             3,826         40,852         29,071        125,514 
                                             ----------     ----------     ----------     ---------- 
                                                  3,674          4,837         20,687      (  23,647)
                                             ----------     ----------     ----------     ---------- 
EXPENSES:                                                                                            
  Advertising                                     2,042              -         10,101            225 
  Salaries                                            -          2,739              -          8,216 
  Consulting Fees to Majority Shareholder        21,000              -         59,500              - 
  General and Administrative                     10,116         11,510        100,545         43,574 
  Depreciation                                      300            302            900            906 
  Interest                                            -          1,718              -          6,328 

  Professional Fees                              13,158          1,811         35,144          6,066 
  Rent                                            3,645         10,406         11,443         26,381 
                                             ----------     ----------     ----------     ---------- 

    Total Expenses                               50,261         28,486        217,633         91,696 
                                             ----------     ----------     ----------     ---------- 

  Other Income                                      540              -          1,819          4,162 
                                             ----------     ----------     ----------     ---------- 
  Net Loss                                    (  46,047)       (23,649)     ( 195,127)     ( 111,181)
                                             ----------     ----------     ----------     ---------- 
  Net Loss per Share                         (      .02)    (      .02)    (      .10)    (      .08)
                                             ==========     ==========     ==========     ========== 

  Weighted Average Number of Shares           1,803,459      1,455,950      1,681,203      1,450,450 
   Outstanding                                                                                       

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BEXY COMMUNICATIONS INC.  
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)  
FOR THE NINE MONTH PERIODS ENDED MAY 31,  

                                                                · Download Table


                                                       1996            1995     
                                                   -------------   ------------ 
                                                                                
CASH FLOWS FROM OPERATING ACTIVITIES:                                           
  Net Loss                                          $(  195,127)    $(  111,181)
  Adjustments to Reconcile Net Loss to                                          
    Net Cash (Used By) Operating Activities:                                    
    Amortization of Film Costs                            2,700          58,255 
    Depreciation                                            900             906 
  Changes in Operating Assets and Liabilities:                                  
    Accounts Receivable                              (    5,600)     (   28,420)
    Other Assets                                          2,122               - 
    Accounts Payable and Accrued Expenses                 3,539          19,962 
    Accrued Interest Expense                         (    4,981)          6,328 
                                                     ----------     ----------- 

     Net Cash (Used By) Operating Activities         (  196,447)     (   54,150)
                                                     ----------     ----------- 

CASH FLOWS FROM INVESTING ACTIVITIES:                                           
  Purchase of Furniture and Fixtures                 (      566)              - 
  Net Change in Notes Receivable                         16,439          51,788 
                                                     ----------     ----------- 
    Net Cash Provided By Investing Activities            15,738          51,788 
                                                     ----------     ----------- 

CASH FLOWS FROM FINANCING ACTIVITIES:                                           
  Sale of Common Stock                                  137,500         130,976 
  Repayment of Note Payable                                   -      (    5,000)
  Net Repayment to Related Party                     (    7,519)     (   51,781)
                                                     ----------     ----------- 
    Net Cash Provided by Financing Activities           129,981          74,186 
                                                     ----------     ----------- 

Net (Decrease) Increase in Cash                     (    50,593)         71,824 

CASH - BEGINNING OF YEAR                                114,134           6,573 
                                                     ----------     ----------- 

CASH - END OF YEAR                                   $   63,541     $    78,397 
                                                     ==========     =========== 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                               

  Cash Paid for Interest                             $    4,983   $             
                                                     ==========   ===========   
  Cash Paid for Income Taxes                         $            $     1,221   
                                                     ==========   ===========   

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BEXY COMMUNICATIONS, INC. 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
MAY 31, 1996  

NOTE 1 -  The accompanying financial statements have been prepared in 
          accordance with generally accepted accounting principles for
             interim financial information and with the instructions to Form
              10-QSB and Regulation S-B.  Accordingly, they do not include all
             of the information and footnotes required by generally accepted
              accounting principles for complete financial statements.  In the
               opinion of management, all adjustments (consisting only of normal
    recurring adjustments) considered necessary for a fair
              presentation have been included.  Certain reclassifications have
             been made to the prior period to conform to the current periods
presentation.                                     

         The financial statements include the Company's wholly owned subsidiary,
         MAR Ventures Inc., a Delaware Corporation, which acquired substantially
     all of the assets and liabilities of the Company on April 16, 1996.

         For further information refer to the financial statements and footnotes
        included in the Registrant's Annual Report on Form 10-KSB for the year
         ended August 31, 1995, which indicated a going concern report as to the
Company's ability to continue in existence.                   

      The Results of Operations for any interim period are not necessarily
         indicative of the results to be expected for the full fiscal year ended
August 31, 1996.                                              

        Unclassified Balance Sheet - In accordance with the provisions of SFAS
    No. 53, the Company has elected to present an unclassified balance
sheet.                                                        

         Per Share Information - Net loss per share for the periods presented is
computed on the basis of the weighted average common shares   
outstanding.                                                  

NOTE 2 -  GENERAL AND ADMINISTRATIVE EXPENSES                         

        The Company has expended approximately $46,000 through May 31, 1996 to
 fund certain start-up costs of a company owned by the Company's
        majority shareholder.  In exchange for funding the start-up costs, the
    majority shareholder granted the Company an option to purchase the
Company for $50,000, which was terminated on April 16, 1996.  

NOTE 3 -  SUBSEQUENT EVENTS                                           

   On July 3, 1996, a date subsequent to the balance sheet date, the
shareholders approved a plan which transferred the assets and 
      liabilities to a new subsidiary, MAR Ventures Inc. and which changed
  the Company's business from the television production and health
  information business to the business of oil and gas exploration.

     As part of the reorganization, the Company issued new shares of its
     stock in exchange for all of the stock of Cheniere Energy Operating
Co., Inc. resulting in a change in control of the Company and 
 distribution of the shares of MAR Ventures Inc. to its existing
     shareholders.  MAR Ventures Inc. assumes the Company's liabilities,
including its obligations under the reorganization agreement. 

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INDEPENDENT AUDITORS' REPORT                                                    

To the Board of Directors of                                                    
Bexy Communications, Inc.:                                                

We have audited the accompanying balance sheet of Bexy Communications, Inc. (the
"Company") as of August 31, 1995. We have also audited the statements of        
operations, shareholders' equity and of cash flows for the two years ended      
August 31, 1995. These financial statements are the responsibility of the       
Company's management. Our responsibility is to express an opinion on these      
financial statements based on our audits.                                       

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting 
the amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by      
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion.          

In our opinion, such financial statements present fairly, in all material       
respects, the financial position of the Company at August 31, 1995, and the     
results of its operations and its cash flows for each of the two years ended    
August 31, 1995 in conformity with generally accepted accounting principles.    

The accompanying financial statements have been prepared assuming that the      
Company will continue as a going concern. As discussed in Note 1 to the         
financial statements, the Company has suffered recurring losses from operations 
that raise substantial doubt about the Company's ability to continue as a going 
concern. Management's plans in regard to these matters are also described in    
Note 6. The financial statements do not include any adjustments that might      
result from the outcome of this uncertainty.                                    

FARBER & HASS                                                                   

November 9, 1995                                                                

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BEXY COMMUNICATIONS, INC.                                                       

BALANCE SHEET                                                                   
AUGUST 31, 1995                                                                 
---------------                                                                 

                                                                · Download Table


                                                              
ASSETS                                                        

CASH                                                 $114,134 
ACCOUNTS RECEIVABLE                                    63,200 
PROGRAM INVENTORY, Net                                 55,456 
FURNITURE AND FIXTURES - Net of accumulated                   
  depreciation of $2,564                                  956 

OTHER ASSETS                                            6,722 
                                                     -------- 

TOTAL ASSETS                                         $240,468 
                                                     ======== 

LIABILITIES AND SHAREHOLDERS' EQUITY                          

LIABILITIES:                                                  
Accounts payable and accrued expenses                $ 36,310 
Accrued interest to related party                      42,189 
Note payable to related party                           7,519 
Deposits                                                2,000 
Deferred income                                        16,000 
                                                    --------- 
Total liabilities                                     104,018 
                                                    --------- 

COMMITMENTS AND CONTINGENCIES                                 

SHAREHOLDERS' EQUITY:                                         
Common stock, par value - $.01, 25,000,000 shares             
  authorized, 1,558,947 issued and outstanding        133,654 
Contributed capital                                   992,831 
Accumulated deficit                                  (943,361)
Notes receivable from shareholders                    (46,674)
                                                    --------- 
Total shareholders' equity                            136,450 
                                                    --------- 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $ 240,468 
                                                    ========= 


See accompanying notes to financial statements.                       

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BEXY COMMUNICATIONS, INC.                                                       

STATEMENTS OF OPERATIONS                                                        
FOR THE TWO YEARS ENDED AUGUST 31, 1995                                         
---------------------------------------                                         

                                                                · Download Table


                                              1995        1994   
                                           ----------  ----------
                                                                 

REVENUES                                   $ 125,654   $ 130,228 
                                           ---------   --------- 

COST OF PROGRAMS AND DISTRIBUTION FEES:                          
Amortization of film costs                   254,044     122,630 
Distribution fees                             63,087      52,036 
                                           ---------   --------- 
Total cost of programs                                           
  and distribution fees                      317,131     174,666 
                                           ---------   --------- 

EXPENSES:                                                        
Advertising                                    2,300      22,552 
General and administrative                    65,227      54,227 
Depreciation                                   1,208         850 
Interest                                       9,593      10,167 
Professional fees                            108,315      60,105 
Rent                                          16,513      21,281 
                                           ---------   --------- 
Total expenses                               203,156     169,182 
                                           ---------   --------- 

NET LOSS                                   $(394,633)  $(213,620)
                                           =========   ========= 


NET LOSS PER SHARE                         $    (.27)  $    (.17)     
                                     =========   =========

See accompanying notes to financial statements.                       

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF SHAREHOLDERS' EQUITY                                    
FOR THE TWO YEARS ENDED AUGUST 31, 1995                               
--------------------------------------------------------------------  

                                                        · Enlarge/Download Table


                                 COMMON STOCK                                       NOTES         TOTAL   
                       ------------------------------                             RECEIVABLE      SHARE-  
                          SHARES                       CONTRIBUTED  ACCUMULATED      FROM        HOLDER'S 
                        OUTSTANDING         AMOUNT       CAPITAL     DEFICIT     SHAREHOLDERS     EQUITY  
                       -------------      -----------  -----------  ----------   -------------  ----------
                                                                                                          

BALANCE,                                                                                                  
  SEPTEMBER 1, 1993       7,164,333          $126,970     $502,575  $(335,108)                  $ 294,437 
ONE-FOR-SIX REVERSE                                                                                       
  STOCK SPLIT            (5,970,277)                                                                      
SALE OF SHARES              120,833             1,208      181,767                  $(153,000)     29,975 
ISSUANCE OF SHARES                                                                                        
  FOR SERVICES               45,062               451       12,179                                 12,630 
CONSTRUCTIVE ISSUANCE                                                                                     
  OF SHARES RELATING                                                                                      
  TO THE PURCHASE OF                                                                                      
   PROGRAM INVENTORY         50,000               500       89,500                                 90,000 
REPAYMENT ON NOTES                                                                                        
  RECEIVABLE                                                                           20,000      20,000 
NET LOSS                                                             (213,620)                   (213,620)
                         ----------          --------     --------  ---------       ---------   --------- 
BALANCE,                                                                                                  
  AUGUST 31, 1994         1,409,951           129,129      786,021   (548,728)       (133,000)    233,422 

                                                                     (Continued)

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED                        
FOR THE TWO YEARS ENDED AUGUST 31, 1995                               
----------------------------------------------------------------------

                                                        · Enlarge/Download Table


                            COMMON STOCK                                            NOTES         TOTAL   
                    ------------------------------                                RECEIVABLE      SHARE-  
                       SHARES                       CONTRIBUTED    ACCUMULATED       FROM        HOLDER'S 
                     OUTSTANDING         AMOUNT       CAPITAL       DEFICIT      SHAREHOLDERS     EQUITY  
                    -------------      -----------  -----------    ----------    -------------  ----------
                                                                                                          
BALANCE,                                                                                                  
  AUGUST 31, 1994     1,409,951          129,129     786,021      (548,728)        (133,000)      233,422 
CANCELLATION OF                                                                                           
  CONSTRUCTIVE                                                                                            
  ISSUANCE              (50,000)            (500)    (89,500)                                     (90,000)
SALE OF SHARES          151,000            4,573     231,393                                      235,966 
ISSUANCE OF SHARES                                                                                        
  FOR SERVICES           45,168              452      64,917                                       65,369 
REPAYMENT ON NOTES                                                                                        
  RECEIVABLE                                                                         86,326        86,326 
ISSUANCE OF SHARES                                                                                        
  FOR ROUNDING            2,828                                                                           
NET LOSS                                                          (394,633)                      (394,633)
                      ---------         --------    --------     ---------      -----------     --------- 
BALANCE,                                                                                                  
  AUGUST 31, 1995     1,558,947         $133,654    $992,831     $(943,361)       $ (46,674)    $ 136,450 
                      =========         ========    ========     =========      ============    ========= 


See notes to financial statements.                                    

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF CASH FLOWS                                              
FOR THE TWO YEARS ENDED AUGUST 31, 1995                               
-------------------------------------------------                     

                                                                · Download Table


                                                1995        1994   
                                             ----------  ----------
                                                                   

CASH FLOWS FROM OPERATING                                          
  ACTIVITIES:                                                      
Net loss                                     $(394,633)  $(213,620)
Adjustments to reconcile net loss to                               
  net cash used by operating activities:                           
 Depreciation                                    1,208         850 
  Amortization of film costs                   239,044     122,630 
  Issuance of stock for services                65,369      12,630 
  Write-off of investment                       10,000             
  Changes in operating assets and                                  
   liabilities:                                                    
  Increase in accounts receivable              (28,000)    (22,151)
  Decrease in program inventory                              3,083 
  Increase in other assets                      (4,601)     (2,121)
  Decrease in accounts payable                                     
   and accrued expenses                         (8,230)    (24,149)
  Increase in deferred income                   16,000             
  Increase in accrued interest expense           9,593      10,030 
   Increase in deposits                                      2,000 
                                             ---------   --------- 
Net cash used by operating activities          (94,250)   (110,818)
                                             ---------   --------- 

CASH FLOWS FROM INVESTING ACTIVITIES -                             
  Capital expenditures                                      (2,577)
                                             ---------   --------- 

CASH FLOWS FROM FINANCING ACTIVITIES:                              
Repayment on note payable                                   (2,038)
Borrowings from related party                   34,519      38,000 
Repayments to related party                   (155,000)            
Sale of common stock                           189,292      49,975 
Collections on note receivable                 133,000             
                                             ---------   --------- 
Net cash provided by financing activities      201,811      85,937 
                                             ---------   --------- 

NET INCREASE (DECREASE) IN CASH                107,561     (27,458)

CASH, BEGINNING OF PERIOD                        6,573      34,031 
                                             ---------   --------- 

CASH, END OF PERIOD                          $ 114,134   $   6,573 
                                             =========   ========= 


                                                                     (Continued)

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF CASH FLOWS - CONTINUED                                  
FOR THE TWO YEARS ENDED AUGUST 31, 1995                               
--------------------------------------------------                    

                                                       1995       1994
                                                       ----       ----

SUPPLEMENTAL DISCLOSURE OF CASH FLOW                                  
INFORMATION:                                                      
 Cash paid for interest                                  $ -0-     $ -0-
  Cash paid for income taxes                              $1,566    $  800

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:                       

During 1995, the Company reduced the carrying value of its program    
inventory by $235,500 in order to reflect a lower of cost or market   
     valuation on certain program inventory.  In addition, the Company wrote-off
its investment ($10,000) in the "Victims" television series.          

  During 1994, the Company issued a note payable amounting to $185,000 and
   common stock amounting to $90,000 for the acquisition of a program series
 entitled "Feelin' Great".  During 1995, the Company negotiated with the
 seller to cancel the acquisition and the related debt and common stock.
The program was returned to the seller.                               

During 1995, the Company issued shares of common stock in exchange for
     notes receivable totalling $46,674.  In addition, the Company issued 45,168
shares of common stock in exchange for services.                      

See accompanying notes to financial statements.                       

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BEXY COMMUNICATIONS, INC.                                             

NOTES TO FINANCIAL STATEMENTS                                         
---------------------------------------------------                   

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                       

       GENERAL INFORMATION - Bexy Communications, Inc. (the "Company") was
         incorporated under the laws of the State of Delaware.  The Company is
         engaged in the production and distribution of television programming,
       focusing on health information for the general public through print
and electronic media that entertains as well as informs.    

       Effective July 18, 1994, the Company approved a one-for-six reverse
split of its outstanding common stock.                      

        GOING CONCERN - The Company experienced significant operating losses
       for the fiscal years ended August 31, 1995 and 1994.  The financial
       statements have been prepared assuming the Company will continue to
    operate as a going concern which contemplates the realization of
    assets and the settlement of liabilities in the normal course of
    business.  No adjustment has been made to the recorded amount of
        assets or the recorded amount or classification of liabilities which
would be required if the Company were unable to continue its
    operations.  As discussed in Note 6, management has developed an
      operating plan which they believe will generate sufficient cash to
meet its obligations in the normal course of business.      

          UNCLASSIFIED BALANCE SHEET - In accordance with the provisions of SFAS
      No. 53, the Company has elected to present an unclassified balance
sheet.                                                      

          CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
subject the Company to concentrations of credit risk consist
principally of cash and trade receivables.  The Company has 
          substantially all of its cash on deposit in one financial institution.
          The Company routinely assesses the financial strength of its customers
and normally does not require collateral to support customer
          receivables.  At August 31, 1995, the Company had four customers which
 accounted for approximately 81% of trade accounts receivable.

        FURNITURE AND FIXTURES - Furniture and fixtures are recorded at cost
      and depreciated over an estimated useful life of 3 years using the
straight-line method.                                       

         LICENSE AGREEMENTS - Revenue from television licensing agreements and
 the related film costs are recognized upon the execution of a
   licensing agreement, provided certain conditions have been met,
including availability of the film for broadcast.           

        PROGRAM INVENTORY - Program inventory is stated at the lower of cost
          or estimated net realizable value, determined on a film-by-film basis.
      Film costs include production, print and pre-release costs.  These
        costs are amortized in the ratio of the current year's gross revenue
         to management's estimate of remaining gross revenues from all sources
on an individual film basis.                                

       The Company continually evaluates the carrying value of its program
       inventory.  Based on the lower than forecasted revenues of its film
    library experienced in 1995 and current projections indicating a
    continued decline in film revenues, the Company re-evaluated the
          future market value of its program inventory in the fourth quarter and
      recorded a write-down to reflect its value at the lower of cost or
 market.  The adjustment totalled $235,500 and was recorded in
amortization of film costs.                                 

  GENERAL AND ADMINISTRATIVE EXPENSES - The Company has expended
   approximately $12,000 through August 31, 1995 and an additional
        $24,000 through November 9, 1995 to fund certain start-up costs of a
company owned by the                                        

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         Company's majority shareholder.  In exchange for funding the start-up
        costs, the majority shareholder has granted the Company an option to
purchase the company for $50,000.                           

          INCOME TAXES - The Company accounts for its income taxes in accordance
          with the provisions of Statement of Financial Accounting Standards 109
          ("SFAS 109").  The asset and liability method requires the recognition
      of deferred tax assets and liabilities for the expected future tax
         consequences of temporary differences between tax bases and financial
reporting bases of other assets and liabilities.            

     The Company has net operating loss carryforwards of approximately
$740,000 and $269,000 available to offset future Federal and
     California taxable income, respectively.  Such loss carryforwards
expire starting in 2006 through 2008.                       

         PER SHARE INFORMATION - Net loss per share for the years presented is
computed on the basis of the weighted average common shares 
 outstanding. The number of shares used in the computation was
      1,459,365 for the year ended August 31, 1995 and 1,256,444 for the
year ended August 31, 1994.                                 

                                                                · Download Table

                                                                                    
2. PROGRAM INVENTORY                                                                

   At August 31, 1995, the program inventory consisted of the following:            

   "Heartstoppers...Horror At The Movies"                                           
   A two-hour television program hosted by                                          
   George Hamilton                                                        $ 416,636 

   "Christmas at the Movies" - A one-hour                                           
   television program hosted by Gene Kelly                                  106,000 

   "It's A Wonderful Life - A Personal                                              
   Remembrance" hosted by Frank Capra, Jr.                                   41,786 
                                                                          --------- 

   Total                                                                    564,422 
   Less:  accumulated amortization                                         (508,966)
                                                                          --------- 

   Program Inventory, Net                                                 $  55,456 
                                                                          ========= 

3.   NOTE PAYABLE TO RELATED PARTY                                    

  Through August 31, 1995, a Trust controlled by Buddy Young, an
       officer, director and majority shareholder of the Company, advanced
          funds to the Company for operating expenses and film productions.  The
          advanced funds accrue interest at a rate of 8% per annum.  The balance
    of the note totalling $7,519 and accrued interest of $42,189 are
  currently due and are collateralized by the program inventory.

4.   STOCK OPTION PLANS                                               

          In November 1993, the Company adopted a nonqualified stock option plan
   that covers certain key employees, consultants and directors as
      determined by the Board.  The aggregate number of shares of common
        stock that may be issued pursuant to options under the plan will not
        exceed 416,666.  Price and terms are determined at the discretion of
the Board.                                                  

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       On November 11, 1993, the Board of Directors granted options to the
          President and principal shareholder.  Options to acquire 58,333 shares
      of the Company's common stock were granted at an exercise price of
    $.60 per share.  All of the shares are currently exercisable and
expire on November 11, 2003.                                

5.   COMMITMENTS AND CONTINGENCIES                                    

      The Company leases its primary office space under a one-year lease
        agreement expiring July 1996.  Monthly rent on such lease is $1,150.
      The Company has an option to extend the lease for one year.  Total
        rent expense for all operating leases for the years ended August 31,
1995 and 1994 was $16,513 and $22,945, respectively.        

6.   MANAGEMENT PLANS                                                 

          In fiscal 1995 and 1994, the Company generated net negative cash flows
    from operating activities of $94,250 and $110,818, respectively.
          Management expects that the forecasted sales and additional equity and
 debt financing will be adequate to finance the 1996 cash flow
        requirements.  If the Company does not achieve the forecasted sales,
     the Company may have difficulty in continuing as a going concern.
        Management has developed alternative plans which include but are not
     limited to, merging with another company and obtaining additional
financing sources.                                          

7.   SUBSEQUENT EVENT (UNAUDITED)                                     

         In September 1995, the Company sold 85,000 shares of its common stock
for a total of $93,500.                                     

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INDEPENDENT AUDITORS' REPORT                                          

To the Board of Directors of                                          
Bexy Communications, Inc.:                                          

     We have audited the accompanying balance sheet of Bexy Communications, Inc.
     (the "Company") as of August 31, 1994.  We have also audited the statements
 of operations, shareholders' equity and of cash flows for the two years
   ended August 31, 1994.  These financial statements are the responsibility
   of the Company's management.  Our responsibility is to express an opinion
on these financial statements based on our audits.                    

We conducted our audits in accordance with generally accepted auditing
    standards.  Those standards require that we plan and perform the audits to
     obtain reasonable assurance about whether the financial statements are free
  of material misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial      
 statements.  An audit also includes assessing the accounting principles
  used and significant estimates made by management, as well as evaluating
   the overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.                           

   In our opinion, such financial statements present fairly, in all material
     respects, the financial position of the Company at August 31, 1994, and the
results of its operations and its cash flows for each of the two years
ended August 31, 1994 in conformity with generally accepted accounting
principles.                                                           

    As discussed in Note 1 to the financial statements, effective September 1,
   1993, the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes".                                   

    The accompanying financial statements have been prepared assuming that the
  Company will continue as a going concern.  As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from  
operations that raise substantial doubt about the Company's ability to
     continue as a going concern.  Management's plans in regard to these matters
    are also described in Note 7.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.   

FARBER & HASS                                                         

October 24, 1994                                                      

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BEXY COMMUNICATIONS, INC.                                             

BALANCE SHEET                                                         
AUGUST 31, 1994                                                       
----------------------------------                                    

                                                                · Download Table


                                                                  

ASSETS                                                            

CASH                                                     $  6,573 

ACCOUNTS RECEIVABLE                                        35,200 

PROGRAM INVENTORY, Net                                    569,500 

FURNITURE AND FIXTURES - Net of accumulated                       
  depreciation of $1,356                                    2,164 

OTHER ASSETS                                               12,121 
                                                         -------- 

TOTAL ASSETS                                             $625,558 
                                                         ======== 

LIABILITIES AND SHAREHOLDERS' EQUITY                              

LIABILITIES:                                                      

Accounts payable and accrued expenses                    $ 44,540 
Accrued interest expense                                   32,596 
Note payable                                              185,000 
Note payable to related party                             128,000 
Deposits                                                    2,000 
                                                         -------- 
Total liabilities                                         392,136 
                                                         -------- 

COMMITMENTS AND CONTINGENCIES                                     

SHAREHOLDERS' EQUITY:                                             
Common stock (par value - $.01, 25,000,000 shares                 
  authorized, 1,409,951 issued and outstanding)           129,129 
Contributed capital                                       786,021 
Accumulated deficit                                      (548,728)
Notes receivable from shareholders                       (133,000)
                                                        --------- 
Total shareholders' equity                                233,422 
                                                        --------- 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY              $ 625,558 
                                                        ========= 


See accompanying notes to financial statements.                       

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF OPERATIONS                                              
FOR THE TWO YEARS ENDED AUGUST 31, 1994                               
-------------------------------------------------                     

                                                                · Download Table


                                              1994        1993   
                                           ----------  ----------
                                                                 

REVENUES                                   $ 130,228   $ 317,946 
                                           ---------   --------- 

COST OF PROGRAMS AND DISTRIBUTION FEES:                          
Amortization of film costs                   122,630     147,292 
Distribution fees                             52,036     133,757 
                                           ---------   --------- 
Total cost of programs                                           
  and distribution fees                      174,666     281,049 
                                           ---------   --------- 

EXPENSES:                                                        
Advertising                                   22,552      27,083 
General and administrative                    54,227      44,457 
Depreciation                                     850         348 
Interest                                      10,167      18,992 
Professional fees                             60,105      62,209 
Rent                                          21,281      14,769 
Reserve on former employee advances                       98,015 
                                           ---------   --------- 
Total expenses                               169,182     265,873 
                                           ---------   --------- 

NET LOSS                                   $(213,620)  $(228,976)
                                           =========   ========= 

Net loss per share                         $    (.17)  $    (.19)
                                           =========   ========= 


See accompanying notes to financial statements.                       

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF SHAREHOLDERS' EQUITY                                    
FOR THE TWO YEARS ENDED AUGUST 31, 1994                               
--------------------------------------------------------------        

                                                        · Enlarge/Download Table


                                          COMMON STOCK                                  
                                      --------------------                              
                                     SHARES                   CONTRIBUTED   ACCUMULATED 
                                  OUTSTANDING      AMOUNT       CAPITAL       DEFICIT   
                                  ------------  ------------  ------------  ------------
                                                                                        

BALANCE, SEPTEMBER 1, 1992          7,164,333       $126,970                   (106,132)

CAPITAL CONTRIBUTIONS                                         $   160,573               

CONVERSION OF RELATED PARTY DEBT                                                        
  AND ACCRUED INTEREST                                            342,002               

NET LOSS                                                                       (228,976)
                                  -----------   ------------  -----------   ----------- 

BALANCE, AUGUST 31, 1993            7,164,333        126,970      502,575      (335,108)

ONE-FOR-SIX REVERSE STOCK SPLIT    (5,970,277)                                          

SALE OF SHARES                        120,833          1,208      181,767               

ISSUANCE OF SHARES FOR SERVICES        45,062            451         12,179             

CONSTRUCTIVE ISSUANCE OF SHARES                                                         
  RELATING TO THE PURCHASE OF                                                           
  PROGRAM INVENTORY                    50,000            500       89,500               

NET LOSS                                                                       (213,620)
                                  -----------   ------------  -----------   ----------- 

BALANCE, AUGUST 31, 1994            1,409,951       $129,129    $ 786,021     $(548,728)
                                  ===========   ============  ===========   =========== 


See notes to financial statements.                                    

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF CASH FLOWS                                              
FOR THE TWO YEARS ENDED AUGUST 31, 1994                               
--------------------------------------------                          

                                                                · Download Table


                                                1994        1993   
                                             ----------  ----------
                                                                   

CASH FLOWS FROM OPERATING                                          
  ACTIVITIES:                                                      
Net loss                                     $(213,620)  $(228,976)
Adjustments to reconcile net loss to                               
  net cash used by operating activities:                           
  Depreciation                                     850         348 
  Amortization of film costs                   122,630     147,292 
  Issuance of stock for services                12,630             
  Reserve for former employee receivables                   98,015 
  Expenses paid by officer                                     420 
  Changes in operating assets and                                  
   liabilities:                                                    
  Increase in accounts receivable              (22,151)    (13,049)
  (Increase) decrease in program                                   
   inventory                                     3,083    (488,857)
  Increase in other assets                      (2,121)     (6,451)
  Increase (decrease) in accounts                                  
   payable and accrued expenses                (24,149)     91,255 
  Decrease in cash overdraft                                (4,565)
  Increase (decrease) in accrued                                   
   interest expense                             10,030      (3,994)
  Increase in deposits                           2,000             
                                             ---------             
Net cash used by operating activities         (110,818)   (408,562)
                                             ---------   --------- 

CASH FLOWS FROM INVESTING ACTIVITIES -                             
  Capital expenditures                          (2,577)            
                                             ---------   --------- 

CASH FLOWS FROM FINANCING ACTIVITIES:                              
Repayment on note payable                       (2,038)       (200)
Borrowings from related party                   38,000     344,000 
Repayments to related party                                (61,780)
Sale of common stock                            49,975             
Contributions to capital                                   160,573 
                                             ---------   --------- 
Net cash provided by financing activities       85,937     442,593 
                                             ---------   --------- 

NET INCREASE (DECREASE) IN CASH                (27,458)     34,031 

CASH, BEGINNING OF PERIOD                       34,031         -0- 
                                             ---------   --------- 

CASH, END OF PERIOD                          $   6,573   $  34,031 
                                             =========   ========= 


                                                   (Continued)

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BEXY COMMUNICATIONS, INC.                                             

STATEMENTS OF CASH FLOWS                                              
FOR THE TWO YEARS ENDED AUGUST 31, 1994 (CONTINUED)                   
  ------------------------------------------------------------------------

                                                          1994          1993
                                                          ----          ----

SUPPLEMENTAL DISCLOSURE OF CASH FLOW                                  
INFORMATION:                                                      
   Cash paid for interest                                $  -0-       $  -0-
   Cash paid for income taxes                            $  800       $  -0-

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:                       

  During the year ended August 31, 1994, the Company issued a note payable
amounting to $185,000 and common stock amounting to $90,000 for the   
   acquisition of a program series entitled "Feelin' Great" (see Notes 2 and
3).                                                                   

    During the year ended August 31, 1994, the Company issued shares of common
stock in exchange for notes receivable totalling $133,000.            

   During the year ended August 31, 1993, $342,002 of related party debt and
accrued interest were converted to contributed capital.               

    During the three years ended August 31, 1993, a former officer/director of
   the Company made repayments of principal and interest on the note payable
 to the bank and paid certain state income taxes due in the prior years.
The amounts paid (approximately $19,000) have been offset against the 
amounts due from former officers.                                     

See accompanying notes to financial statements.                       

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BEXY COMMUNICATIONS, INC.                                             

NOTES TO FINANCIAL STATEMENTS                                         
  ------------------------------------------------------------------------

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                       

       GENERAL INFORMATION - Bexy Communications, Inc. (the "Company") was
         incorporated under the laws of the State of Delaware.  The Company is
         engaged in the production and distribution of television programming,
       focusing on health information for the general public through print
and electronic media that entertains as well as informs.    

       Effective July 18, 1994, the Company approved a one-for-six reverse
split of its outstanding common stock.                      

        GOING CONCERN - The Company experienced significant operating losses
        for the fiscal year ended August 31, 1994.  The financial statements
         have been prepared assuming the Company will continue to operate as a
      going concern which contemplates the realization of assets and the
   settlement of liabilities in the normal course of business.  No
    adjustment has been made to the recorded amount of assets or the
   recorded amount or classification of liabilities which would be
       required if the Company were unable to continue its operations.  As
         discussed in Note 7, management has developed an operating plan which
         they believe will generate sufficient cash to meet its obligations in
the normal course of business.                              

          UNCLASSIFIED BALANCE SHEET - In accordance with the provisions of SFAS
      No. 53, the Company has elected to present an unclassified balance
sheet.                                                      

          CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
subject the Company to concentrations of credit risk consist
         principally of trade receivables.  The Company routinely assesses the
       financial strength of its customers.  The Company normally does not
      require collateral to support customer receivables.  At August 31,
        1994, the Company had one customer which accounted for approximately
86% of trade accounts receivable.                           

        FURNITURE AND FIXTURES - Furniture and fixtures are recorded at cost
      and depreciated over an estimated useful life of 3 years using the
straight-line method.                                       

          OTHER ASSETS - Other assets consist primarily of a 50% interest in the
pilot program for the "Victims" television series.          

         LICENSE AGREEMENTS - Revenue from television licensing agreements and
 the related film costs are recognized upon the execution of a
   licensing agreement, provided certain conditions have been met,
including availability of the film for broadcast.           

       INCOME TAXES - Effective September 1, 1993, the Company adopted the
        provisions of Statement of Financial Accounting Standards 109 ("SFAS
    109").  The adoption of SFAS 109 changes the Company's method of
       accounting for income taxes from the deferred method (APB 11) to an
        asset and liability method.  The asset and liability method requires
  the recognition of deferred tax assets and liabilities for the
         expected future tax consequences of temporary differences between tax
        bases and financial reporting bases of other assets and liabilities.
          The cumulative effect of the initial adoption on prior years' retained
  earnings was not significant.  Additionally, the effect of the
adoption of SFAS 109 for fiscal 1994 was not significant.   

     The Company has net operating loss carryforwards of approximately
$339,000 and $177,000 available to offset future Federal and
     California taxable income, respectively.  Such loss carryforwards
expire starting in 2006 through 2008.                       

         PER SHARE INFORMATION - Net loss per share for the years presented is
computed on the basis of the weighted average common shares 
  outstanding.  The number of shares used in the computation was
      1,256,444 for the year ended August 31, 1994 and 1,194,055 for the
year ended August 31, 1993.                                 

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2.   PROGRAM INVENTORY                                                

     Program inventory is stated at the lower of cost or estimated net
     realizable value, determined on a film-by-film basis.  Film costs
     include production, print and pre-release costs.  These costs are
 amortized in the ratio of the current year's gross revenue to
         management's estimate of remaining gross revenues from all sources on
an individual film basis.                                   

         At August 31, 1994, the program inventory consisted of the following:

                                                                · Download Table


                                                   
"Heartstoppers...Horror At The Movies"             
A two-hour television program hosted by            
George Hamilton                          $ 416,636 

"Christmas at the Movies" - A one-hour             
television program hosted by Gene Kelly    106,000 

"It's A Wonderful Life - A Personal                
Remembrance" hosted by Frank Capra, Jr.     41,786 

"Feelin' Great" - 26 one-half hour                 
episodes promoting a healthy lifestyle     275,000 
                                         --------- 

Total                                      839,422 
Less:  accumulated amortization           (269,922)
                                         --------- 

Program Inventory, Net                   $ 569,500 
                                         ========= 

3.   NOTE PAYABLE                                                     

   In connection with the acquisition of a program series entitled
 "Feelin' Great", the Company issued a note payable to Hammond
          Productions in the amount of $185,000.  The note bears no interest, is
   secured by the existing 26 episodes of the series and scheduled
         maturities of the note are as follows for the years ending August 31:

                                                                · Download Table

              
1995  $ 85,000
1996    50,000
1997    50,000
       -------

      $185,000
      ========

4.   NOTE PAYABLE TO RELATED PARTY                                    

  Through August 31, 1994, a Trust controlled by Buddy Young, an
       officer, director and majority shareholder of the Company, advanced
          funds to the Company for operating expenses and film productions.  The
          advanced funds accrue interest at a rate of 8% per annum.  The balance
        of the note, $128,000, is due June 30, 1995 and is collateralized by
the program inventory.                                      

5.   STOCK OPTION PLANS                                               

          In November 1993, the Company adopted a nonqualified stock option plan
   that covers certain key employees, consultants and directors as
      determined by the Board.  The aggregate number of shares of common
        stock that may be issued pursuant to options under the plan will not
        exceed 416,666.  Price and terms are determined at the discretion of
the Board.                                                  

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       On November 11, 1993, the Board of Directors granted options to the
          President and principal shareholder.  Options to acquire 58,333 shares
      of the Company's common stock were granted at an exercise price of
    $.60 per share.  All of the shares are currently exercisable and
expire on November 11, 2003.                                

6.   COMMITMENTS AND CONTINGENCIES                                    

         The Company leases its primary office space on a month-to-month basis
         at a rate of $500 per month.  The Company has also entered into a two
       year lease agreement for other office space expiring February 1996.
         Monthly rent on such lease is $2,080.  As this space is currently not
  being utilized, the Company has sublet the space commencing on
          September 1, 1994 and terminating August 31, 1995 for a monthly rental
          amount of $2,080.  Total rent expense for all operating leases for the
 years ended August 31, 1994 and 1993 was $22,945 and $14,769,
respectively.                                               

      In connection with the acquisition of a television series entitled
      "Feelin' Great", the Company will pay to Hammond Productions three
      percent of the gross revenues derived from the distribution of the
existing twenty-six episodes.                               

7.   MANAGEMENT PLANS                                                 

      In fiscal 1994, the Company generated net negative cash flows from
       operating and investing activities of $100,765.  Management expects
          that the forecasted higher sales and cash flow from operations will be
        adequate to finance the 1995 cash flow requirements.  If the Company
      does not achieve the forecasted higher sales, the Company may have
          difficulty in continuing as a going concern.  Management has developed
        alternative plans which include but are not limited to, merging with
another company and obtaining additional financing sources. 

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=============================================================================== 
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY    
REPRESENTATIONS IN CONNECTION WITH THE OFFERING AND SALE OF THE COMMON STOCK    
OFFERED HEREBY, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND ANY SUCH     
INFORMATION OR REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS MUST NOT BE     
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN   
OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN   
THE REGISTERED SECURITIES TO WHICH IT RELATES. THIS PROSPECTUS DOES NOT         
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES
IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER   
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY    
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE      
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED  
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.                        

__________                                      

TABLE OF CONTENTS                                     

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                                          PAGE
                                          ----
                                              

Summary..................................   2 
Risk Factors.............................   4 
The Company..............................   8 
Use of Proceeds..........................   9 
Capitalization...........................   9 
Market Price and Dividend Information....   9 
Selected Financial Data..................  11 
Management's Discussion and Analysis of       
   Financial Condition and Results of         
   Operations............................  11 
Business and Properties..................  13 
Management...............................  24 
Description of Capital Stock.............  27 
Selling Stockholders.....................  30 
Principal Stockholders...................  32 
Plan of Distribution.....................  32 
Legal Matters............................  33 
Experts..................................  33 
Available Information....................  34 


2,844,211 SHARES                                            

CHENIERE ENERGY, INC.                                             

COMMON STOCK                                            
(PAR VALUE $.003 PER SHARE)                                           

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PART II 

Information Not Required in Prospectus

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION                           

         The Common Stock to be registered is to be offered for the account of
the Common Stockholders.  The estimated expenses of this offering, to be fully  
paid by the Company unless otherwise noted, in connection with the issuance and 
distribution of the securities being registered are as follows:                 

 Accounting Fees and Expenses............................... $ 10,000.00
 Legal Fees and Expenses.................................... $150,000.00
 Securities and Exchange Commission Filing Fee.............. $  3,127.00
 Miscellaneous Expenses..................................... $ 10,000.00
   Total.................................................... $173,127.00

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS                             

   The Amended and Restated Certificate of Incorporation of the Company (the
"Company's Charter") eliminates the liability of directors of the Company to the
Company or its stockholders (in their capacity as directors but not in their    
capacity as officers) to the fullest extent permitted by Section 102 of the     
Delaware General Corporation Law, as the same may be amended from time to time  
(the "DGCL"). Specifically, under Section 102(b)(7) of the DGCL, directors of   
the Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such 
provision shall not eliminate or limit the liability of a director (i) for any  
breach of the director's duty of loyalty to the Company or its stockholders,    
(ii) for acts or omissions not in good faith or which involve intentional       
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper personal   
benefit.                                                                        

  The Company's Charter also provides that the Company shall indemnify all
persons whom it may indemnify under Section 145 of the DGCL to the fullest      
extent permitted by such Section.  Section 145(a) of the DGCL provides that a   
Delaware corporation may indemnify any person who was or is a party or is       
threatened to be made a party to any threatened, pending or completed action,   
suit or proceeding, whether civil, criminal, administrative or investigative    
(other than an action by or in the right of the corporation) by reason of the   
fact that he is or was a director, officer, employee or agent of the            
corporation, or is or was serving at the request of the corporation as a        
director, officer, employee or agent of another corporation, partnership, joint 
venture, trust or other enterprise, against expenses (including attorneys'      
fees), judgments, fines and amounts paid in settlement actually and reasonably  
incurred by him in connection with such action, suit or proceeding if he acted  
in good faith and in a manner he reasonably believed to be in or not opposed to 
the best interests of the corporation, and, with respect to any criminal action 
or proceeding, had no reasonable cause to believe his conduct was unlawful.     

Section 145(b) of the DGCL provides that a Delaware corporation may   
indemnify any person who was or is a party or is threatened to be made a party  
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such  
person acted in any of the capacities set forth above, against expenses         
(including attorneys' fees) actually and reasonably incurred by him in          
connection with the defense or settlement of such action or suit if he acted    
in good faith and in a manner he reasonably believed to be in or not opposed to 
the best interests of the corporation and except that no indemnification shall  
be made in respect of any claim, issue or matter as to which such person shall  
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the                              

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adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to be indemnified for such expenses    
which the court shall deem proper.                                              

   Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful on the merits or otherwise in the  
defense of any action, suit or proceeding referred to in subsections (a) and    
(b) of Section 145, or in the defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and  
reasonably incurred by him in connection therewith; that indemnification and    
advancement of expenses provided by, or granted pursuant to Section 145 shall   
not be deemed exclusive of any other rights to which those seeking              
indemnification or advancement of expenses may be entitled under any bylaw,     
agreement, vote of stockholders or disinterested directors or otherwise, both as
to his official capacity and as to action in another capacity while holding such
office; that indemnification and advancement of expenses provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided when authorized or    
ratified, continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a 
person; and that the corporation shall have the power to purchase and maintain  
insurance on behalf of any person who is or was a director or officer of the    
corporation against any liability asserted against him and incurred by him in   
any such capacity, or arising out of his status as such, whether or not the     
corporation would have the power to indemnify him against such liability under  
such Section 145.                                                               

     Article IX of the Company's Bylaws contains detailed indemnification rights
for the Company's directors, other employees and other agents. The Bylaws       
provide for indemnification in accordance with the provisions of Section 145 of 
the DGCL.                                                                       

  The inclusion of the indemnification provisions in the Company's Charter
and Bylaws may have the effect of reducing the likelihood of derivative         
litigation against directors, and may discourage or deter stockholders or       
management from bringing a lawsuit against directors for breach of their duty of
care, even though such an action, if successful, might otherwise have benefitted
the Company and its stockholders.                                               

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES                               

  In May and June 1996, Cheniere Operating issued 200 shares of its common
stock (which were exchanged for 2,000,000 shares of the Common Stock following  
the Reorganization) to a group of "accredited investors" (as defined in Rule    
501(a) promulgated under the Securities Act of 1933, as amended (the "Securities
Act")) pursuant to Rule 506 of Regulation D promulgated under the Securities Act
("Regulation D").  Cheniere Operating received net proceeds of $2,883,000, net  
of offering costs, on cash sales of $3,000,000.                                 

    In June 1996, Cheniere Operating issued 11 short term unsecured promissory
notes with an initial interest rate of 8% and an aggregate face value of        
$425,000 to a group of "accredited investors" (as defined in Rule 501(a)        
promulgated under the Securities Act) for $425,000 in cash pursuant to Section  
4(2) of the Securities Act.  Subsequently, the Company agreed to issue 105,000  
shares of the Common Stock to the holders of Notes in the aggregate principal   
amount of $210,000 in exchange for such Notes.  In addition, prior to the       
maturity of the Notes, an individual Noteholder (the "Remaining Noteholder")    
purchased several outstanding Notes following which such Noteholder held Notes  
in the aggregate principal amount of $215,000.  Cheniere Operating has issued a 
new promissory note to the Remaining Noteholder with an interest rate of 13% per
annum in exchange for the Notes held by him.                                    

In July 1996, Cheniere issued 50,000 shares of Common Stock to an     
"accredited investor" (as defined in Rule 501(a) promulgated under the          
Securities Act) for $100,000 in cash pursuant to Rule 506 of Regulation D.      

    In July and August 1996, Cheniere issued 508,400 shares of Common Stock to
a group of investors pursuant to Regulation S promulgated under the Securities  
Act.  Cheniere received net proceeds of $915,000 on cash sales of $1,016,800    
less placement fees of $101,800 paid to Pinnacle Group, Ltd. and Ostis Ventures,
Ltd. as placement agents.                                                       

   In late August 1996, the Company raised $1,000,000 from the sale of 100,000
units, each consisting of five shares of the Common Stock and a warrant to      
purchase one share of the Common Stock, pursuant to Regulation S.               

 In September 1996, Cheniere issued 130,250 shares of stock to "accredited
investors" (as defined in Rule 501(a) promulgated under the Securities Act) for 
an aggregate price of $260,500 in cash pursuant to Rule 506 of Regulation       
D.                                                                              

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ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                            

A.   Exhibits                                                                   

3.1    Amended and Restated Certificate of Incorporation of Cheniere  
Energy, Inc. ("Cheniere")/*/                            
3.2    By-laws of Cheniere/*/                                         
4.1    Specimen Common Stock Certificate of Cheniere/*/               
5.1    Opinion of Dewey Ballantine/*/                                 
10.1   Exploration Agreement between FX Energy, Inc. (now known as    
       Cheniere Energy Operating Co., Inc. ("Cheniere Operating")) and
Zydeco Exploration, Inc./*/                             
     10.2   First Amendment to the Exploration Agreement between FX Energy, Inc.
         (now known as Cheniere Operating) and Zydeco Exploration, Inc./*/
 10.3   Second Amendment to the Exploration Agreement between FX Energy,
      Inc. (now known as Cheniere Operating) and Zydeco Exploration,
Inc./*/                                                 
 10.4   Form of Noteholders' Agreement ("Noteholders Agreement") between
     Cheniere Operating and the holders of promissory notes in the
aggregate principal amount of $425,000.00/*/            
   10.5   Form of Warrant Agreement governing warrants of Cheniere issued in
      exchange for warrants of Cheniere Operating (which were issued
pursuant to the Noteholders Agreement)/*/               
 10.6   Asset Transfer, Assignment and Assumption Agreement between Bexy
Communications, Inc. and Mar Ventures Inc./*/           
10.7   Indemnification Agreement among Buddy Young, Cheniere, Cheniere
          Energy Operating Co., Inc. and the Stockholders of Cheniere Energy
Operating Co., Inc. named therein/*/                    
   10.8   Form of Warrant Agreement between Cheniere and each of C.M. Blair,
W.M. Foster & Co., Inc. and Redliw Corp./*/             
10.9   Consulting Agreement between Cheniere and Buddy Young/*/       
10.10  Letter Agreement between Cheniere and Buddy Young regarding    
reverse splits of the Common Stock/*/                   
21.1   Subsidiaries of Cheniere/*/                                    
23.1   Consent of Dewey Ballantine (included in Exhibit 5.1)/*/       
23.2   Consent of Merdinger, Fruchter, Rosen & Corso, P.C./*/         
23.3   Consent of Farber & Hass/*/                                    
    23.4   Consent of Merdinger, Fruchter, Rosen & Corso, P.C. to inclusion of
financial statements for the fiscal year ended as of    
August 31, 1996.                                        
24.1   Powers of Attorney included on signature page./*/              
----------------                                                                
* Filed previously.                                                   

B.   Financial Statement Schedules                                              

None                                                                  

ITEM 17.  UNDERTAKINGS                                                          

The undersigned Registrant hereby undertakes:                         

   (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:                        

(i) To include any prospectus required by section 10(a)(3) of the     
Securities Act of 1933 (the "Securities Act");                                  

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 (ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective 
amendment thereof) which, individually or in the aggregate, represent a         
fundamental change in the information set forth in the registration statement.  
Notwithstanding the foregoing, any increase or decrease in volume of securities 
offered (if the total dollar value of securities offered would not exceed that  
which was registered) and any deviation from the low or high end of the         
estimated maximum offering range may be reflected in the form of prospectus     
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the     
changes in volume and price represent no more than a 20% change in the maximum  
aggregate offering price set forth in the "Calculation of Registration Fee"     
table in the effective Registration Statement; and                              

(iii) 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, 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 the
offering.                                                                       

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the          
registrant pursuant to the foregoing provisions, or otherwise, the registrant   
has 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 the registrant of expenses  
incurred or paid by a director, officer or controlling person of the registrant 
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, the registrant 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 the issue.                                                      

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SIGNATURES

   Pursuant to the requirements of the Securities Act of 1933, the
registrant 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 the 1st day of October, 1996.                                

       CHENIERE ENERGY, INC.

             By:  /s/ William D. Forster
                                  ----------------------------------------
                              William D. Forster, President, Chief
                            Executive Officer and Director

    Pursuant to the requirements of the Securities Act of 1933, this
registration statement of which this prospectus is a part has been signed below 
by the following persons in the capacities indicated and on the 1st day of      
October, 1996.                                                                  

                                                        · Enlarge/Download Table

Signature                                                       Title                                           
---------                                                       -----                                           
                                                                                                                
/s/ William D. Forster                                           President, Chief Executive Officer and Director
---------------------------------------------------------------  (Principal Executive Officer)                  
William D. Forster                                                                                              

/s/ *                                                            Vice-Chairman and Director                     
---------------------------------------------------------------                                                 
Walter L. Williams                                                                                              

/s/ *                                                            Chief Financial Officer and Treasurer          
---------------------------------------------------------------                                                 
Keith F. Carney                                                                                                 

/s/ *                                                            Secretary and Director                         
---------------------------------------------------------------                                                 
Charif Souki                                                                                                    

/s/ *                                                            Director                                       
---------------------------------------------------------------                                                 
Efrem Zimbalist III                                                                                             

*By: /s/  William D. Forster                                                                                    
    -----------------------------------------------------------                                                 
    Willam D. Forster                                                                                           
    Attorney-in-Fact                                                                                            


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EXHIBIT INDEX 

Exhibit                                                                   
No.                          Description                              
-------                        -----------                                

3.1    Amended and Restated Certificate of Incorporation of Cheniere  
Energy, Inc. ("Cheniere")/*/                            
3.2    By-laws of Cheniere/*/                                         
4.1    Specimen Common Stock Certificate of Cheniere/*/               
5.1    Opinion of Dewey Ballantine/*/                                 
10.1   Exploration Agreement between FX Energy, Inc. (now known as    
       Cheniere Energy Operating Co., Inc. ("Cheniere Operating")) and
Zydeco Exploration, Inc./*/                             
     10.2   First Amendment to the Exploration Agreement between FX Energy, Inc.
         (now known as Cheniere Operating) and Zydeco Exploration, Inc./*/
 10.3   Second Amendment to the Exploration Agreement between FX Energy,
      Inc. (now known as Cheniere Operating) and Zydeco Exploration,
Inc./*/                                                 
 10.4   Form of Noteholders' Agreement ("Noteholders Agreement") between
     Cheniere Operating and the holders of promissory notes in the
aggregate principal amount of $425,000.00/*/            
   10.5   Form of Warrant Agreement governing warrants of Cheniere issued in
      exchange for warrants of Cheniere Operating (which were issued
pursuant to the Noteholders Agreement)/*/               
 10.6   Asset Transfer, Assignment and Assumption Agreement between Bexy
Communications, Inc. and Mar Ventures Inc./*/           
10.7   Indemnification Agreement among Buddy Young, Cheniere, Cheniere
          Energy Operating Co., Inc. and the Stockholders of Cheniere Energy
Operating Co., Inc. named therein/*/                    
   10.8   Form of Warrant Agreement between Cheniere and each of C.M. Blair,
W.M. Foster & Co., Inc. and Redliw Corp./*/             
10.9   Consulting Agreement between Cheniere and Buddy Young/*/       
10.10  Letter Agreement between Cheniere and Buddy Young regarding    
reverse splits of the Common Stock/*/                   
21.1   Subsidiaries of Cheniere/*/                                    
23.1   Consent of Dewey Ballantine (included in Exhibit 5.1)/*/       
23.2   Consent of Merdinger, Fruchter, Rosen & Corso, P.C./*/         
23.3   Consent of Farber & Hass/*/                                    
    23.4   Consent of Merdinger, Fruchter, Rosen & Corso, P.C. to inclusion of
financial statements for the fiscal year ended as of    
August 31, 1996.                                        
24.1   Powers of Attorney included on signature page./*/              
----------------                                                                
* Filed previously.                                                   

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This S-1/A Filing		Date		First		Last			Other Filings
		4/8/92		23
		1/1/93		23
		8/31/93		68		71
		9/1/93		63		69
		11/11/93		62		71
		7/18/94		60		69
		8/31/94		35		71
		9/1/94		71
		10/24/94		63
		1/1/95		23
		5/31/95		50
		6/30/95		70
		8/3/95		35
		8/31/95		52		71
		9/1/95		12		47
		11/9/95		53		60
		2/14/96		19
		2/29/96		47
		3/1/96		47
		4/4/96		14
		4/16/96		10		52
		5/15/96		17
		5/31/96		35		52			10QSB
		6/30/96		17
		7/3/96		10		52			8-K
		7/8/96		11
		7/16/96		27		46
		7/23/96		27		28
		7/26/96		3		47			8-K
		7/30/96		17
		8/5/96		17
		8/9/96		14		17
		8/21/96		29		45
		8/31/96		5		78			10-K, 10-K/A
		9/1/96		27
		9/4/96		14
		9/14/96		14		48
		9/16/96		36
		9/27/96		2		28
		9/30/96		17
Filed On / Filed As Of		10/2/96		1
		10/31/96		17
		1/14/97		14					8-K
		6/1/97		28		46
		1/3/98		29
		6/1/98		28		46
		7/3/98		25
		9/17/98		32
		5/15/99		29		45
		6/14/99		14		45
		9/1/99		30		46
		5/15/1		20					10-Q
		6/1/1		46
		7/16/1		46
		11/11/3		46		71
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