CREDIT AGREEMENT

REVOLVING LINE OF CREDIT

OF UP TO $5,000,000

FROM

STERLING BANK,

TO

CHENIERE ENERGY, INC.,

CHENIERE LNG, INC.,

CHENIERE ENERGY OPERATING CO., INC.,

CHENIERE LNG SERVICES, INC.

AND

CHENIERE-GRYPHON MANAGEMENT, INC.

July 25, 2003

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CREDIT AGREEMENT

dated July 25, 2003

from

STERLING BANK

to

CHENIERE ENERGY, INC.,

CHENIERE LNG, INC.,

CHENIERE ENERGY OPERATING CO., INC.,

CHENIERE LNG SERVICES, INC. AND

CHENIERE-GRYPHON MANAGEMENT, INC.

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this Agreement), dated effective July 25, 2003, is by and between CHENIERE ENERGY, INC. (Parent Borrower), CHENIERE LNG, INC. (Cheniere LNG), CHENIERE ENERGY OPERATING CO., INC., CHENIERE LNG SERVICES, INC. AND CHENIERE-GRYPHON MANAGEMENT, INC. (Cheniere-Gryphon), each a Delaware corporation, (each, individually, a Borrower and collectively, the Borrowers) and STERLING BANK, a Texas chartered banking association (the Bank).

W I T N E S S E T H

WHEREAS, the Borrowers desire to obtain a loan from the Bank in order to satisfy certain working capital needs of the Borrowers, including the exploration, development and/or acquisition of oil and gas properties, the payment of fees and expenses related to this credit facility, the payment of existing indebtedness and for general corporate purposes; and

WHEREAS, the Bank is willing to loan such funds to the Borrowers in accordance with the terms of this Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Bank and the Borrowers agree as follows:

ARTICLE I.

DEFINITIONS

As used in this Agreement, the following terms shall have the meanings indicated:

Affiliate means, as applied to any Person, any other Person, directly or indirectly, controlling, controlled by, or under common control with, that Person. For purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by, and under common control with), as applied to any Person, means either: (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract, or otherwise, or (b) the legal or beneficial ownership of or voting rights with respect to 8% or more of the equity interest in such Person.

Agreement means this Credit Agreement, as the same may be amended or supplemented from time to time.

Applicable Margin means two and one-half percent.

Bank Parties has the meaning given such term in Section 8.07(B).

Base Rate means, at the time any determination thereof is to be made, the fluctuating per annum rate of interest then most recently announced by the Bank in Houston, Texas, as its Base Rate. The Base Rate is a rate set by the Bank based upon various factors, including the Banks costs and desired return, general economic conditions and other factors, and

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is used as a reference point for pricing some loans. The Bank may price loans at, above or below the Base Rate. Any change in the Base Rate shall take effect hereunder as of and on the opening of business on the date specified in the announcement of such change. A certificate in writing by any Vice President of the Bank as to the Base Rate as of any date or dates shall be prima facie evidence of such fact.

Borrowing Base means the maximum loan amount with respect to the Borrowing Base Properties, as determined by the Bank from time to time in accordance with Section 2.05 of this Agreement.

Borrowing Base Oil and Gas Properties means those Oil and Gas Properties of the Borrowers that are subject to the liens created by certain of the Security Instruments to secure the Obligations, including, but not limited to, the indebtedness evidenced by the Note, which Borrowing Base Oil and Gas Properties are described in Exhibit A attached hereto and made a part hereof.

Borrowing Base Properties means, collectively, the Borrowing Base Receivables and the Borrowing Base Oil and Gas Properties.

Borrowing Base Receivables means the Receivables set forth on the Borrowing Base Receivables Schedule which are composed of Cheniere LNGs Receivables (i) under the Partnership Agreement and the Contribution Agreement payable by Freeport LNG Investments, LLC, a Delaware limited liability company and (ii) under the Purchase Agreement payable by Contango Sundance, Inc.; in the aggregate amount of $4,133,333.

Borrowing Base Receivables Report has the meaning set forth in Section 2.05(b) hereof.

Borrowing Base Receivables Schedule means Schedule 4.06 attached hereto.

Business Day means a day other than a Saturday, Sunday or legal holiday for commercial banks under the laws applicable to national banking associations and those applicable to Texas state chartered banks.

Change of Control means an event or series of events by which the shareholders of any Borrower as of the date of this Agreement cannot alone elect at least 51% of the board of directors of any Borrower.

Cheniere-Gryphon means Cheniere-Gryphon Management, Inc., a Delaware corporation.

Closing has the meaning provided in Section 3.01.

Collateral means all of the assets of the Borrowers subject to the liens and security interests under the Security Instruments.

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