Document:

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                                                                   Exhibit 10.29

                      FIRST AMENDMENT TO CREDIT AGREEMENT

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this "Amendment")
is made as of the 31st day of December, 1999 by and between Cheniere Energy,
Inc. ("Borrower") and EnCap Energy Capital Fund III, L.P. ("Lender").

                                 W I T N E S S E T H:

     WHEREAS, Borrower and Lender have entered into that certain Credit
Agreement dated as of September 1, 1999 (as amended, supplemented, or restated
to the date hereof, the "Original Agreement"), for the purposes and
consideration therein expressed, pursuant to which Lender made a loan to
Borrower as therein provided; and

     WHEREAS, Borrower and Lender desire to amend the Original Agreement for the
purposes described herein; and

     WHEREAS, Borrower and Lender hope to enter into a Three Party Agreement
with Schlumberger Technology Corporation;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:

                                  ARTICLE I.

                          Definitions and References

     (S) 1.1. Terms Defined in the Original Agreement.  Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.

     (S) 1.2.  Other Defined Terms.  Unless the context otherwise requires, the
following terms when used in this Amendment shall have the meanings assigned to
them in this (S) 1.2.

          "Amendment" means this First Amendment to Credit Agreement.

          "Amendment Documents" means this Amendment and, if executed and
     delivered, the Three Party Agreement.

          "Credit Agreement" means the Original Agreement as amended hereby.

          "IP" means IP Petroleum Company, Inc.

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          "Net Profits Interest" means the net profits overriding royalty
     interest, and all appurtenant rights, titles and interests, conveyed by
     Borrower to Lender under the Net Profits Interest Conveyance.

          "Net Profits Interest Conveyance" means that certain Conveyance of Net
     Profits Overriding Royalty Interest dated as of September 1, 1999, and
     recorded in Cameron Parish Louisiana on September 3, 1999 under Entry No.
     261732 in Conveyance Book 900.

          "Schlumberger" means Schlumberger Technology Corporation, a Texas
     corporation.

          "Specified Payables" means the accounts payable owed by Borrower that
     are listed on Schedule 1 hereto, in the amounts listed on such Schedule.

          "Stingray Well" means the State Lease 16017 Well #1 located on the
     Stingray Prospect.

          "Three Party Agreement" means a Three Party Agreement to be entered
     into by and among Borrower, Lender, and Schlumberger in a form acceptable
     to Lender and Borrower.

                                  ARTICLE II.

        Amendments to Original Agreement; Waivers of Events of Default

     (S) 2.1.  Defined Terms.

          (a) Effective as of September 2, 1999, the definition of "Base Rate"
     in Section 1.1 of the Original Agreement is hereby amended in its entirety
     to read as follows:

              " "Base Rate" means the rate of ten percent (10.00%) per annum.
          The Base Rate shall in no event, however, exceed the Highest Lawful
          Rate."

          (b) The definition of "Maturity Date" in Section 1.1 of the Original
     Agreement is hereby amended in its entirety to read as follows:

               " "Maturity Date" means June 30, 2000, or, if earlier, the day on
          which the Note first becomes due and payable in full."

          (c) The following definitions are hereby added to Section 1.1 of the
     Original Agreement:

               "Schlumberger Note" means a promissory note in the principal
          amount of $1,118,424.00 to be made by Borrower to the order of
          Schlumberger Technology Corporation in a form acceptable to Lender and
          Borrower to evidence Liabilities

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          incurred by Borrower in connection with the provision of materials and
          services by Schlumberger Technology Corporation.

               "Three Party Agreement" means a Three Party Agreement to be
          entered into by and among Borrower, Lender, and Schlumberger in a form
          acceptable to Lender and Borrower.

     (S) 2.2.  Monthly Payments.  Section 2.5 of the Original Agreement is
hereby amended in its entirety to read as follows:

               "Section 2.5.  Monthly Payments.  Borrower will arrange for all
          payments of the proceeds of Collateral to be paid directly to Lender.
          Whenever Lender is obligated to forward a portion of such proceeds to
          Schlumberger Technology Corporation under Section 3 of the Three Party
          Agreement, Lender will apply all such proceeds as agreed to in Section
          3 of the Three Party Agreement.  Whenever such Section 3 ceases to be
          applicable, Lender will apply all such payments of Collateral proceeds
          that Lender receives (other than payments under the NPI Conveyance,
          which are Lender's own property) first to interest on the Note and
          other non-principal Obligations as determined by Lender and then to
          principal owing under the Note."

     (S) 2.3.  Deletion of Section 2.6.  Section 2.6 of the Original Agreement
and hereby deleted in their entirety and Section 2.6 of the Original Agreement
is hereby amended in its entirety to read as follows:

     "Section 2.6. - [Reserved]"

     (S) 2.4.  Deletion of Article III.  Sections 3.1, 3.2, 3.3, and 3.4 of the
Original Agreement and hereby deleted in their entirety and Article III of the
Original Agreement is hereby amended in its entirety to read as follows:

     "ARTICLE III - [Reserved]"

     (S) 2.5.  Indebtedness.  The following Subsection (h) is hereby added to
Section 7.1(h) of the Original Agreement:

               "(h) Liabilities arising under the Schlumberger Note and other
          items of Indebtedness (excluding Indebtedness for borrowed money) not
          exceeding $500,000 in aggregate principal amount at any time
          outstanding."

     (S) 2.6.  Limitation on Liens.  The following Subsection (d) is hereby
added to Section 7.2 of the Original Agreement:

          "(d)  Liens encumbering the Redfish Prospect and the Stingray Prospect
     securing the payment of Liabilities under the Schlumberger Note."

     (S) 2.7.  Waivers of Events of Default.  Borrower has failed to complete
the September 1999 Issuance when required under the Original Agreement, and
Borrower has failed to pay the

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Subordinated Debt when required under the Original Agreement. Each of these
failures constitutes an Event of Default under the Original Agreement. Certain
Specified Payables have been outstanding for more than 90 days past the original
invoice or billing date therefor, and Lender contends that Borrower failed to
disclose to Lender the incurring of additional Indebtedness through the aging of
accounts payable beyond ninety (90) days subsequent to the closing of the
Original Agreement. Lender contends that each of these failures constitutes an
Event of Default under the Original Agreement. Borrower anticipates that
additional Specified Payables will hereafter remain outstanding for more than 90
days past the original invoice or billing date therefor, and Borrower's failure
to pay the same may constitute additional Events of Default under the Credit
Agreement. The foregoing Events of Default and alleged Events of Default are
herein called the "Designated Defaults". Lender hereby waives, effective upon
the effectiveness of this Amendment, the Designated Defaults and Lender's right
to seek any remedy against Borrower on account of the Designated Defaults,
including but not limited to, on account of Designated Defaults continuing after
the date hereof.

     (S) 2.8.  Bridge Note Defaults.  Borrower has requested, but as of the date
hereof not received, the consent of certain of its creditors with respect to the
execution and delivery by Borrower of a mortgage in favor of Schlumberger.  The
failure by Borrower to obtain such consents from such creditors will result in
Events of Default under Section 8.1(f) of the Original Agreement (such Events of
Default are herein referred to as the "Bridge Note Defaults").   Lender agrees
not to seek any remedy against Borrower on account of the Bridge Note Defaults
so long as no such creditor of Borrower seeks any remedy against Borrower on
account of the Bridge Note Defaults.

     (S) 2.9.  Certificates and Opinion to be Delivered.  Concurrently with the
execution and delivery of the Three Party Agreement (or upon any earlier request
by Lender), Borrower will deliver to Lender all of the following documents, each
document (unless otherwise indicated) being dated the date of receipt thereof by
Lender, duly authorized, executed and delivered, and in form and substance
satisfactory to Lender:

          (a) Opinion of Counsel for Borrower.  A written opinion of Mayor, Day,
     Caldwell, and Keeton, L.L.P., addressed to Lender, to the effect that the
     Amendment Documents have been duly authorized, executed and delivered by
     Borrower and that each of the Credit Agreement and the Amendment Documents
     constitute the legal, valid and binding obligation of Borrower, enforceable
     in accordance with its terms.

          (b) Officer's Certificate.  A certificate of a duly authorized officer
     of Borrower to the effect that all of the representations and warranties
     set forth in (S) 4.1 hereof are true and correct at and as of the time of
     such effectiveness.

          (c) Supporting Documents.  (i) A certificate of the Secretary of
     Borrower dated the date of this Amendment certifying that attached thereto
     is a true and complete copy of resolutions adopted by the Board of
     Directors of Borrower authorizing the execution, delivery and performance
     of the Amendment Documents and (ii) such supporting documents as Lender may
     reasonably request.

          (d)  Other Documents.  Any instruments, agreements, documents, or
     writings of any kind and character requested by Lender under (S) 4.6 of
     this Amendment.

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                                 ARTICLE III.

                          Conditions of Effectiveness

     (S) 3.1.  Effective Date.  This Amendment shall become effective as of the
date first above written (except as provided in (S)2.1(a)) when and only when
(i) Lender shall have received, at Lender's office, a counterpart of this
Amendment executed and delivered by Borrower, and (ii) Borrower shall have paid
all interest on the Note due from September 2, 1999 through and including
December 31, 1999, and (iii) Borrower shall have paid all amounts due and owing
as of December 31, 1999 under the NPI Conveyance.

                                 ARTICLE IV.

         Representations and Warranties; Agreements; Waivers; Releases

     (S) 4.1.  Representations and Warranties of Borrower.  In order to induce
Lender to enter into this Amendment, Borrower represents and warrants to Lender
that:

          (a) Subject to the matters described in Schedule 4.1 attached hereto,
     the representations and warranties contained in Article V of the Credit
     Agreement are true and correct at and as of the time of the effectiveness
     hereof.   Borrower has paid all Specified Payables (other than the listed
     payables owing to Marine Drilling and Schlumberger Technology Corporation).

          (b) Borrower is duly authorized to execute and deliver the Amendment
     Documents and the other Loan Documents and is and will continue to be duly
     authorized to borrow and to perform its obligations under the Credit
     Agreement.  Borrower has duly taken all corporate action necessary to
     authorize the execution and delivery of the Amendment Documents and the
     other Loan Documents and to authorize the performance of the obligations of
     Borrower thereunder.

          (c)  The execution and delivery by Borrower of the Amendment Documents
     and the other Loan Documents, the performance by Borrower of its
     obligations thereunder and the consummation of the transactions
     contemplated thereby do not and will not conflict with any provision of
     law, statute, rule or regulation or of the certificate of incorporation and
     bylaws of Borrower, or (upon receipt of the consents contemplated in part
     (c) of Schedule 4.1 attached hereto) of any material agreement, judgment,
     license, order or permit applicable to or binding upon Borrower, or result
     in the creation of any Lien, charge or encumbrance upon any assets or
     properties of Borrower.  Except for those which have been duly obtained or
     as set forth in part (c) of Schedule 4.1 attached hereto, no consent,
     approval, authorization or order of any court or governmental authority or
     third party is required in connection with the execution and delivery by
     Borrower of the Amendment Documents or the other Loan Documents or to
     consummate the transactions contemplated thereby.

          (d) When duly executed and delivered, each Amendment Document will be
     a legal and binding instrument and agreement of Borrower, enforceable in
     accordance with

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     its terms. Each other Loan Document is and shall continue to be the legal,
     valid and binding obligation of Borrower, enforceable against Borrower in
     accordance with their respective terms.

          (e)  The unaudited quarterly Consolidated financial statements of
     Borrower dated as of September 30, 1999 fairly present the Consolidated
     financial position at such date and the Consolidated statement of
     operations and the changes in Consolidated financial position for the
     periods ending on such date for Borrower.  Copies of such financial
     statements have heretofore been delivered to Lender.  Since September 30,
     1999, no Material Adverse Change has occurred in the Consolidated financial
     condition or businesses of Borrower.

          (f) No Default or Event of Default has occurred or is continuing
     (other than the Designated Defaults).

          (g) Borrower has no defense, counterclaim or setoff with respect to
     the Obligations or the Loan Documents (any such setoffs, defenses or
     counterclaims being hereby waived and released by Borrower).

     (S) 4.2.  Waivers.  Borrower hereby waives and affirmatively agrees not to
allege or otherwise pursue any or all defenses, affirmative defenses,
counterclaims, claims, causes of action, setoffs or other rights that it may
have to contest (a) the enforceability of any of the Obligations; (b) any
provision of the Loan Documents; (c) any Lien or security interest of Lender in
any Collateral or other property, whether movable or immovable, real or
personal, or tangible or intangible, or any right or other interest, now or
hereafter arising in connection with the Collateral; (d) the actions and
inactions of Lender prior to the date hereof in administering the Loan
Documents, or any other matter prior to the date hereof relating to the
financing arrangements between Borrower and Lender; or (e) the rights of Lender
to the Net Profits Interest.

     (S) 4.3.   Mutual Release. Each of Borrower and Lender HEREBY RELEASES,
REMISES, ACQUITS AND FOREVER DISCHARGES the other and the other's partners,
participants, predecessors, successors and assigns, subsidiary entities, parent
entities, and other affiliates, as well as all employees, agents,
representatives, consultants, attorneys, fiduciaries, partners, officers and
directors of any of the foregoing (all of the foregoing beneficiaries of such
release being hereinafter called the "Released Persons") from any and all
actions and causes of action, judgments, executions, suits, debts, claims,
demands, liabilities, obligations, damages and expenses of any and every
character, known or unknown, direct or indirect, at law or in equity, sounding
in contract or in tort, of whatsoever kind or nature, for or because of any
matter or things done, omitted or suffered to be done by any of the Released
Persons prior to the date of execution hereof and in any way directly or
indirectly arising out of or in any way connected to the Credit Agreement or any
attempt by Borrower to raise funds through the sale of equity or debt
securities, INCLUDING WITHOUT LIMITATION ANY CLAIM OR LIABILITY RELATED TO
FRAUD, INADEQUATE DISCLOSURE, NEGLIGENCE, USURY (INCLUDING WITHOUT LIMITATION
ANY DEFENSE BASED ON USURY), OR WRONGFUL INTERFERENCE WITH CONTRACTS, BUSINESS
OPPORTUNITIES OR RELATIONSHIPS (all of the foregoing hereinafter called the
"Released Matters"); PROVIDED THAT THE RELEASED MATTERS DO NOT INCLUDE OR APPLY
TO, AND THAT NO RELEASE IS GIVEN

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HEREBY WITH RESPECT TO, ANY PRINCIPAL, INTEREST, OTHER INDEBTEDNESS, INDEMNITY,
COVENANT, OR OTHER RIGHTS, OBLIGATIONS OR DUTIES OF BORROWER OR LENDER UNDER
THIS AMENDMENT, THE CREDIT AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT. Each
of Borrower and Lender acknowledges and agrees that the provisions of this
Amendment constitute full and adequate consideration for the foregoing releases.
For the purposes of the foregoing release by Borrower, the affiliates of
Borrower shall be deemed to include, without limitation, EnCap Energy Advisors,
Inc., RP&C International, Inc., and EnCap Investments L.C.

     (S) 4.4. Acknowledgments and Admissions.  Borrower hereby represents,
warrants, acknowledges and admits that (a) it has made an independent decision
to enter into the Amendment Documents and the other Loan Documents without
reliance on any representation, warranty, covenant or undertaking by Lender,
whether written, oral or implicit, other than as expressly set out in the
Amendment Documents or in the other Loan Documents, (b) there are no
representations, warranties, covenants, undertakings or agreements by Lender as
to the Loan Documents except as expressly set out in the Amendment Documents or
in another Loan Document, (c)  Lender has no fiduciary obligation toward
Borrower with respect to any Loan Document or the transactions contemplated
thereby, (d) the relationship pursuant to the Loan Documents between the
Restricted Persons, on one hand, and Lender, on the other hand, is and shall be
solely that of debtor and creditor, respectively, (e) no partnership or joint
venture exists with respect to the Amendment Documents, the Loan Documents, or
the Collateral between Borrower and Lender, (f) should a breach or other default
occur or exist under the Amendment Documents, any Loan Document, or any document
or instrument at any time delivered in connection therewith, Lender will
determine in its sole discretion and for its own reasons what remedies and
actions it will or will not exercise or take at that time, (g) without limiting
any of the foregoing, Borrower is not relying upon any representation or
covenant by Lender, or any representative of Lender, and no such representation
or covenant has been made, that Lender will, at the time of any such breach or
default, or at any other time, waive, negotiate, discuss, or take or refrain
from taking any action permitted under the Loan Documents with respect thereto,
and (h) Lender has relied upon the truthfulness of the acknowledgments in this
section in deciding to execute and deliver the Amendment Documents.

     (S) 4.5.  Recompletion of Stingray Well.  Borrower anticipates that IP
shall propose the recompletion of the Stingray Well (such proposal is herein
called the "Recompletion Proposal") in the near future.  Each of Borrower and
Lender hereby agrees that it will consider whether the Recompletion Proposal is
a prudent economic decision based solely upon the risks and rewards of the
Recompletion Proposal and not upon other factors.  If the Three Party Agreement
has been entered into by all parties thereto, and if each of Borrower and Lender
determines that the Recompletion Proposal is a prudent economic decision, Lender
agrees to loan to Borrower an amount not to exceed $650,000 for the express
purpose of the payment by Borrower of Borrower's share of the costs of the
Recompletion Proposal and for no other purpose, such loan to be made pursuant to
an amendment to the Credit Agreement which shall be acceptable to Lender in
Lender's sole and absolute discretion.

     (S) 4.6.  Letter in Lieu.  Borrower has previously executed and delivered
to Lender a letter in lieu of transfer order in the form attached hereto as
Exhibit A (the "Letter in Lieu").  Such Letter in Lieu has been delivered to IP
and IP has informed Borrower and Lender that IP shall begin making payments to
Lender as directed in such Letter in Lieu.  Borrower hereby agrees to execute
and deliver to IP or Lender such instruments, agreements, documents, and
writings of

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any kind and character as may be from time to time requested by IP or Lender
(including without limitation duplicate originals of the Letter in Lieu) in
order to assist Lender in obtaining direct payment of any proceeds from the sale
of Collateral. Lender agrees to authorize IP to withhold from the proceeds from
the sale of production Borrower's share of lease operating expenses owed to IP,
as operator of the Stingray Prospect and the Redfish Prospect.

                                 ARTICLE V.

                                 Miscellaneous

     (S) 5.1.  Ratification of Agreements.  The Original Agreement as hereby
amended is hereby ratified and confirmed in all respects.  Any reference to the
Credit Agreement in any Loan Document shall be deemed to refer to this Amendment
also.  The execution, delivery and effectiveness of the Amendment Documents
shall not, except as expressly provided therein, operate as a waiver of any
right, power or remedy of Lender under the Credit Agreement or any other Loan
Document nor constitute a waiver of any provision of the Credit Agreement or any
other Loan Document.

     (S) 5.2.  Survival of Agreements.  All representations, warranties,
covenants and agreements of Borrower herein shall survive the execution and
delivery of this Amendment and the performance hereof, including without
limitation the making or granting of the Loan, and shall further survive until
all of the Obligations are paid in full.  All statements and agreements
contained in any certificate or instrument delivered by any Restricted Person
hereunder or under the Credit Agreement to Lender shall be deemed to constitute
representations and warranties by, or agreements and covenants of, Borrower
under this Amendment and under the Credit Agreement.

     (S) 5.3.  Loan Documents.  Each Amendment Document is a Loan Document, and
all provisions in the Credit Agreement pertaining to Loan Documents apply
thereto.

     (S) 5.4.   Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of Texas and any applicable
laws of the United States of America in all respects, including construction,
validity and performance.

     (S) 5.5.  Counterparts.  This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.

     THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.

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     IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

                    ENCAP ENERGY CAPITAL FUND III, L.P.

                    By:  ENCAP INVESTMENTS, L.C., general partner

                        By:
                           ---------------------------------
                           D. Martin Phillips
                           Managing Director

                    CHENIERE ENERGY, INC.

                    By:
                       -----------------------------------------
                       Walter L. Williams
                       Vice Chairman of the Board of Directors

                             CONSENT AND AGREEMENT

     The undersigned hereby consents to the provisions of this Amendment and the
transactions contemplated herein, and hereby ratifies and confirms the Guaranty
dated as of September 1, 1999 made by it for the benefit of Lender, and agrees
that its obligations and covenants thereunder are unimpaired hereby and shall
remain in full force and effect.

                              CHENIERE ENERGY OPERATING CO., INC.

                              By:
                                  Walter L. Williams
                                  President
Exhibit A -- Letter in Lieu

Schedule 1 -- Specified Payables

                                       9<PAGE>

                                                                   Exhibit 10.30

                             THREE PARTY AGREEMENT

     This Three Party Agreement (this "Agreement") is made as of the 4th day of
January, 2000, by Cheniere Energy, Inc. ("Cheniere"), Schlumberger Technology
Corporation ("Schlumberger"), and EnCap Energy Capital Fund III, L.P. ("EnCap
Fund III").

                                 RECITALS:

     1.  EnCap Fund III and Cheniere have entered into that certain Credit
Agreement dated as of September 1, 1999 (the "EnCap Credit Agreement"), pursuant
to which EnCap Fund III made loans to Cheniere and Cheniere mortgaged to EnCap
Fund III Cheniere's interests in Louisiana State Leases Nos. 16185, 16017, and
16186 in Cameron Parish, Louisiana (as more fully described on Schedule 1
hereto, the "Stingray Prospect") and  Louisiana State Leases Nos. 16016, 16018,
16020 and 16022 in Cameron Parish, Louisiana (as more fully described on
Schedule 1 hereto, the "Redfish Prospect"), pursuant to that certain Mortgage,
Assignment, Security Agreement, Fixture Filing and Financing Statement recorded
in Cameron Parish, Louisiana on September 3, 1999 in Mortgage Book 245, File No.
261733, as amended by that certain First Amendment to Mortgage, Assignment,
Security Agreement, Fixture Filing and Financing Statement recorded in Cameron
Parish, Louisiana on September 9, 1999 in Mortgage Book 245, File No. 2618017 as
amended by that certain Second Supplement and Amendment to Mortgage, Assignment,
Security Agreement, Fixture Filing and Financing Statement recorded in Cameron
Parish, Louisiana on October 26, 1999 in Mortgage Book 246, File No. 262290.
Prior to giving such mortgage, Cheniere executed and delivered to EnCap Fund III
a Conveyance of Net Profits Overriding Royalty Interest dated as of September 1,
1999 (the "NPI Conveyance") which has been filed for record in Cameron Parish,
Louisiana on September 3, 1999 in Conveyance Book 900, File No. 261733.

     2.  Schlumberger has provided materials and services to Cheniere in
connection with the Stingray Prospect and has mechanic's and materialman's liens
on the Stingray Prospect (the "M&M Liens") that are superior to the liens under
EnCap Fund III's mortgage to secure unpaid bills owing by Cheniere to
Schlumberger.  Prior to the execution hereof, Schlumberger does not have any
liens, security interests or privileges of any kind on the Redfish Prospect.

     3.  EnCap Fund III, Cheniere and Schlumberger desire to enter into this
Agreement to provide a procedure under which payments will be made to both EnCap
Fund III and Schlumberger.

     In consideration of the mutual covenants herein, including, without
limitation Schlumberger's agreement with respect to foreclosure, as provided
below, and EnCap Fund III's agreement to allow certain proceeds from the Redfish
Prospect to be used to pay Schlumberger, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
EnCap Fund III, Cheniere and Schlumberger hereby agree as follows:

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<PAGE>

                                 AGREEMENTS:

     Section 1.  Payments; Collections.

     (a) Cheniere has paid to Schlumberger the amount of $360,000 in immediately
available funds.

     (b) Cheniere has arranged, and, until all amounts owed EnCap Fund III under
the EnCap Credit Agreement or other Loan Documents (as such term is defined in
the EnCap Credit Agreement) entered into pursuant thereto have been paid in
full, will continue to arrange, for all payments owing to Cheniere by the
purchasers of Cheniere's production from the Stingray Prospect and the Redfish
Prospect to be paid directly to EnCap Fund III.  IP Petroleum Company, Inc.
("IP"), who is the operator of both prospects, presently distributes revenue
attributable to the sale of such production and may possibly from time to time
net out of such payments certain amounts owing to IP, as operator, by Cheniere,
as non-operator.  As used herein, "Net Payments" refers to the net amounts
actually received by EnCap Fund III from IP or any other purchasers of
Cheniere's production from the Stingray Prospect and the Redfish Prospect, less
any billings from the operators of the Redfish Prospect or Stingray Prospect
that have not already been netted out (it being agreed that EnCap Fund III will
authorize IP to withhold, from the proceeds of the sale of such production,
Cheniere's share of lease operating expenses owed to IP as operator of the
Stingray Prospect and the Redfish Prospect.

     Section 2.  Reduced Schlumberger Claim; Promissory Note; Mortgage;
Subordination.

     (a) Schlumberger claims and believes that the amount of indebtedness owing
to it by Cheniere for services and materials provided in connection with the
Stingray Prospect (the "Original Schlumberger Claim") is in excess of
$1,117,569.84, as determined after application of the $360,000 referred to in
Section 1(a) above.  Schlumberger hereby reduces the Original Schlumberger Claim
(together with any other amounts owing by Cheniere to Schlumberger that are
possibly secured by any lien, security interest, or privilege of any kind
burdening either the Stingray Prospect or the Redfish Prospect) to $1,117,569.84
(which includes its legal fees and expenses to date), and Schlumberger hereby
waives any rights Schlumberger may have on the date hereof to receive more than
such reduced claim from Cheniere (except to the limited extent provided in (i)
the Debt Restructure Agreement by and between Cheniere and Schlumberger, (ii)
the Mortgage, Assignment, Security Agreement, Fixture Filing and Financing
Statement dated January 4, 2000 executed by Cheniere in favor of Schlumberger
(the "Schlumberger Mortgage"), and (iii) the Promissory Note dated January 4,
2000 executed by Cheniere in favor of Schlumberger.  Schlumberger's reduced
claim in the amount of $1,117,569.84  plus (i) future legal fees and expenses
and (ii) Cheniere's obligation under the Debt Restructure Agreement, the
Schlumberger Note, and the Schlumberger Mortgage is herein collectively referred
to as the "Reduced Schlumberger Claim".

     (b) Cheniere has executed and delivered to Schlumberger on the date hereof
the Debt Restructure Agreement ("Debt Restructure Agreement").

     (c) In order to evidence the Reduced Schlumberger Claim, Cheniere executed
and delivered to Schlumberger on the date hereof a promissory note in the form
required by the Debt Restructure Agreement (the "Schlumberger Note").

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<PAGE>

     (d) In order to secure the payment and performance of the Schlumberger
Note, Cheniere executed and delivered to Schlumberger the Schlumberger Mortgage.

     (e) EnCap Fund III hereby promises simultaneously with execution hereof to
execute and deliver to Schlumberger on the date hereof the Lien Subordination
Agreement attached hereto as Exhibit A.

     Section 3.  Application of Net Payments.  Until the Schlumberger Note is
paid in full, either pursuant to this Agreement or otherwise, EnCap Fund III
will apply all Net Payments it receives during January 2000 and each calendar
month thereafter as follows:

          (a)  Within two business days after receipt of Net Payments, EnCap
     Fund III will first apply such Net Payments to any payments (i) which are
     then due under the Schlumberger Note, or (ii) shall become due on the first
     business day of the following month (e.g., for January 2000, to any
     payments due under the Schlumberger Note on or before February 1, 2000) by
     paying over the same to Schlumberger;

          (b)  EnCap Fund III will thereafter apply the entirety of any
     remaining Net Payments:

          (i)  with respect to the Net Proceeds received from production that
               occurred in November 1999, December 1999, and January 2000, (A)
               first to the amount of outstanding legal fees and costs owed by
               Cheniere and (B) next to the unpaid principal balance under the
               EnCap Credit Agreement or the promissory note issued in
               connection therewith;

          (ii) with respect to any other Net Proceeds (A) first to all amounts
               then due and payable under the NPI Conveyance, (B) next to all
               interest then due and payable under the EnCap Credit Agreement
               and the related promissory note, and (C) next to the unpaid
               principal balance under the EnCap Credit Agreement or the
               promissory note issued in connection therewith.

Pending payment to Schlumberger under subsection (a) above, EnCap Fund III will
hold in trust for Schlumberger any Net Payments to be paid to Schlumberger.
EnCap Fund III will promptly send a written report to Cheniere and to
Schlumberger of the amounts paid and applied under subsections (a) and (b)
above, and within two business days after receipt of such report Cheniere will
(1) make additional payments to Schlumberger as required under the Schlumberger
Note if the amount applied by EnCap Fund III under subsection (a) above is less
than the amount then due and payable under the Schlumberger Note, and (2) prior
to EnCap Fund III's receipt of Net Proceeds from production that occurred in
January 2000, make additional payments to EnCap Fund III of all interest then
due and payable under the EnCap Credit Agreement and the related promissory note
and of all amounts then due and payable under the NPI Conveyance.  If Net
Payments are not timely received from IP and, as a result, Cheniere directly
pays to Schlumberger amounts due under the Schlumberger Note, then when such Net
Payments are received from IP, EnCap Fund III shall (upon authorization by
Schlumberger, which Schlumberger hereby agrees to give promptly after receipt of
such payment by Cheniere)

                                       3
<PAGE>

disburse to Cheniere from such Net Payments the amount of the direct payments
made by Cheniere to Schlumberger.

     Section 4.  Limitations on Foreclosure by Schlumberger; Option to Purchase
Schlumberger Note and Schlumberger Mortgage by EnCap Fund III.

     (a) Schlumberger hereby agrees to give written notice to EnCap Fund III and
Cheniere of the occurrence of any Schlumberger Note Default.  (As used herein,
"Schlumberger Note Default" means the occurrence of any event defined as a
"default" or "event of default" in the Schlumberger Note, the Debt Restructure
Agreement, or the Schlumberger Mortgage which default or event of default is not
remedied within any applicable period of grace provided therefor therein.).
Each of Schlumberger and Cheniere promises to copy EnCap Fund III on any other
written notice or communication that it sends pursuant to the Debt Restructure
Agreement.

     (b) Schlumberger will not take any action to enforce the Schlumberger
Mortgage or any other liens, security interests, privileges, or similar rights
that it may have with respect to any properties, assets, revenues, or proceeds
of Cheniere until the end of the fifteenth (15th) day following the delivery by
Schlumberger of written notice to EnCap Fund III and Cheniere of the occurrence
of a Schlumberger Note Default. (The period from the date hereof to the end of
such fifteenth day is herein referred to as the "Standstill Period".)

     (c) Schlumberger hereby grants to EnCap the option to purchase the
Schlumberger Note (together with the Schlumberger Mortgage and any other related
agreements or documents) at any time during the Standstill Period, for a
purchase price equal to the amounts then owing and unpaid to Schlumberger
thereunder (including legal fees and expenses incurred by Schlumberger).  This
option terminates upon expiration of the Standstill Period.

     Section 5.  No Enforcement Against Co-Owners.  Schlumberger hereby
releases, and agrees not to perfect or enforce, any liens, security interests,
privileges, or similar rights that it may have with respect to the interests of
any person or entity other than Cheniere in the Stingray Prospect or the Redfish
Prospect, including without limitation the interests of EnCap Fund III under the
NPI Conveyance and the interests of Cheniere's joint interest owners in the
Stingray Prospect.  Schlumberger expressly reserves any liens, security
interests, privileges, or similar rights that it has with respect to the
interests of Cheniere, subject to the terms hereof.

     Section 6.  Cheniere to Remain Liable.  Notwithstanding anything to the
contrary contained herein, Cheniere shall remain liable to EnCap Fund III under
the EnCap Credit Agreement and the Loan Documents (as such term is defined in
the EnCap Credit Agreement) and shall remain liable to Schlumberger on the
Reduced Schlumberger Claim and under the Schlumberger Note.

     Section 7.  Notices.  All notices, requests, demands and other
communications required or permitted under this Three Party Agreement or by law
shall be in writing and shall be deemed to have been duly given, made and
received only when sent by facsimile transmission (receipt confirmed) or
reputable overnight delivery service (receipt confirmed), when delivered against
receipt, or when deposited in the United States mails, certified mail, return
receipt requested, postage prepaid, addressed as set forth below, and actually
presented at the address of the noticed party:

                                       4
<PAGE>

               (a)  if to Schlumberger:

                    Schlumberger Technology Corporation
                    1325 South Dairy Ashford, Suite 300
                    Houston, Texas 77077
                    Attention:  Pre Moss
                    Fax:  (281) 749-8381

               (b)  if to EnCap Fund III:

                    EnCap Energy Capital Fund III, L.P.
                    1100 Louisiana
                    Houston, Texas 77002
                    Attention:  John Howie
                    Fax: (713) 659 6130

               (c)  if to Cheniere:

                    Cheniere Energy, Inc.
                    Two Allen Center, Suite 1740
                    1200 Smith Street
                    Houston, Texas 77002
                    Attention:  Charif Souki
                    Fax:  (713) 659-6130

          Any addressee may alter the address to which communications are to be
          sent by giving notice of such change of address in conformity with the
          provisions of this section for the giving of notice.

                                       5
<PAGE>

     IN WITNESS WHEREOF, this Agreement is executed and delivered by EnCap Fund
III, Cheniere and Schlumberger as of date first written above.

WITNESSES                     CHENIERE ENERGY, INC.

                              By:
                                 ----------------------------------
Name:                            Walter L. Williams, Vice Chairman
                                 of the Board of Directors

Name:

                              Notary Public

                              ENCAP ENERGY CAPITAL FUND III, L.P.

                              By:   EnCap Investments L.C., General Partner
Name:
                                 By:
                                    ---------------------------------------
                                    D. Martin Phillips, Managing Director
Name:

                              Notary Public

                              SCHLUMBERGER TECHNOLOGY CORPORATION

Name:                         By:
                                 ---------------------------------
                                 Name:
                                 Title:
Name:

                                 Notary Public

                                       6
<PAGE>

                                 ACKNOWLEDGMENT

STATE OF TEXAS      (S)
                    (S)
COUNTY OF HARRIS    (S)

     On this date before me, the undersigned authority, personally came and
appeared Walter L. Williams, to me personally known and known by me to be the
person whose genuine signature is affixed to the foregoing document as the Vice
Chairman of the Board of Directors of Cheniere Energy, Inc., a Delaware
corporation, who signed said document before me in the presence of the two
witnesses, whose names are thereto subscribed as such, being competent
witnesses, and who acknowledged, in my presence and in the presence of said
witnesses, that he signed the above and foregoing document as his own free act
and deed on behalf of such corporation by authority of its board of directors
and as the free act and deed of such corporation and for the uses and purposes
therein set forth and apparent.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Houston, Harris County, Texas, on the day and year first above written.

                              ______________________________________
                              NOTARY PUBLIC, State of Texas

                              ______________________________________
                                 (printed name)

My commission expires:

     [SEAL]

                                       7
<PAGE>

STATE OF TEXAS      (S)
                    (S)
COUNTY OF HARRIS    (S)

     On this date before me, the undersigned authority, personally came and
appeared D. Martin Phillips, to me personally known and known by me to be the
person whose genuine signature is affixed to the foregoing document as the
Managing Director of EnCap Investments L.C., General Partner of EnCap Energy
Capital Fund III, L.P., a Texas limited partnership, who signed said document
before me in the presence of the two witnesses, whose names are thereto
subscribed as such, being competent witnesses, and who acknowledged, in my
presence and in the presence of said witnesses, that he signed the above and
foregoing document as his own free act and deed on behalf of such general
partner acting on behalf of said limited partnership by proper authority and as
the free act and deed of such general partner acting of behalf of said limited
partnership and for the uses and purposes therein set forth and apparent.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Houston, Harris County, Texas, on the day and year first above written.

                              ______________________________________
                              NOTARY PUBLIC, State of Texas

                              ______________________________________
                                 (printed name)

My commission expires:

     [SEAL]

                                       8
<PAGE>

STATE OF TEXAS      (S)
                    (S)
COUNTY OF HARRIS    (S)

     On this date before me, the undersigned authority, personally came and
appeared ____________, to me personally known and known by me to be the person
whose genuine signature is affixed to the foregoing document as the
________________________of Schlumberger Technology Corporation, a Texas
corporation, who signed said document before me in the presence of the two
witnesses, whose names are thereto subscribed as such, being competent
witnesses, and who acknowledged, in my presence and in the presence of said
witnesses, that he signed the above and foregoing document as his own free act
and deed on behalf of such corporation by authority of its board of directors
and as the free act and deed of such corporation and for the uses and purposes
therein set forth and apparent.

     IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
City of Houston, Harris County, Texas, on the day and year first above written.

                              ______________________________________
                              NOTARY PUBLIC, State of Texas

                              ______________________________________
                                 (printed name)

My commission expires:

     [SEAL]

                                       9
<PAGE>

                                 SCHEDULE 1

*[Property Descriptions from EnCap Mortgage to be attached]

Redfish Prospect

Stingray Prospect

Exhibit A

                                                    Lien Subordination Agreement

                                      10

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