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Guy Ausmus  

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  • How Do Cheniere Energy's Sabine Pass Sales Contracts Affect Its Bottom Line? [View article]
    Good add to this battleground stock. Your analysis touches on the essential issue facing all midstream businesses now. No transport differential, no flow. No flow, stunted profits.
    Nov 27, 2015. 11:07 AM | 1 Like Like |Link to Comment
  • Cheniere Energy Is A Falling Knife [View article]
    Ah, plenty of haters when a negative article comes out about Cheniere. And you can argue the world's LNG capacity/demand balance until the cows come home. Here's what all of us can hang our hat on in the near term. Revenue is a function of throughput, and realized fees for throughput. Yes, Cheniere has signed some long term capacity contracts, but they are not as sold out as mapodga suggests.

    There's a very good Cheniere deep drill on Seeking Alpha that speaks to this: "Cheniere Energy: A riddle wrapped in a mystery inside an enigma". This article is required reading for any LNG (the company) holder, long or short. (and I'm short, by the way). As of July 15, about 2/3 of the capacity was termed up, and 1/3 was spot. The deal with ENGIE S.A. (as described on the Cheniere website) is "...The SPA covers the delivery of up to 12 cargoes per year, or up to approximately 222 million MMBtus in total, from 2018 to 2023". "Up to" means ENGIE has an option to decline the shipments, so if they find a better deal...

    In short, the capacity isn't all that termed up.

    Second, one MUST look at the transatlantic arbitrage of LNG (the commodity). If the arbitrage between Europe and the U.S. isn't greater than the cost of liquefaction + transport, the gas isn't gonna flow, and customers won't sign up for more.

    Platt's has a great chart showing the arbitrage trend, which I won't hyperlink for copyright reasons, but the chart shows clearly that the arbitrage has narrowed from $5-$6 USD per MMBtu to $1.50-$2.00. Search for the phrase "Transatlantic gas price arbitrage 2015" and you will find it. LNG has sold the 2/3 of capacity sold to date in the $2.50 to $3.00/MMBtu range. How many customers will sign up for the balance of capacity (~$2.75/MMBtu asking price) at the market derived arbitrage numbers ($1.50/MMBtu)? And we haven't included transport and boiloff losses. I dunno. None, maybe?

    I know this is a battleground stock. Ichan is smart, Chanos is smart, etc etc. All I'm saying is: look at the publically available discernable data, and plug it into the cashflow model in the referenced article. Things get ugly for LNG (the company) unless the world LNG (the commodity) market tightens up really fast.
    Nov 16, 2015. 07:10 PM | 4 Likes Like |Link to Comment
  • Energy Transfer Hammered: What Are My Units Really Worth? [View article]
    I think the answer to this valuation can be found in Ron Hiram's last analysis of ETP "A Closer Look At Energy Transfer Partners' Distributable Cash Flow As Of Q2 2015". Ron Hiram, by the way, is the Zen master of understanding these companies, IMHO.

    Basically, ETP can't cover distributions and CAPEX from existing cash flow, and they are issuing equity and taking on debt to plug the shortfall.
    Nov 12, 2015. 03:04 PM | Likes Like |Link to Comment
  • Reuters: Cheniere Energy's Sabine Pass set for inaugural loading Jan. 12 [View news story]
    Oil derivative pricing is going the way of the dodo. An increasingly liquid (and oversupplied) LNG market will usher in gas on gas competition. Transatlantic gas arbitrage values are generally lower than the cost of liquefaction + transport. Chiniere doesn't have its capacity sold out, not by a long shot. There's a lot of headwinds here
    Nov 12, 2015. 08:42 AM | 1 Like Like |Link to Comment
  • Cheniere Energy Stock: A Floating Stock In A Sinking Market [View article]
    Ugh. Missed their last earnings expectation. Transatlantic LNG arbitrage usually lower than liquefaction fee at Sable island. Ichan is way underwater on this trade.
    Nov 4, 2015. 06:50 PM | 3 Likes Like |Link to Comment
  • Why You Should Short Cheniere Energy [View article]
    Have come to the same conclusion as you - a great shorting candidate...been short LNG twice, waiting for the next entry point.
    Oct 15, 2015. 05:46 PM | 2 Likes Like |Link to Comment
  • Cheniere: A Compelling Investment For Patient Investors [View article]
    Nice summary Chris. Here's a some of questions I have with this one. First, the ownership structure - which name owns what, or more appropriately what are the cash flows attributable to each instrument traded? (LNG, CQH, CQP)

    Second, what is the nature of the agreements entered? Are they merchant sales of LNG, or are they use of the facilities similar to a gas pipeline transport contract?

    Third question: Where is the break even capacity utilization for the company?
    Sep 30, 2015. 07:07 AM | 4 Likes Like |Link to Comment
  • Pipes, Pipe Dreams, Pipelines, And Why I'm Short This Sector [View article]
    Danielle: Thanks for corresponding. Everybody's entitled to an opinion, I guess. Few grind numbers, and that's where it's at if you are going to succeed. Yes, there's room for further declines here. I evaluated CPGX by attaching a trough multiple to slightly higher earnings than the present run rate. Don't want to say much more than I see this as a sub-$15 name. LNG, geez, I just don't know. It all depends on what happens to the substantial uncontracted capacity. Then there's the Godzilla vs. Mothra (Ichan vs. Chanos) issue. The SA article I cite is the best deep drill I've seen. As to MWE, it made the short list, but the div kept me away. I'll check out your suggestion. Another idea (and I bought some of this) is an inverse ETF (MLPS). Not very liquid, but company idiosyncratic risk is gone - just shorts a basket of pipeline mlp's. It has done very well - trade's 7 days old, up 15%.
    Sep 29, 2015. 04:03 PM | 1 Like Like |Link to Comment
  • Pipes, Pipe Dreams, Pipelines, And Why I'm Short This Sector [View article]
    Lee: Thanks for reading the article and commenting. I'm not really in a position to comment on the Chinese plants, don't know scale, and so on. Both of those chemicals are global commodities, would require a competitive source of gas supply to compete with what I believe to be the lowest cost competitors on the US Gulf Coast. Frankly, I don't see how they could based on LNG consumption. Perhaps they could using the new Gazprom deal I referenced in the article.
    Sep 29, 2015. 03:51 PM | Likes Like |Link to Comment
  • Pipes, Pipe Dreams, Pipelines, And Why I'm Short This Sector [View article]
    AT: Thanks for your comments. If an E&P goes BK that doesn't terminate the tolling (transport?) contracts. Ok, who pays in that instance? I'll grant you, the gas can only leave the lease thru the pipe, so a deal will be cut with the same gathering company. But I wouldn't presume it to be on the same terms. Williams didn't renegotiate with Chesapeake out of the goodness of their heart.

    As for the thoughts on the pipe MLP's - well, all interesting stuff, but the charts are terrible, they were well represented on the 52 week lows list yesterday, and they continue to have deteriorating fundamentals. These call into question the ability to pay the fat yields attached to many of the MLP's. As I mentioned in the article, the yields are "shark repellent" to me. I don't want to hold a short and pay 9% per annum for the privilege of doing so. Hence the appeal of CPGX and LNG.

    You, and many of the commenters to this article point to a longer term horizon where things will be better. Well, okay. Not holding this trade for the rest of my life. At the rate that CPGX and LNG have been dropping, I envisage reaching fair value in a much shorter time frame. As for q3 - suggest that you keep a close eye on gas well rig counts. They've gone one direction...down. I've looked for a factual basis for optimism here - higher rig counts, higher gas prices, increasing gas production, something. Haven't seen it yet. These fundamental activity drivers have to improve for improvement of the Midstream biz. If you or anyone else can point to these drivers, believe me, I welcome the information.
    Sep 29, 2015. 10:51 AM | Likes Like |Link to Comment
  • Icahn ups stake in Cheniere Energy to 11.43% [View news story]
    You know, I've played cards with guys that try to buy the pot after everybody figures out that they don't have a hand. Yeah, we make'em pay.
    Sep 28, 2015. 09:18 PM | 2 Likes Like |Link to Comment
  • Pipes, Pipe Dreams, Pipelines, And Why I'm Short This Sector [View article]
    Both trades are on. Both have positive equity. More than enough to keep a reasonable stop on both names. Now, it's just an issue of managing to the target price. Will I get stopped out? Maybe. But I would be stopped out at a profit. So, am I confident? Yes. Confident that its the right trade directionally right now. Not in some EIA someday time frame. Now. Confident that it would be grabbing a falling knife to hold either name long. Confident that I have enough equity in the trade to manage it appropriately. Confident that the trade will close profitably. Only question will be how much.

    Will either short trade to zero? Doubt it. Will both names go up someday? Maybe. But I'll have the money. And that is the whole point of this.
    Sep 28, 2015. 08:00 PM | Likes Like |Link to Comment
  • Pipes, Pipe Dreams, Pipelines, And Why I'm Short This Sector [View article]
    Thanks for your interest. A good article on this detail is on SA - entitled "Cheniere Energy: A riddle wrapped in a mystery inside an enigma". Per the company's own disclosures, only 1/2 of their planned and existing capacity is termed up. A "charitable" cash flow analysis in this article (author's description, not mine) shows equity to be overvalued.
    Sep 28, 2015. 05:57 PM | Likes Like |Link to Comment
  • Pipes, Pipe Dreams, Pipelines, And Why I'm Short This Sector [View article]
    Exactly the point - LNG still has to sell approximately 1/2 of their developed and planned capacity. China's demand vs. previous forecasts appears to be dropping if their impact on other basic materials is any guide. If I were an LNG (the company) long, I'd be much more relieved/bullish if they had a Chinese market booked.
    Sep 28, 2015. 05:48 PM | Likes Like |Link to Comment
  • Pipes, Pipe Dreams, Pipelines, And Why I'm Short This Sector [View article]
    Thanks for commenting GT. As to timing. - sure, could have been earlier. CPGX & LNG still have meat on the bone, if you look at earnings (or lack of) and trough PE's in this sector. In my opinion, anyway. As I said earlier, it took awhile to get the article published, and both names have had some precipitous declines in the last ten days.
    Sep 28, 2015. 05:16 PM | Likes Like |Link to Comment