Seeking Alpha

Proactive Investor's  Instablog

Proactive Investor
Send Message
Proactiveinvestors is a leading multimedia news organization, investor portal and events management business with offices in New York, Sydney, Toronto and London. Proactiveinvestors operates five financial websites in four languages providing breaking news, comment and analysis on hundreds of... More
My company:
Proactiveinvestors
My blog:
Proactiveinvestors
  • Liquefied Natural Gas Limited Makes Key U.S. FERC Filing For Magnolia LNG 0 comments
    May 4, 2014 8:36 PM

    Liquefied Natural Gas Limited (ASX: LNG) has filed the highly anticipated formal application for its 8 million tonne per annum Magnolia LNG project in Louisiana with the U.S. Federal Energy Regulatory Commission.

    This milestone is a major step towards achieving a Final Investment Decision in late 2014 and Financial Close mid‐2015.

    Completion of the FERC filing process is a critical step toward permitting and approval necessary for the Project's construction.

    Magnolia LNG anticipates receiving all approvals during 2015. Construction will commence shortly thereafter with first LNG exports planned for the second half of 2018.

    "This is a significant milestone for the Magnolia LNG Project, placing it among a small group of projects to have formally filed an application with FERC," managing director Maurice Brand said.

    "We are committed to meeting all FERC safety and environmental requirements during construction and operation and anticipate Financial Close of the Project in mid‐2015. The Magnolia LNG Project will bring jobs and economic growth to southwest Louisiana.

    "Moving forward, FERC will prepare an Environmental Impact Statement (NYSEARCA:EIS) to satisfy the National Environmental Policy Act (OTC:NEPA) with the input of the public and other cooperating agencies. Our regulatory team looks forward to working with FERC and other agencies in this process.

    "During this time, the focus of LNG Limited's and Magnolia LNG's management teams will be to deliver a bankable EPC contract and finalise legally binding Liquefaction Tolling Agreements with counterparties."

    FERC Filing

    The FERC filing follows extensive work performed by the LNG Limited and Magnolia LNG teams on Front End Engineering Design (OTC:FEED), pre‐filing consultation and preparation of 13 draft Resource Reports for FERC.

    The work, which has been ongoing since early 2013, also has involved consultation with other federal, state and local agencies, such as the Louisiana Department of Environmental Quality, U.S. Department of Transportation and the U.S. Coast Guard.

    Magnolia LNG

    Magnolia LNG is planned as a 8Mtpa liquefied natural gas export project comprising of four liquefaction trains, each capable of producing up to 2Mtpa of LNG (1.7Mtpa firm).

    This will use LNG Limited's OSMR® LNG process technology with the company adopting a tolling business model whereby Magnolia LNG will provide liquefaction, storage and ship loading facilities to LNG buyers who pay a monthly fixed capacity fee, plus all LNG plant operating and maintenance costs.

    The LNG buyers are also responsible for the supply and transportation of gas to the project site.

    LNG Limited has tolling agreements covering 7Mtpa of the project's planned 8Mtpa capacity and is currently focused on converting the first 4Mtpa to binding status in the first half of 2014.

    SK Engineering and Construction Group, which recently signed a Technical Services Agreement with the company, has estimated engineering, procurement and construction costs for an initial two train project at US$1.57 billion.

    In addition, Stonepeak Partners is earning an estimated 50% stake in MLNG return for contributing the full US$660 million project equity requirement.

    This represents 30% of the total capital costs with LNG Limited planning to finance the remaining 70% with project debt.

    To that end, the company has appointed BNP Paribas Bank as its project finance advisor.

    It will also work with Stonepeak and New York based EAS Advisors, which had been instrumental in LNG lining up funding and partners for the project, to secure the proposed project debt financing for the Stage 1 development.

    LNG Limited has also secured U.S. Department of Energy approval for it to export its full 8 million tonne per annum of LNG production to Free Trade Agreement countries.

    U.S. LNG

    LNG Limited's FERC filing for the Magnolia LNG project comes amidst an LNG development boom in the U.S. that is spearheaded by the redevelopment of LNG import facilities at Cheniere Energy's (NYSEMKT:LNG) Sabine Pass in Louisiana to export 18 - 27Mtpa of LNG.

    This growth is driven by new drilling and recovery technologies that have lifted U.S. gas reserves to 350 trillion cubic feet and the company is aiming to be amongst the first five producers and exporters of U.S. LNG.

    U.S. LNG is expected to be very competitive with current Asian LNG pricing of ~US$14.00 MMBtu, South America with ~US$15.00 MMBtu, and Europe which is dictated by captive Gazprom pricing of US$11.30-US$14.00MMBtu for pipeline gas.

    Analysis

    With the formal FERC filing for Magnolia LNG, Liquefied Natural Gas Limited is now well on the path blazed by Cheniere Energy, which had received FERC approval to in April 2012 to build an export plant for liquefied natural gas at Sabine Pass.

    Notably, shares in Cheniere have grown from $12 a share at that time to the current $56.45.

    Shares in LNG Limited have performed strongly in the past month, hitting a high of $0.695 last week, and is currently trading at $0.65.

    In fact, the LNG share price has risen 135% since a Research Report by Proactive Investors' Andrew McCrea in February.

    We continue to maintain a Speculative Buy recommendation with a 18 month price target of $2.25.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

Back To Proactive Investor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.