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  • Liquefied Natural Gas Limited Gains Key U.S. FERC Filling Acceptance 0 comments
    May 15, 2014 3:22 AM

    Liquefied Natural Gas Limited (ASX: LNG) has reached another milestone with the U.S. Federal Energy Regulatory Commission formally accepting the filling application for its 8 million tonne per annum Magnolia LNG project in Louisiana.

    The company is fully funded for the project to financial close in mid-2015.

    "FERC's formal acceptance of Magnolia LNG Project's filing application is another step forward for the Magnolia LNG Project, placing it among a small group of projects to have formally received this notification from FERC," managing director Maurice Brand said.

    "Magnolia LNG anticipates receiving all approvals during 2015 and such approvals will be a key requirement for Financial Close. Construction will commence shortly thereafter with first LNG exports planned for the second half of 2018."

    The acceptance of MLNG's filing application (made under Docket No. CP14‐347‐000 on 30 April 2014) represents another step towards a Final Investment Decision in late 2014 and Financial Close of MLNG by mid‐2015.

    Magnolia LNG

    Magnolia LNG, located along the Calcasieu River near Lake Charles, 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.

    Project finance advisor BNP Paribas Bank has recently appointed experienced LNG advisor Merlin Advisors LLC as their Engineer.

    This is expected to help identify and address any issues in the early stages with Merlin to develop the key Bankability Due Diligence Report that will be issued to prospective project debt financiers.

    Analysis

    Shares in LNG Limited should rise today on the FERC acceptance of the Magnolia LNG filing, highlighting as it does the strong progress that the company has made.

    Magnolia LNG draws closer towards securing all necessary approvals and a Final Investment Decision in late 2014. This will in turn lead to Financial Close by mid‐2015.

    Proactive Investors continues 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.

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