Cheniere Energy: A Scary Midstream Stock To Avoid
Value Digger • 72 Comments
Value Digger • 72 Comments
Thu, Jul. 21, 5:58 PM
- The U.S. will ship its first liquefied natural gas cargo through the expanded Panama Canal next week, as a Royal Dutch Shell (RDS.A, RDS.B) tanker has left Cheniere Energy's (NYSEMKT:LNG) Sabine Pass LNG export plant in Louisiana and will arrive at the Canal on July 25, Reuters reports.
- The size of most LNG tankers had prevented them from squeezing through the Canal, forcing them to sail around South America instead; the Panama Canal route shaves distances between Gulf of Mexico export plants and Asia to 9K miles from 16K.
- So far only Sabine Pass is exporting LNG, and output will double to 9M metric tons/year as Cheniere adds a second production line later this year; Shell owns the entire output of Sabine Pass's first production line.
Tue, Jul. 19, 11:38 AM
- Cheniere Energy's (LNG -2%) Sabine Pass liquefied natural gas export plant on the U.S. Gulf Coast will shut down for planned maintenance in September, Reuters reports.
- The Louisiana plant, which began operations in February and has exported 17 cargoes so far, can produce ~4.5M metric tons/year of LNG from its one existing production line; the second LNG train at the plant is expected to enter service by the end of August.
Fri, Jul. 1, 5:21 PM
- Chile's government may have provided Cheniere Energy (NYSEMKT:LNG) reason to build another plant to export U.S. natural gas by clearing the final environmental hurdle for the Penco Lirquen LNG floating import terminal, Bloomberg reports.
- The executive director of Biobiogenera, the developer behind the project, also says the 1,200 MW Central El Campesino power plant, which will be supplied by the gas import vessel, should be approved in July or August.
- Cheniere has a 20-year agreement to supply gas to the power plant and is a co-owner of the import project with Biobiogenera.
- Analysts say success in Chile may help Cheniere find other new buyers needed to sign long-term contracts before it makes a decision on an additional liquefaction plant at its Corpus Christi facility in Texas.
Tue, Jun. 28, 5:58 PM
- The D.C. Circuit Court of Appeals ruled today that the expansion of Cheniere Energy’s (NYSEMKT:LNG) Sabine Pass export terminal in Louisiana and the construction of Freeport LNG’s terminal in Texas could move forward, rejecting attempts by environmental groups to block the projects.
- The Sierra Club had sued on the grounds the projects threatened to worsen climate change by increasing natural gas production, but the court ruled that environmental analysis by the federal government was limited to local impacts of a facility.
- The ruling comes as a relief to the oil and gas industry, which has faced mounting legal challenges from environmental groups.
Wed, May 25, 11:39 AM
- Cheniere Energy (LNG +1.9%) plans to begin exporting liquefied natural gas from a second plant at its Sabine Pass terminal in Louisiana in August, based on the current progress being made at the facility.
- "Actual project progress supports the achievement of substantial completion for Trains 1 and 2 by late May 2016 and September 2016, respectively. Trains 3 and 4 targeted substantial completion dates are April 2017 and August 2017, respectively," according to a new FERC filing.
- Cheniere became the first exporter of U.S. shale gas in February with the start of shipments from the first unit at Sabine Pass.
Tue, May 24, 5:47 PM
- Citigroup analysts Faisel Khan and George Wang rebut the bear argument against Cheniere Energy (NYSEMKT:LNG) proffered by critics such as Jim Chanos, suggesting two potential catalysts that could drive shares higher.
- First, Citi believes new LNG CEO Jack Fusco will provide visibility to the market on the timing of when the company will be profitable and when it will start returning capital to shareholders.
- Second, the firm notes that LNG’s marketing entity has contracts to sell 84 liquefied natural gas cargoes through 2018 that could be valued at $1B in gross revenue, and visibility on the margin for the cargoes could provide clarity on the potential cash flows from marketing.
- Citi maintains its Buy ratings for LNG, Cheniere Energy Partners (NYSEMKT:CQP) and Cheniere Energy Partners LP (NYSEMKT:CQH) with respective $47, $36 and $23 price targets.
Tue, May 17, 11:59 AM
- South Africa, seeking to reduce its dependence on coal-fired power, is creating a unit to import liquefied natural gas for power plants as suppliers including Cheniere Energy (LNG +1.9%) await fuel tenders for at least 3M tons in annual shipments.
- Bloomberg reports that Cheniere is among companies interested in supplying South Africa’s gas-to-power program, which plans to add 3,126 MW of capacity during 2019-25.
- The new government unit may consider regional gas supplies from Botswana and Mozambique, which expects Anadarko Petroleum (APC +1.8%) and Eni (E -1.1%) to make final investment decisions on LNG export projects later this year.
Thu, May 12, 6:25 PM
- Cheniere Energy (NYSEMKT:LNG) gained 6.3% in today's trade after the company named Jack Fusco as its new President and CEO, and it withstood a renewed bear case on the stock from Jim Chanos, who calls the company a "pipe dream."
- Chanos says there has been no increase in demand for liquefied natural gas despite an increase in supply, and that Cheniere is the "most levered LNG company in the world."
- To top it off, Cheniere is still “crazy expensive” compared to peers; Chevron, Shell and Woodside Petroleum trade between 5x and 6.3x EV/EBITDA, while LNG trades at 11.4x, and while the other companies will be paying down debt, Cheniere’s will be growing its own - “financial engineering gone crazy,” Chanos says.
Thu, May 12, 9:59 AM
- Cheniere Energy (LNG +5.8%) pops higher at the open on news of the appointment of Jack Fusco as its new President and CEO effective immediately, confirming earlier reports.
- Fusco had served as CEO at Calpine (CPN +0.7%) during 2008-14 and was Executive Chairman since 2014; CPN names Frank Cassidy, one of its directors, as its new Chairman.
- Fusco succeeds Neal Shear, a former head of Morgan Stanley’s commodities division who became interim CEO after LNG ousted its founder, Charif Souki, in December.
- Fusco’s target compensation for 2016 will be ~$9M, including a $1.25M salary, $1.56M target bonus and $6.25M long-term incentive that will pay out over three years, and he has agreed to buy $10M worth of LNG stock by Dec. 31; Souki made $54M in his last year with the company.
- The new hire is “a major positive step” for LNG, according to Carl Icahn, who is credited with pushing Souki out.
- Now read Cheniere Energy: An inexpensive natural gas play
Wed, May 11, 8:58 PM
- Cheniere Energy (NYSEMKT:LNG) is set to name Calpine Executive Chairman Jack Fusco its next CEO, replacing interim chief Neal Shear, The Wall Street Journal reports.
- The move could come as soon as tomorrow. Fusco had served as CEO at natural gas/geothermal firm Calpine from 2008-2014.
- Shear had served in the interim role at Cheniere after the company ousted its co-founder, Charif Souki, from the CEO/chairman slots.
- Now read Should Cheniere Energy Investors Panic? »
Wed, May 11, 7:27 PM
- Bernstein analysts initiate several midstream and pipeline MLPs, estimating that less than 7% of MLPs $70B in service revenues are at risk in a $40/bbl oil environment; oil production volumes will likely fall this year, but midstream pipeline plays will mostly be unaffected, the firm says.
- On the other hand, the firm sees less long-term upside to MLPs than many investors expect, as after next year existing and in-progress gas and crude infrastructure will be sufficient to handle forward production through 2025.
- Bernstein prefers Enterprise Products Partners (NYSE:EPD) because of its significant committed market-based projects, and Williams Partners (NYSE:WPZ) and Williams Cos. (NYSE:WMB) on the belief they have been unfairly punished due to expected dividend cuts; the firm rates EPD, WPZ and WMB at Outperform.
- Bernstein ranks Kinder Morgan (NYSE:KMI), Spectra Energy (NYSE:SE), Spectra Energy Partners (NYSE:SEP), Energy Transfer Partners (NYSE:ETP), Energy Transfer Equity (NYSE:ETE), Cheniere Energy (NYSEMKT:LNG) and Cheniere Energy Partners (NYSEMKT:CQP) at Market Perform; the only name rated Underperform is Sunoco Logistics (NYSE:SXL).
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Thu, May 5, 4:31 PM
Wed, May 4, 12:49 PM
- Previewing his Ira Sohn appearance set for early this evening, Jim Chanos tells CNBC Cheniere Energy (LNG -4.6%) is an "excessively expensive bet" on liquid natural gas. His appearance prompts a call to the set from Cheniere long Carl Icahn, who tells the group there is no risk to company cash flows.
- As for Valenat (VRX -4.2%), the stock is worth zero if its acquisitions are worth the same price the company paid for them. Bausch & Lomb, for instance, is likely not worth $8B-$9B. Pro forma earnings from Valeant, says Chanos, are "very, very misleading."
Mon, Apr. 25, 5:47 PM
- Cheniere Energy (NYSEMKT:LNG) would require a “significant premium over what traditional M&A” is used to paying before he would consider potential takeover bids, CEO Neal Shear tells Bloomberg.
- Some analysts say Cheniere could be an attractive target for large U.S. gas drillers because of its focus on exporting; “Generally, with LNG export assets globally, if you’re buying an asset, you have to buy oil and gas fields as well,” says one. “Cheniere’s a pure play. People know pretty much exactly what they’re getting down to the penny.”
- While Cheniere has long-term contracts covering 87% of its capacity, Shear saysurrent spreads represent a challenge for the industry; the discount for spot gas at the Henry Hub in Louisiana dropped to $2/MMBtu this month vs. Northeast Asia spot LNG prices from more than $15 in December 2013.
- Now read Cheniere Energy: Don't miss the bull run
Thu, Apr. 21, 12:35 PM
- A tanker carrying liquefied natural gas from Cheniere Energy's (LNG -0.2%) Sabine Pass, La., export facility is en route to Portugal, marking the first shipment in a trade relationship that could shake up the European market.
- Portugal energy company Galp Energia bought the first European cargo from Sabine Pass, with the ship estimated to arrive at the Port of Sines in Portugal on April 26, according to the report.
- Some analysts predict the start of a price war between U.S. liquefied natural gas and long-dominant Russian pipeline gas, which could lead to lower prices for consumers that could act as a shot in the arm for the struggling European economy.
- The U.S. began selling Gulf Coast gas abroad for the first time in February with a Cheniere shipment to Brazil, with subsequent cargoes headed to Asia.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG
- Now read Bloomberg: LNG exports trim 35B cf from U.S. natural gas glut
Tue, Apr. 19, 6:58 PM
- Cheniere Energy’s (NYSEMKT:LNG) Sabine Pass terminal in Louisiana has received nearly 35.4B cf of natural gas for export since pipeline deliveries to the facility were first reported in October - with most of the volume arriving in the last six weeks - helping gas futures to rise 7% over the past month as the shipments limit the size of the current supply glut, Bloomberg reports.
- Exports of liquefied natural gas are boosting bullish traders after a flood of production from shale formations sent futures falling to historic lows, and hedge funds are betting on rising gas prices for the first time since 2014 as cargoes from Sabine Pass boost demand, according to the report.
- Cheniere’s gas demand so far this year has helped support prices by $0.05-$0.10 per MMBtu, says Kyle Cooper of Cypress Energy Capital Management, adding that while volumes are still relatively small, Sabine Pass total consumption will reach 200B cf or more by this time next year.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, DCNG
- Now read Report: LNG trade hit new record in 2015, with glut looming in 2016
Cheniere Energy, Inc. is engaged in the development, construction and operation of LNG terminals and marketing of LNG and natural gas. The company operates through two segments: LNG terminal and LNG and natural gas marketing. The LNG terminal segment consists of the operational Sabine Pass LNG... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Country: United States
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