Pipeline flows to Cheniere Energy's (NYSEMKT:LNG) Sabine Pass liquefied natural gas export terminal set a record 1.66M dekatherms a day on Dec. 29, surpassing the previous all-time high set in November, WSJ reports, citing SNL Energy.
Deliveries from both the Cheniere Creole Trail Pipeline and Natural Gas Pipeline Company of America have increased since the terminal closed and restarted operations three months ago, according to the report.
The Louisiana terminal began shipping LNG exports less than a year ago, boosting the U.S. natural gas export business and raising hopes that future export demand will help lift prices and increase global influence.
With margins high, many refiners have delayed routine work over the past couple of years to run flat out, but now pipe fitters and ironworkers are in short supply amid a glut of billion-dollar projects, including liquefied natural gas export terminals from Cheniere (NYSEMKT:LNG) and a new petrochemical unit for Dow (NYSE:DOW).
U.S. refiners are expecting to spend $1.26B on planned maintenance next year, a 38% increase and the highest level since at least 2010, according to IIR -- but IIR also expects the Gulf Coast region to be short about 37,400 craftsmen needed to complete all the planned projects.
Seeking Alpha contributor Dallas Salazar has reported that Cheniere Energy (NYSEMKT:LNG) has executed its 20-year contract with BG Shell (RDS.A, RDS.B) after confirming the news with members of LNG management.
"What Cheniere is doing is unique from the standpoint that it's doing it on a global scale. While having generated meaningful revenues already, at scale, the BG Shell contract will be enormous. Given the size of the physical infrastructure in place, and the cost of this infrastructure, the BG Shell contract goes a long way into confirming the viability of the Cheniere enterprise - something that the investment and operational communities will be sure to take notice of."
The contract, at scale, will generate ~$723M in expected annual cash flows - from fixed fees alone, and will generate additional revenues in volume-based payments.
It'll be reported at Q4/2016 reporting with an "in-force" date of late-November.
Cheniere Energy Partners Holdings (CQH +0.4%) is upgraded to Outperform from Neutral at Credit Suisse based on valuation while the firm lowers it stock price target for Cheniere Energy (LNG) after the proposed merger between the MLP and its parent is called off.
Credit Suisse says its prior valuation for LNG assumed closure of the CQH merger, implying direct receipt of CQP LP distributions; it also cites higher interest expenses tied to the recent issuance of $1.5B in Corpus Christi notes which were issued at 5.875%.
The firm thinks the merger will take place eventually but for the next 12-18 months, it considers CQP and now also CQH as the preferred ways to invest in the Cheniere family.
Credit Suisse raises its CQH price target to $28 from $24, while lowering its target for LNG to $52 from $54, and maintains its Outperform rating on LNG as well as Cheniere Energy Partners (CQP -0.3%); CQH essentially is a non-MLP holding company for shares of CQP.
Parsley Energy (NYSE:PE) and Chesapeake Energy (NYSE:CHK) are pricing deals today (I, II) and follow a bond from Cheniere Energy (NYSEMKT:LNG) yesterday which was increased to $1.5B from $1B on strong demand; Rowan (NYSE:RDC) and Matador Resources (NYSE:MTDR) also are marketing deals (I, II).
Since OPEC's Nov. 30 production cut announcement, junk-rated energy bond spreads have tightened by 71 bpa to 483 bpa over U.S. Treasurys as of Monday's close, marking the lowest level since October 2014.
The five borrowers coming to market this week could sell $3.4B of junk-rated bonds, which would mark the highest weekly volume for the energy sector since March 2015.
Goldman reiterates Buy rating on Cheniere Energy (NYSEMKT:LNG). Price target $48.
"We continue to like LNG’s strong free cash flow profile driven by long-term contracts with investment-grade counterparties and upside optionality from its marketing business.
"For illustrative purposes, we conduct a scenario analysis on potential upside from three proposed growth projects: (1) El Campesino, the Chilean LNG-to-power project, (2) “MIDSHIP”, a natural gas pipeline from the MidContinent to the Gulf Coast, and (3) a midscale LNG facility.
"In addition to its growth project portfolio, we continue to like LNG’s long-term contracted cash flows and potential upside from its marketing business."
The U.S. has become a net exporter of natural gas for the first time in nearly 60 years, exporting an average of 7.4B cf/day of gas in November, more than the 7B cf/day it had imported.
The U.S. will export gas equal to as much as 20% of its annual consumption by 2020, and the Energy Department says it will be the world’s third-largest producer of liquefied natural gas for export by that year, trailing Australia and Qatar.
Meanwhile, Cheniere Energy (LNG +0.4%) reportedly is gearing up to send its first supplies of liquefied natural gas from its Sabine Pass export terminal on the Gulf coast to Asian customers, as a rise in prices in the region have made such shipments profitable; the first LNG gas vessel from the lower 48 states left Sabine Pass for China earlier this year, collected by Royal Dutch Shell as part of its contracted offtake from the terminal.
The U.S. is on track to export a record number of cargoes of shale gas in November, as nine liquefied natural gas tankers have departed or are scheduled to leave Cheniere Energy’s (LNG +1.3%) Sabine Pass terminal this month, already the most for any month since exports began in February, Bloomberg reports.
The U.S. is set to become a net exporter of natural gas next year, a stark turnaround from just a decade ago when it was facing a shortage.
The Sabine Pass complex in Louisiana has exported 40 cargoes totaling ~6.5M cm of gas since February, says Pan Eurasian Enterprises president Zach Allen.
Cheniere Energy (LNG -0.6%) and Cheniere Energy Partners (CQP -0.7%) are resumed with Outperform ratings at Credit Suisse, which says current prices present an attractive entry point to a story with potential for step-up in distribution and dividend growth by Q1 2018.
The firm notes Cheniere’s seven-train portfolio has secured ~$4.25B/year in 20-year take-or-pay fees, with upside from monetizing marketing capacity and potential upside from opportunistic investments in the global liquefied natural gas landscape, and believes investor confidence should improve as construction and export cargoes progress.
Credit Suisse suggests the safer CQP for conservative yield-focused investors, albeit with limited upside and catalysts, while investors with a long-term bullish view on commodity fundamentals should choose LNG, which has exposure to most of the growth optionality.