Cheniere Energy: A Scary Midstream Stock To Avoid
Value Digger • 72 Comments
Value Digger • 72 Comments
Tue, Sep. 20, 10:27 AM
- Cheniere Energy (LNG -0.2%) has started a four-week shutdown of its Sabine Pass LNG export terminal in Louisiana to repair gas flares that have not functioned properly, Argus Media reports.
- The facility was scheduled to receive ~20.8M cf of gas yesterday after receiving the same amount the previous day, but the volumes are negligible compared with the average intake of 1.18B cf/day during the first half of September, indicating that production from trains 1-2 at Sabine Pass had stopped.
- Sabine Pass could continue to export during the shutdown, as the five LNG storage tanks at the terminal have combined capacity equivalent to ~17B cf of gas, while a typical LNG cargo is equivalent to 3B-3.5B cf of gas, so four or five exports are possible during the shutdown if the tanks are relatively full.
Mon, Sep. 19, 2:47 PM
- Cheniere Energy (LNG +0.6%) and CEO Jack Fusco, who was named CEO in May, names a new leadership team, including the promotion of Michael Wortley to become executive VP and CFO after serving as VP for strategy and risk.
- Seven other executives were named to executive and senior VP-level positions, after CEO and co-founder Charif Souki was ousted early this year and former executive VP Meg Gentle left last month to join Souki at his new company, Tellurian.
- The company does not say when the appointments will become effective.
Fri, Sep. 16, 8:12 AM
- Cheniere Energy (LNG, CQP, CQH) announces substantial completion of Train 2 at the Sabine Pass liquefaction project in Louisiana.
- Commissioning has been completed, and development partner Bechtel is turning over care, custody and control of Train 2 to Cheniere.
- Financial results of liquefied natural gas sales from Train 2 going forward will be reflected in the statements of CQP and its affiliates.
Wed, Aug. 31, 1:56 PM
- Tellurian Investments hires Meg Gentle, a key figure at Cheniere Energy (NYSEMKT:LNG), as its new President and CEO, reuniting her with Cheniere’s ousted CEO and founder Charif Souki at his latest venture.
- Gentle, who was executive VP of marketing at Cheniere, will remain CEO after Tellurian's merger with Magellan Petroleum (NASDAQ:MPET), a transaction that is expected to close in Q4; she also is making a $10M private investment in Tellurian.
- Souki will continue to serve as Tellurian’s non-executive chairman, with former BG Group COO Martin Houston as executive vice chairman.
Wed, Aug. 24, 10:28 AM
- The first-ever shipment of liquefied natural gas from the U.S. to China reportedly arrived this week through the recently expanded Panama Canal.
- Dow Jones reports tha the shipment was chartered by Royal Dutch Shell (RDS.A, RDS.B), and the cargo was shipped from Cheniere Energy's (NYSEMKT:LNG) Sabine Pass export facility in the U.S. Gulf of Mexico to the Yantian Port in southern China and purchased by Cnooc (NYSE:CEO) as part of a long-term contract.
- The Panama Canal's new locks, which opened in June and can accommodate larger ships, can cut the travel time from the U.S. to north Asia for ships that could not fit in the old locks by about one third - to 20 days - and lower transportation costs by $0.30-$1/MMBtu, according to research consultancy Energy Aspects.
Tue, Aug. 9, 8:04 AM
Mon, Aug. 8, 5:30 PM
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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