Cheniere Energy: A Scary Midstream Stock To Avoid
Value Digger • 72 Comments
Value Digger • 72 Comments
Fri, Mar. 11, 7:02 PM
- NGL Energy Partners (NYSE:NGL) fell more than 10% in today's trade after Goldman Sachs downgraded units to Sell from Neutral with a $6 price target, slashed from $12, but three other energy MLPs downgraded by the firm fared better.
- Goldman sees material risk to NGL’s distributions given weak historical and projected cash flow conversion, high GAAP leverage of 7.2x vs. a peer average of 4.4x, and poor current coverage of ~0.6x.
- The firm expects volume pressure and limited organic growth opportunities to adversely impact NGL’s ability to conserve liquidity and maintain distributions.
- Cheniere Energy Partners (NYSEMKT:CQP), Summit Midstream Partners (NYSE:SMLP) and Western Gas Equity Partners (NYSE:WGP) posted gains or finished flat despite being downgraded to Neutral from Buy.
- Goldman notes that while CQP offers a total return opportunity of 18%, it is less attractive than that offered by Cheniere Energy (NYSEMKT:LNG) and Cheniere Energy Partners Holdings (NYSEMKT:CQH), which offer respective total return opportunities of 30% and 28%.
Tue, Mar. 8, 5:17 PM
- A U.S. bankruptcy judge says Sabine Oil & Gas (OTCPK:SOGCQ) can reject contracts with midstream companies it made before oil and gas prices plunged.
- But the judge says her ruling is not binding, potentially setting the stage for another legal battle over the pipeline operators' argument that the agreements cannot be broken because they are inextricably tied to the land on which Sabine operates.
- The ruling covers agreements with two companies, including an affiliate of Cheniere Energy (NYSEMKT:LNG), that gather natural gas for Sabine in specific geographic locations; Sabine has said that rejecting the contracts could save as much as $115M for the bankruptcy estate.
- Restructuring and energy experts have warned that a loss for Sabine's pipeline operators could inspire other bankrupt oil and gas producers to seek similar relief, spreading the distress that has plagued them to the midstream companies that process and transport oil and natural gas.
- Similar requests are pending in the chapter 11 cases of companies including Quicksilver Resources (OTCPK:KWKAQ) and Magnum Hunter Resources (OTCPK:MHRCQ); a Delaware judge is expected to rule on KWK's request by the end of the month.
- Pipeline stocks include: KMI, ENB, EEP, SE, SEP, WMB, ETE, ETP, OKS, PAA, PBA, MMP, CQP, BWP, BPL, WES, SXL, NS, NSH, TCP, NGL, DPM, GEL, HEP, APL, SEMG, TLLP, MMLP, TLP, SGU, BKEP
Fri, Mar. 4, 2:37 PM
- Cheniere Energy (LNG +3%) is initiated with an Overweight rating and $54 price target at J.P. Morgan, which cites cash flows stemming from blue-chip customer contracts and visible project catalysts.
- JPM credits LNG as the first North American mover, beginning its services two years before the next U.S. peer, which allows the company to have the scale and diversification in the Americas to potentially drive increasing market share, revenue growth and profit margins.
- The firm also highlights LNG’s value driven contracts, which remain favorable as there are no opportunities to change the fixed fees or re-sell contracts for customers, allowing the company to remain a market leader and drive value for shareholders in 2016.
- Cheniere Energy Partners (CQP -3%) and Cheniere Energy Partners (CQH +0.9%) also are initiated at Overweight.
Wed, Feb. 24, 2:14 PM
- The first cargo of U.S. liquefied natural gas exports from the lower 48 states is departing today Cheniere Energy's (LNG +8.1%) Sabine Pass terminal in Louisiana, a company executive says.
- The fuel will be carried to Brazil on the Asia Vision LNG tanker and is expected to be received by Petrobras, according to a recent report from Bloomberg.
- Meg Gentle, LNG’s president of marketing, made the announcement at the IHS Energy CERAWeek conference and called the shipment as among the first steps toward creating a liquid and transparent market for LNG across the globe.
Tue, Feb. 23, 12:24 PM
- Petrobras (PBR -3.9%) is scheduled to receive the first cargo of shale gas to be shipped from Cheniere Energy's (LNG +0.6%) Sabine Pass terminal in Louisiana, Bloomberg reports.
- Demand is forecast to be higher in South America during the spring, in part due to a drought that has increased Brazil’s dependence on LNG as a power-plant fuel.
- Loading the Asia Vision, the LNG tanker that moored at the Sabine Pass over the weekend, may take a few days and the timing of its departure is unclear.
Tue, Feb. 23, 8:58 AM
- Cheniere Energy (NYSEMKT:LNG) +8.8% premarket after Goldman Sachs upgrades shares to Buy from Neutral with a $46 price target, citing an attractive valuation with the stock down 19% YTD.
- LNG's cash flows are low risk as they are supported by 20-year take-or-pay contracts, and two of its seven planned liquefied natural gas trains come online in 2016, the firm says.
- A liquefied natural gas tanker docked at LNG's Sabine Pass terminal in Louisiana over the weekend, and the first export cargo of seaborne gas from the lower 48 states may leave the site by the end of February or early March.
Mon, Feb. 22, 4:20 AM
- Swiss commodities trader Trafigura is shipping one of the first crude oil cargos of benchmark WTI in the coming weeks to Israel, following the lifting of the decades old American crude oil export ban.
- A liquefied natural gas tanker also docked on Sunday at the Sabine Pass terminal in Louisiana, with only days to go before the U.S ships its first export cargo of seaborne gas from the lower 48 states. Cheniere Energy (NYSEMKT:LNG) expects the first load to leave the facility by early March.
Fri, Feb. 19, 8:41 AM
Fri, Feb. 19, 8:18 AM
- Former Cheniere Energy (NYSEMKT:LNG) co-founder Charif Souki has resigned from the board of directors following his December departure as president and CEO.
- Souki has said he was ousted over his plan to speed the growth of liquefied natural gas projects, a strategy opposed by Carl Icahn, the company’s largest investor.
- The company's 10-K shows a FY 2015 GAAP loss of $4.30/share on revenues of $270.9M; analyst consensus projected a $2.18/share loss on $273.3M revenues.
- LNG plans to start exporting natural gas from the Gulf coast soon, marking the emergence of the U.S. as a major exporter, but the debut is raising questions about whether too many sellers are chasing too few buyers, WSJ reports.
Wed, Feb. 10, 6:39 PM
- Williams Cos. (WMB, WPZ) signs agreements to deliver dry gas to liquefied natural gas export terminals being constructed by Cheniere Energy (NYSEMKT:LNG) and Freeport LNG Development.
- Williams has secured the long-term contracts for Gulf Connector, a 475K dekatherm/day expansion of the Transco pipeline system to connect U.S. natural gas supplies with overseas markets.
- Williams says regulatory approvals are pending for Gulf Connector to add compression and make the natural gas flow bi-directional on a portion of the Transco system between Louisiana and south Texas.
Mon, Feb. 8, 4:59 PM
- Cheniere Energy (NYSEMKT:LNG) is closing its newly formed crude oil trading desk, Reuters reports, just two months after its board ousted CEO Charif Souki and increase the company's focus on its core businesses.
- In mid-2015, LNG launched a crude trading and origination desk by hiring Nelson Lee from BHP Billiton, where he had helped orchestrate some of the first-ever exports of U.S. condensate.
- It is not yet clear how many traders and support staff would be laid off as a part of the closure, but Lee will be leaving the company, according to the report.
Thu, Jan. 28, 2:58 PM
- Standard & Poor's raises its corporate credit rating on Cheniere Energy (LNG +1.3%) to BB- from B+ with a stable outlook,
- S&P says Cheniere has improved its business risk profile through managing key risks for successful construction and operation of its Sabine Pass Liquefaction project and by the successful debt and partial equity raise to build its Corpus Christi LNG project, which the firm says is "imperative... because of the inherent volatility in receiving residual cash flows."
- The ratings agency expects stable cash flow from Cheniere Energy Partners (CQP -1.8%), as construction at Sabine Pass is progressing in line with budget and schedule expectations.
Fri, Jan. 22, 6:58 PM
- Cheniere Energy (NYSEMKT:LNG) is seeking to borrow ~$2.6B to refinance its underused Sabine Pass liquefied natural gas import facility and the Creole Trail pipeline, Bloomberg reports.
- Cheniere, which is better known because it is on track to export the first cargo of U.S. shale gas this year, owes $2.1B on the import facility in Louisiana, with $1.67B due in November.
- The refinancing effort comes after Cheniere said earlier this month that its first LNG export cargo from Sabine Pass would be delayed by as much as two months because of faulty wiring.
Thu, Jan. 14, 11:47 AM
- Cheniere Energy (LNG, CQP) says it has delayed the first export of liquefied natural gas from its plant at Sabine Pass, La., by about a month until late February or early March, citing “instrumentation issues” discovered during the final phases of plant commissioning that it will work to fix during the next few weeks.
- LNG interim CEO Neal Shear says the company remains ahead of the guaranteed contractual schedule with engineering and construction contractor Bechtel and anticipates meeting all contractual targets and completion dates.
- Cheniere plans to build at least six trains to produce LNG at the ~$15B Sabine Pass project by late 2018, allowing the terminal to supply more than 3.5B cf/day.
- LNG -1.8%, CQP -2.4%.
Dec. 31, 2015, 1:52 PM
- The volatility continues: After getting drubbed yesterday following the release of EIA inventory data, a slew of North American oil/gas industry firms are up strongly today as Nymex natural gas futures rise 6.1% to $2.35/MMBtu. The EIA reported today a weekly U.S. natural gas inventory change of -58 Bcf (close to expectations) to 3,756 Bcf.
- Oil is also higher: WTI crude is up 2.5% to $37.53/barrel, and Brent crude up 3.7% to $37.80/barrel. The S&P is down 0.3%.
- Also: Cheniere Energy (LNG +3.4%) has begun production at its Sabine Pass terminal, which will be the first to export shale gas from the U.S. Partner ING Capital states Cheniere is currently receiving, chilling, and storing 50M cubic feet of gas per day at the facility.
- Major gainers include Southwestern Energy (SWN +9.6%), Williams (WMB +5.6%), Encana (ECA +4.5%), Gulfport Energy (GPOR +5.3%), Whiting Petroleum (WLL +8.2%), Rice Energy (RICE +5.6%), SandRidge Permian Trust (PER +8.9%), Oasis Petroleum (OAS +5.9%), BP Prudhoe Bay Royalty Trust (BPT +7.3%), and Baytex Energy (BTE +9.3%). ONEOK is up over 7% after catching an upgrade from Credit Suisse.
Dec. 18, 2015, 7:44 AM
- "You can be pretty much sure we’re short all of the major leveraged oil companies," Jim Chanos tells CNBC. The stocks, he says, have held up better than oil thanks to the companies' commitment to paying dividends, "but in effect, they're borrowing to pay their dividend."
- It's no secret Chanos has been short Cheniere Energy (NYSEMKT:LNG), and it sounds like he remains so.
- As for the price of oil, he's got no price target, but he's a bear. If he were OPEC, he says, he'd be pumping out as much oil as possible today because it might be worth even less in 15 years.
- Famously short SolarCity (NASDAQ:SCTY), he's not fazed by this week's big tax-break related gains, and wishes he could borrow more shares. "We're not bearish on solar. We’re bearish on the guys who are knocking on doors, trying to put solar panels on your house."
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, PXJ, FIF, PSCE, NDP, RYE, FXN, DDG, GUSH, DRIP
- XLE -1.6%, SCTY -3% premarket
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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