Cheniere Energy: A Scary Midstream Stock To Avoid
Value Digger • 72 Comments
Value Digger • 72 Comments
Dec. 15, 2015, 5:25 PM
- Ousted Cheniere Energy (NYSEMKT:LNG) Chairman and CEO Charif Souki will not be around to see the company's Sabine Pass, La., export terminal ship the first-ever cargo of liquefied natural gas from the mainland U.S. next month, but WSJ reports his termination triggered payments of stock and other compensation totaling ~$165M.
- Souki’s immediate payout consists of $4.2M in cash, 875K LNG shares that vested upon his termination and 1.1M in performance-based shares tied to the company’s stock price; he will get 2.1M shares later, if the company meets milestones tied to construction of later phases of the Sabine Pass terminal.
- While Souki's nine-figure package is unusually large for a company that has yet to produce a profit, LNG created significant shareholder value during his tenure; the stock has risen 376% since its 1997 debut and last year climbed above $80/share.
Dec. 14, 2015, 11:24 AM
- Carl Icahn, who last week raised his stake in Cheniere Energy (LNG -1.2%) to 13.83% from 12.65%, praises the company's board for having the "guts" to fire CEO Charif Souki, a move he "fully" supports.
- LNG's board voted this weekend to replace Souki, looking to "clamp down" on the former CEO's goals to expand the company beyond its core business of exporting liquid natural gas, and feeling the need for a more experienced CEO.
- Icahn says Souki is a "talented entrepreneur... [but] there is also little doubt that the board wished to move the company in a direction that differed greatly from the path Souki wanted," and that Souki's plans were "win-win for Souki but not necessarily for the shareholders."
Dec. 13, 2015, 10:18 PM
- The board of Cheniere Energy (NYSEMKT:LNG) has elected to replace Charif Souki -- its co-founder, chairman and CEO -- effective immediately.
- The natural gas producer has named Neal Shear, a boardmember since June 2014, its interim CEO.
- The move comes just days after another disclosure that activist investor Carl Icahn boosted his stake in the company again, to just under 14%.
- Shares have fallen 10.5% in the past month, and are down 41.4% YTD.
- Previously: Icahn ups Cheniere stake again (Dec. 08 2015)
Dec. 8, 2015, 5:10 AM
- Activist investor Carl Icahn has raised his stake again in struggling Cheniere Energy (NYSEMKT:LNG), marking the eighth time he upped his holdings in the company since taking an initial 8.2% position in August.
- According to a Dow Jones report, the billionaire boosted his stake to 13.8% from 12.7% previously.
- The stock is now up slightly premarket after a day in which it slid 5.4% amid a drop in the price of natural gas and crude oil. It has fallen more than 40% this year.
Nov. 16, 2015, 11:48 AM
- Apache (APA -0.2%) and Anadarko Petroleum (APC +0.3%), whose brief merger possibilities broke apart last week, are run by CEOs with smaller golden parachutes than similar-sized oil and gas companies, according to a Bloomberg analysis.
- The dollar incentive for takeovers for APA CEO John Christmann was $8.4M as of the company’s fiscal year-end when he was COO, and APC CEO Al Walker’s was $31.2M at year-end 2014, regulatory filings show; by comparison, Cheniere Energy (LNG +5.9%) CEO Charif Souki has a $147.8M payout, the highest of 83 U.S. oil and gas companies with a market value less than $45B as of their fiscal year-end.
- According to the Bloomberg report, among companies with the smallest golden parachute for its CEO is SM Energy (SM +1.5%), whose payout for Javan Ottoson would be $1.26M as of Dec. 31, 2014, when he was COO.
- The biggest parachute relative to company size is the $36.2M that would be due to Energy XXI (EXXI +0.6%) CEO John Schiller Jr., whose award was equal to ~15% of the company’s $249M market cap at its June 30 fiscal year-end.
Nov. 9, 2015, 5:42 PM
- Cheniere Energy's (NYSEMKT:LNG) Sabine Pass liquefied natural gas export plant in Louisiana will receive its first tanker for loading on Jan. 12, Reuters reports, citing ship tracking data and a source with knowledge of the plant's operations.
- The event would mark a milestone for the project, the first of its kind to be built in the U.S. in nearly 50 years.
- The Energy Atlantic LNG tanker is expected to be the first in a string of test cargoes that will be loaded before Sabine Pass commercial operations begin; the test phase could take 4-6 months before first shipments begin under a long term contract between Cheniere and shipper BG Group.
Oct. 30, 2015, 9:10 AM
- Cheniere Energy (NYSEMKT:LNG): Q3 EPS of -$1.31 misses by $0.83.
- Revenue of $66.1M (-1.1% Y/Y) misses by $2.45M.
Oct. 28, 2015, 9:14 AM
- Cheniere Energy (NYSEMKT:LNG) signs a five-year deal to sell liquefied natural gas to France's Engie (OTCPK:ENGIY), a step that increases the importance of France as a market for U.S. fuel.
- The U.S. company will ship as many as 12 cargoes/year to France’s Montoir-de-Bretagne regasification terminal beginning in 2018 at prices linked to northern European indexes.
- Cheniere’s Corpus Christi liquefaction plant currently under construction will be the primary source for supply under the contract.
- Cheniere also has agreements with Electricite de France for as many as 50 cargoes/year from its Sabine Pass, La., export plant for delivery through 2018; Cheniere plans to ship the first U.S. Gulf Coast cargo from Sabine Pass in January.
Oct. 26, 2015, 10:29 AM
- CEO Charif Souki tells CNBC he does not believe Cheniere Energy (LNG -2%) will become Europe's leading liquefied natural gas player, believing "Russian gas will still be the dominant player in Europe."
- Export production volumes at its Sabine Pass export terminal are expected at 27M metric tons/year, rising to 60M/year 2025, sparking some talk of whether Cheniere could overcome Russia to become Europe's leading supplier once it begins exporting to the region.
- European countries are courting Cheniere in an attempt to wean themselves off Russian supply; earlier this month, Lithuania's Energy Minister said he was in talks with Cheniere regarding potential imports.
- Gazprom (OTCPK:OGZPY) currently supplies more than 30% of Europe's gas.
Oct. 26, 2015, 8:34 AM
- Cheniere Energy (NYSEMKT:LNG) expects to start receiving natural gas to convert into super-chilled liquid fuel at its Sabine Pass, La., export terminal before the end of the year, with shipments to start in January, CEO Charif Souki says, according to Reuters.
- Cheniere has sold most of its 31.5M metric tons/year of LNG via long-term contracts, with ~4M remaining for sale in spot markets, Souki says, adding that the company plans to start offering a cargo per month from December.
- Cheniere's seven total lines of gas liquefaction at Sabine Pass and at another terminal in Corpus Christi, Tex., will account for almost half of the 65M metric tons/year of LNG export capacity under construction in the U.S.
Oct. 20, 2015, 5:41 PM
- Noted short seller Jim Chanos says the effects from the drop in oil prices are just beginning to be felt, and North American oil and gas E&P companies are in trouble.
- Chanos thinks the business model for fracking that underpins the U.S. shale revolution will crumble, arguing that "with depletion rates so high, maintenance capital costs to keep production constant are pretty much much larger than people think."
- He also says the accounting method used by most E&P companies obscures their actual earnings, distorting the way they report EBITDA figures: “Real levels of EBITDA may be lower - significantly lower,” he says, meaning investors may be paying much higher multiples than they realize for these stocks.
- Chanos has been bearish on Royal Dutch Shell (RDS.A, RDS.B), Cheniere Energy (NYSEMKT:LNG) and SolarCity (NASDAQ:SCTY).
- ETFs: XOP, IEO, PXE, NDP
Oct. 14, 2015, 8:31 AM
- Blackstone Holdings discloses a 5.5% active stake in Cheniere Energy Partners (NYSEMKT:CQP), saying it may communicate with CQP's board and management to discuss "operational, strategic, financial or governance matters or otherwise... with a view to maximizing unitholder value."
- Separately, Cheniere Energy’s (NYSEMKT:LNG) Sabine Pass terminal, the first complex designed to liquefy and export natural gas from the continental U.S., is being commissioned and is on track to start producing by the end of this year, according to Bechtel Corp., the engineering and construction company behind the project.
Oct. 12, 2015, 12:22 PM
- Cheniere Energy (LNG -5%) tumbles as Jim Chanos tells Bloomberg that the company's plans to export liquefied natural gas from the U.S. will leave it burdened with more than $30B in debt.
- Half of Cheniere’s projected 2020 earnings will depend on how much gas the company can sell into the spot market, Kynikos Associates chief Chanos says, adding that LNG will be on the hook for ~$2B of interest payments annually and its equipment will depreciate by $1B/year.
- Cheniere has said it plans to ship the first cargo of liquefied natural gas from its Sabine Pass terminal in Louisiana in Q4.
- Separately, on Friday the SEC charged a Cheniere VP and a friend with insider trading in the company during 2011 and 2012.
Oct. 7, 2015, 11:59 AM
- Cheniere Energy (LNG +3.8%) reportedly has begun the monthslong process of preparing its $18B Sabine Pass liquefied natural gas export terminal to crank out its first batch of super chilled gas for shipment overseas.
- Sabine Pass LNG began last week bringing in small amounts of natural gas and flaring some off, providing early signs that the first phase of the project is nearing the finish line, according to energy research firm Genscape, which adds that it can take 3-6 months to ready the plant for production once construction is completed.
- The plant is scheduled to become the first large-scale terminal to ship LNG from the continental U.S.
Sep. 30, 2015, 9:37 AM
- Cheniere Energy (LNG +1.3%) is urging South Africa to consider U.S. liquefied natural gas supplies as it adds the fuel to its energy mix.
- Cheniere already has contracted its planned export capacity of 40M metric tons/year, but that does not preclude resale to South Africa, the company's VP of origination and marketing for the Americas said today at a conference in Cape Town.
- South Africa’s measures to combat a power crisis that has slowed economic growth include an invitation to private companies to supply 3,126 MW of gas-fired generation, and it is discussing ways to price gas imports to ensure they compete with other fuels.
Sep. 28, 2015, 6:31 PM
- Carl Icahn discloses he has raised his stake in Cheniere Energy (NYSEMKT:LNG) to 11.43%, after hiking his stake to 9.6% just two weeks ago.
- Icahn bought more than 2M shares today at $47.14/share; funds controlled by Icahn now own more than 27M shares of LNG.
- Icahn's Sept. 14 increase already made him the company's biggest shareholder.
- LNG +0.7% AH.
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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