Cheniere Energy: A Scary Midstream Stock To Avoid
Value Digger • 72 Comments
Value Digger • 72 Comments
Sep. 21, 2015, 2:34 PM
- Cheniere Energy (LNG -2.1%) agrees to send 24 cargoes of liquefied natural gas, or 89T BTUs, from its Sabine Pass Terminal in Louisiana in 2017 and 2018 to Electricite de France (OTC:ECIFF), its second deal in two months to ship the fuel to France after EDF agreed to buy as many as 26 cargoes last month.
- The sales price of the shipments will be linked to the Title Transfer Facility in the Netherlands, continental Europe's biggest and most liquid gas trading point, but Reuters reports that LNG retained cancellation options as part of its deal, meaning it could escape some supply commitments if it found more profitable outlets in Asia or the Middle East.
- LNG says the accord with EDF takes Cheniere Marketing’s sales to 92 cargoes, or up to ~340T BTUs, to buyers in Europe and Asia through 2018.
Sep. 16, 2015, 12:22 PM
- Jim Chanos has racked up gains this year amid China’s slowdown after a three-year losing streak at his hedge funds, but he actually has larger bets against the energy industry, which also have contributed to recent profits.
- One of his short bets reportedly is against Consol Energy (CNX +3.3%), although Chanos last spoke critically about CNX in 2012; Chanos is said to have maintained a short bet against CNX, though its investment now is smaller than in 2012.
- WSJ reports that a July 2015 Chanos presentation for clients said CNX, which has dropped more than 60% YTD, was "driven by financial engineering.”
- Chanos has taken aim at other energy companies as well, saying last week that he was short Cheniere Energy (LNG +1.2%) and saying at a Las Vegas investment conference in May he was short major oil companies.
Sep. 14, 2015, 5:52 PM
- Cheniere Energy (NYSEMKT:LNG) +2.8% AH after Carl Icahn disclosed he has raised his stake in the company to 9.59% from 8.18%, according to an SEC filing.
- Icahn is LNG's largest shareholder, now owning more than 22.6M shares vs. 19.4M shares earlier; he has already been successful in getting two Icahn Capital directors appointed to LNG's board.
- Icahn's latest activity began on Sept. 9, the day short-seller Jim Chanos went on CNBC and called the stock a "looming disaster."
Sep. 9, 2015, 8:02 AM
- Cheniere Energy (NYSEMKT:LNG) -3.4% premarket after Jim Chanos announced on CNBC a new short position in the company.
- Chanos called the company a "looming disaster" that he views as simply a commodity play, adding that the risk/reward in the stock at current levels is "completely out of whack."
- "LNG was seen as a savior of a lot of natural gas plays, a way to basically satiate the incredible demand for energy out of Asia. The problem is... everybody figured it out... at the same time," according to Chanos.
- Last month, Carl Icahn disclosed an 8.2% stake in LNG, and days later the company allowed Icahn to appoint two new board members.
Sep. 3, 2015, 5:35 PM
- Cheniere Energy (NYSEMKT:LNG) CEO Charif Souki tells FT that the start-up of the company’s Sabine Pass liquefied natural gas terminal in Louisiana in December will create a global market for the fuel that could eventually compete with oil.
- The price of LNG is closely linked to the value of oil, and most deals involve contracts running for 10 years or more, but Souki is pushing to link LNG to gas prices globally - something that has already happened on a small scale in the U.S. - and create a large spot market.
- "I think transporting this model into the global market will transform it,” Souki says.
Aug. 24, 2015, 7:39 PM
- Plunging crude oil prices have hurt prospects for soon-to-start U.S. liquefied natural gas exports, as the gap between U.S. and global prices has narrowed as oil’s collapse reduced the cost of crude-linked LNG contracts in Asia and Europe, Bank of America says.
- "Spare U.S. liquefaction capacity could aggravate the ongoing spot LNG market glut,” the BofA report says, and “longer-term, the critical question for LNG global prices is whether there will be enough demand to meet incremental supply from Australia and the U.S.”
- The reduced price advantage comes as Cheniere Energy (LNG, CQP) finishes construction of its Louisiana export terminal, which is poised to send the first shipment of liquefied natural gas from the continental U.S. before the end of the year.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, DCNG
Aug. 24, 2015, 9:55 AM
- Cheniere Energy (LNG -5.2%) appoints Icahn Capital managing directors Jonathan Christodoro and Samuel Merksamer to its board.
- Icahn reported an 8.2% stake in LNG earlier this month and said he plans to talk with the company's management about operations, capital expenditures, financing and executive compensation.
Aug. 11, 2015, 6:43 PM
- Cheniere Energy (NYSEMKT:LNG) agrees to sell 100M MMBtus of liquefied natural gas to Électricité de France (OTC:ECIFF) through 2018 from its Sabine Pass terminal.
- The sales price for the cargoes is linked to the Dutch Title Transfer index, a natural gas pricing index in continental Europe.
- Combined with the 26 cargoes under the EDF transactions, Cheniere says it executed agreements for the sale of up to 68 cargoes, or as much as ~250M MMBtus, to buyers in Europe and Asia through 2018.
Aug. 8, 2015, 8:25 AM
- Carl Icahn must still foresee plenty of profits to be made in the right energy investments, with his newly announced 8.18% stake in Cheniere Energy (NYSEMKT:LNG) coming after losing billions so far on his holdings in Chesapeake Energy (NYSE:CHK), CVR Energy (NYSE:CVI) and Transocean (NYSE:RIG).
- Cheniere soon will begin to throw off considerable cash flow as it prepares to export the first major amounts of U.S. natural gas by sea later this year from its $16B Sabine Pass terminal on Louisiana’s Gulf coast - but should the company start to return cash to shareholders through dividends, or should it continue to invest and grow?
- Cheniere recently revealed plans to further expand its Corpus Christi terminal and team up with another company on two mid-scale projects in Louisiana, even though it has not secured contracts for the full capacity of projects already announced.
- Heard On The Street's Liam Denning is among those who suggest Icahn may seek to push Cheniere to scale back its ambitions and focus on churning out cash for distribution from its existing contracts; Denning thinks the deal is not a bet on a gas price rally but that any recovery in oil would "turbocharge" Icahn's investment.
- "Cheniere has a very aggressive expansion program and is building out more export capacity than any company in North America," Raymond James analyst Pavel Molchanov says, adding that Icahn may say “You guys have built enough, and now it’s time to give to shareholders instead of building more and more and more."
- While Icahn's plans are unclear, traders bid up the stock anyway after the news, apparently with the expectation that Icahn’s involvement will help push the stock price higher - even though results so far from his energy holdings contradict that notion.
Aug. 6, 2015, 6:04 PM
- Cheniere Energy (NYSEMKT:LNG) +6.5% AH after Carl Icahn reports a new 8.18% activist stake in the company and plans to seek talks with management and perhaps board seats “if appropriate.”
- Icahn says LNG’s shares are undervalued and will seek discussions on "operations, capital expenditures, financings and executive compensation,” according to a 13D filing.
- Icahn's combined stake totals 19.4M shares; as of March 31, the largest shareholder was Viking Global Investors, with 15.4M shares.
Jul. 30, 2015, 4:59 PM
- Cheniere Energy (NYSEMKT:LNG): Q2 EPS of -$0.52 misses by $0.20.
- Revenue of $68M (+0.6% Y/Y) misses by $1.4M.
Jul. 28, 2015, 11:19 AM
- Cheniere Energy (LNG +1.2%) plans to deliver liquefied natural gas to central and southeast Europe within a few years, Reuters reports, in a move that would help loosen Russia's energy grip on the region.
- Cheniere reportedly is looking at bringing a floating regasification terminal to Croatia, which has started the process to attract investors for a gas terminal; many believe the project is too costly and faces too many roadblocks to succeed, which would make Cheniere's plans for a floating LNG terminal a realistic way to help supply the region.
Jul. 22, 2015, 3:39 PM
- Cheniere Energy (LNG -1.2%) is initiated with an Accumulate rating and $76 price target at Global Hunter, which views the company as one of the best ways to gain exposure to growth of U.S. liquefied natural gas exports, which are being driven by cheap U.S. shale gas and arbitrage with international LNG prices.
- While this price arbitrage has come down from $12/mmBtu to $5-$6 with the slide in crude oil prices, the firm thinks LNG's first mover advantage, largely contracted capacity and ability to take advantage of international LNG-U.S. gas price arbitrage and sanction expansions at existing facilities provide significant upside potential.
- Cheniere Energy Partners (CQP -0.9%) also is started at Accumulate, with a well-contracted portfolio of five trains currently under construction providing visibility to distribution growth over the next 4-5 years with additional upside potential with sanctioning of a sixth train if contracts can be signed and financing secured.
Jun. 29, 2015, 4:59 PM
- Cheniere Energy (NYSEMKT:LNG) will move forward with a $550M export terminal in Texas that will ship processed condensate to international markets, a top executive says today at an energy conference.
- "The reason why we're going ahead with that project is we think that we will have unfettered crude oil exports in U.S at some point, and there aren't the sort of logistics for the crude to exit the United States," says Nelson Lee, the company's director of crude trading and origination.
- Lee says the terminal, scheduled to start up in 2017, will have 2M barrels of oil storage and dock infrastructure that can accommodate Aframax-sized tankers.
- Cheniere also is building liquefied natural gas export terminals in Corpus Christi, Tex., and Cameron, La.
Jun. 29, 2015, 1:11 PM
- Cheniere Energy (LNG -3.1%) says it will assume up to $5.8B in debt to pay for the construction of a fifth production facility at its Sabine Pass export terminal, including $4.6B of credit and a $1.2B revolving credit facility.
- Sabine Pass is being designed for up to six liquefaction trains, each with nominal production capacity of ~4.5M metric tons/year; LNG has yet to secure contracts for the planned sixth train.
- The move follows decisions last week by federal regulators to grant approval for LNG to build two additional trains at Sabine Pass and ship supercooled gas produced by those facilities to countries with which the U.S. does not have free trade agreements.
Jun. 26, 2015, 3:58 PM
- Cheniere Energy (LNG +0.4%) receives approval from the Department of Energy for a key export authorization for its Sabine Pass expansion, paving the way for the company to move forward with the project.
- LNG already had received approval from the DoE to ship 2.2B cf/day of natural gas for 20 years, and the latest approval clears the company to export an additional 1.38B cf/day.
- With the major regulatory hurdles out of the way, LNG is poised to make a final investment decision on the project, which will be built on the same site where it already is building four liquefaction production facilities.
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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