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  • Sailing The Seas Of Natural Gas With Golar LNG [View article]

    I can certainly substantiate that I THINK GLOG's rates are near or below breakeven.
    I cannot substantiate that they are, which is why I did not state they are.

    It is impossible to calculate the actual breakeven cost, they are only estimated. The calculation spreadsheets are full of assumptions. Minor changes to many of these assumptions can change the breakeven figure by USD1000's.
    From my experience, and considering the newbuild prices, I believe that the dayrates are near or below breakeven.

    "That doesn't make any sense"
    LNGCs are expected to last for 30-40 yrs, and it will take close to 30 years before an owner can be confident in estimating whether the vsl will be profit making. In that time the manager who led the deal will either be the boss, or retired. So, in the short term he gets promoted/bonuses, and he doesnt care about the long term.

    Does anyone actually care about the long term?
    How many of the shareholders or management team will still have a stake in 20-30 yrs???
    Apr 24, 2013. 11:16 AM | 1 Like Like |Link to Comment
  • Sailing The Seas Of Natural Gas With Golar LNG [View article]
    Herr Hansa, I tend not to listen to the 'analysts' such as Pareto or Arctic Securities. I believe they have some conflicts of interest when giving out free market advice, and they do not have a deep understanding of the LNG shipping market. (That said, whether I have conflicts or deep understanding is also open to interpretation!)

    In my comment, I did not give a view on whether Golar is likely to find business for its on order vsls, nor whether the rates would be above or below breakeven. My comment was rather that I believe taking a view on this should be key on weighing up an investment in Golar.

    Jan, I do not see any good LNG shipping investments at present. I believe that Golar is very exposed with the new vsls being delivered into a falling market. Gaslog has business for almost all of its vsls, but in my opinion at rates that are close to or even below cost. Hoegh is the one LNG shipping company I would consider. They have clearly moved into regasification vessels, and away from regular trading vessels. This market is doing better, although competition is now quite high.
    Mar 21, 2013. 09:42 AM | Likes Like |Link to Comment
  • Sailing The Seas Of Natural Gas With Golar LNG [View article]
    This article, whilst well researched, is an excellent example of how a little bit of knowledge can be a dangerous thing.

    Golar has a large number of LNG carriers on order. These vessels do not have contracts in place (focusing on the regular LNG ships, rather than the regas units).
    Therefore, the key risk of whether GLNG is a wise investment is the probability of whether these vessels will find business at delivery. And if they do find business, will the charter rates be above or below breakeven.

    Consideration of Chinese imports (all long term imports will be on Chinese-built vsls) and the risk of a terrorist incident whilst interesting to consider are largely irrelevent without the fundamental analysis mentioned above.
    Mar 19, 2013. 07:51 AM | Likes Like |Link to Comment
  • Cheniere Energy Licensed To Liquefy, Has Contracts, Now Needs Money [View article]
    Dear Author,

    Your statement: "If the company gets its financing, this looks very likely to pay off, given the unique niche that the company occupies at this time".
    Could you please explain this a little. Is this based on any financial analysis?

    I cannot see how it could be as it is impossible to estimate how much their financing would cost (if they can get any). Plus the risks of not being able to put in place long term purchase agreements, equity dilution and the inevitable project delays are unquantifiable.

    Note - I am VERY bearish on Cheneire (either of their listings). The company seems to be virtually bankrupt, and this export project is a final roll of the dice to try and save the company.
    Jun 27, 2012. 09:55 AM | 1 Like Like |Link to Comment
  • Cheniere Energy, The Company Of The Future, Is Falling Quickly In The Present [View article]
    David, An excellent article.
    It is nice to read something about Cheniere which isn't 100% biased (and this bias has always been in the positive over the last year or so).

    Something to consider: Cheniere is not building any liquefaction trains. It is hoping to building at least two. They have sold the LNG, subject to FID, but they have not bought the gas. Nor have they raised sufficient finance.

    At this stage fancy cashflow models are not necessary. It is impossible to predict how much the financing will cost (assuming it can be raised in the first place). Yes the sales contacts are signed with top tier investment grade companies. But Cheniere itself is as good as bankrupt. This will concern financiers.

    And equity dillution is inevitable.

    Cheniere is the furthest ahead of the US Gulf export terminals. But this does not convey any advantage. LNG is a global business.

    dcollela "My opinion...Cheniere is a Pioneer in the US Natural Gas business".

    And you complain about the author being biased!!!! You are obviously either ignorant (which your research suggest not), a cheniere employee or long cheniere and so biased yourself.

    1) Cheniere has never made a profit. 2) Cheniere HAS to build this reliq plant to avoid bankruptcy.
    As for being a pioneer, Cheneire's only completed project to date is to build an import terminal in the US. Not exactly a stellar record.
    Jun 12, 2012. 11:16 AM | 1 Like Like |Link to Comment
  • The Obama administration is telling Japan and other allied countries they must wait (past the election?) before moving forward on plans to buy U.S. natural gas. Several companies are seeking permits to export gas to countries lacking free-trade deals with the U.S., but LNG exports have become a hot-button topic for some lawmakers and environmentalists. (earlier)  [View news story]
    Any chance of people checking their facts before commenting??? Cheniere is NOT building a liquefaction plant. They are trying to convert their import terminal into an export liquefaction plant, the final decision has not yet been taken.
    May 31, 2012. 07:56 AM | Likes Like |Link to Comment
  • Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
    I believe that they didn't start to change their strategy until 2010. The reason for changing their strategy was that the previous one, importing, was leading to bankruptcy. Not that it is a bad thing for companies to evolve, but it wasn't a choice.

    They have not been building an export terminal. They have built one import terminal. They have approval from FERC to build four LNG trains (industry jargon, LNG production cannot be scaled easily so one large export terminal requires several production lines called trains).

    You seem to over estimate the value of their 'exclusive' approval. LNG sells on the global market. Cheniere is competing with Russia, Nigeria, East African countries, Canada, Australia, Papua New Guinea etc more than they are with other US potential exporters. ie the fact that they are first to get US export approval really doesnt mean anything.

    I was very disappointed with the Cramer interview. It was horribly biased. Paraphrasing only slightly "How much income? 2.5Bn. Will that leave a lot for shareholders? Yes."
    Not exactly worthy Wall St Journal stuff.
    A high school economics class would have subjected the CEO to much sterner questions.

    To summarise:
    Cheniere is NOT building an export terminal.
    IF they do,
    It MAY become profitable.

    There are a lot of unknowns as yet. Can they agree 20 years gas supply contracts, will they get financing, will the cost of financing and supply gas allow them to be profitable?

    It is interesting to note that Cheniere recently paid large bonuses to their top executives.
    Is this a sign of confidence, or the big boys getting paid while things look good?
    They have also announced dividends will be paid to those on record of holding shares in early May.
    Is this a sign of artificially trying to boost their share price, if so why?

    Cheniere could be a good long term play. But it is far, far from guaranteed.
    Apr 26, 2012. 03:00 PM | Likes Like |Link to Comment
  • Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
    Very true. Cheniere has two very strong points 1) BG is the buyer of the first two trains (forget about trains 3 and 4, they will not built at the same time). and 2) Bectel already has a provisional contract.
    Apr 26, 2012. 02:44 PM | Likes Like |Link to Comment
  • Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
    care to provide examples of the number of projects that bechtel have build on time over the last few years vs those that were late?
    Apr 26, 2012. 11:48 AM | Likes Like |Link to Comment
  • Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
    There is an advantage in terms of time to convert. But you cannot ignore the cost of building the regas plant in the first place when looking at the economics of exporting. Its is another $1Billion (pure guess, especially as a time element has to be considered) onto the cost of the export plant.
    Apr 26, 2012. 11:18 AM | Likes Like |Link to Comment
  • Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
    And why does this quote have any impact on whether Cheniere will export? FERC has approved the plant. So what?
    While that was an essential step for Cheniere to take, other countries in the world do not need FERC approval to export. And there are many other potential liquefaction projects in the planning stage throughout the world.
    Legal approval to export is one hurdle. Provisional Sales and Purchase agreements are another hurdle. Cheniere has passed both. But there are many more hurdles for a liquefaction plant to pass before they take the final decision to build an export plant
    Apr 26, 2012. 11:09 AM | Likes Like |Link to Comment
  • Cheniere Energy: Why It Could Be The Greatest Investment Of The Decade [View article]
    A. I. Houriani,

    A few responses to your article:
    1) "In the midst of this disaster is a company that actually profits tremendously on the depressed natural gas price: Cheniere Energy". Cheniere has lost money every year since incorporation

    2) "So what does Cheniere Energy do? It is a master of arbitrage" To date the only substantial thing Cheniere has done is build an importing terminal in the US. ie their arbitrage play is in the wrong direction.

    3) "Cheniere Energy is an intermediary which, through a complex process they specializes in" Cheniere has no experience in liquefaction. none.

    4) "It already has contracts lined up, bringing in $2.5 Billion after operational expenses" The contracts are not firm until the Final Investment Decision (FID) is taken. This FID cannot be taken until the financing is committed.

    5) "Cheniere Energy currently holds an exclusive exporting license" Not true. The US has been exporting LNG since 1969 out of Alaska. The truth is Cheniere is just the first from the many current applicants trying for approval to export.

    6) "The expansion should be completed by 2015" Expansion? Cheniere is not currently producing LNG.

    In the interests of balance i would be very interested to hear your replies on the above.

    PS - One additional fact. Between 2005 and 2007 Cheniere Energy was trading at approx $40. Over 100% higher than it is now...

    If the financing can be put in place, at a price which will leave significant profits for shareholders, then this may be a good buy. But it is very high risk.
    Apr 26, 2012. 08:56 AM | 3 Likes Like |Link to Comment