Report

Liquefied Natural Gas - Higher capacity at 8.8Mtpa, lower SPA pricing

The focus for Liquefied Natural Gas (LNGL) remains the signature of long-term offtake contracts for Magnolia LNG, the company’s flagship LNG export terminal in Lake Charles, Louisiana. In March 2019, authorisation was received from the US Department of Energy (DOE) for expansion of export capacity to 8.8Mtpa (from 8.0Mtpa) to free trade agreement (FTA) countries. Management expects FERC approval and non-FTA consent from the DOE to follow shortly. Edison’s valuation has been updated to reflect higher Magnolia export capacity, offset by our assumption of lower contract pricing. The net impact is a decrease in valuation from A$1.01/share to A$0.70/share. Key valuation drivers include sale and purchase agreement (SPA) pricing, cost of funding, timing of first gas exports and the risking we apply to Magnolia and Bear Head projects proceeding.
Underlying
Liquefied Natural Gas Ltd.

Liquefied Natural Gas is developing Liquefied Natural Gas Limited (LNG) export terminal projects in the U.S., Canada, and Australia. Co. focuses on the identification and progression of opportunities for the development of LNG projects to facilitate the production and sale of LNG. Co.'s segments are: LNG Infrastructure, which includes the aggregation of the Magnolia LNG project, Bear Head LNG project, and Fisherman's Landing LNG project; and Technology and Licensing, which focuses on the development of LNG technology, through research and development activities, and the advancement of each developed technology to the patent application stage or ability to commercialise the LNG technology.

Provider
Edison Investment Research
Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts
Sanjeev Bahl

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