LNG the US gas boom infrastructure play

[Corporate]

Time for a new thread on LNG

Some background:

LNG were originally developing the Fisherman's Landing LNG facility, and even turned dirt at the Gladstone site. This was occurring right in the middle of the CSG boom. Some will remember that Arrow was going to supply gas and there was even a HOA for Arrow to acquire the Fisherman's Land development.

This all got called off when Shell acquired Arrow.

There was speculation of a deal with BOW but nothing eventuated and the project is now parked. Suffice to say the share price got hammered.

Where are we are now:

Market Cap: $60m @ 20c
Cash: ~ $12.5m after placement and SPP

The exciting part is that LNG are now progressing Magnolia LNG (MLNG) in the Louisiana USA, right on the Gulf of Mexico. This report http://www.lnglimited.com.au/IRM/Com...2&EID=21466788 gives you a very good overview but some highlights are:

- The project is ranked in the top 5 US export projects
- MLNG is able to be fast tracked leveraging off all of the work completed for Fisherman's Landing
- Initial 4mtpa modular solution
- 70 year site secured with existing deep water LNG shipping channel
- Close to abundant US gas reserves from nearby shale gas fields
- Gas pipeline to site with excess capacity
- HOA for tolling signed for trains 1 and 2
- Funding alliance with Stonepeak to provide 100% of the equity required for 50% of the project $660m
- Tolling agreement to generate US$3.7b EBITDA per train over 20 years

There is a lot to like about this company. But in particular for me I have been accumulating because of these factors:

- There is no commodity price risk
- This is an infrastructure play and will be valued based on annuity cash flows (PE of 10+)
- The model is scalable for additional trains
- Huge upside if LNG can obtain approval to supply non FTA countries
- Funding. I don't know of any other $60m company with a credible partner willing to put up $660m

But the kicker is, take a look at Cheniere Energy (ticker code LNG.us) and the share price over the last 3 years. LNG has a path to follow and there is some serious blue sky. In my opinion 20c will look very very cheap.

DYOR.

P.s. apologies if spelling/grammer is awful. It's late!

[Corporate]

Some more info - Cheniere has a market cap of $7.2 billion. The most recent investor presentation states they have 20mtpa for 20 years locked in sale and purchase agreements with major gas suppliers.

LNG.AX have HOA for two trains totallyin 4mtpa for 20 years

Compare the market caps vs. volumes.

Obviously there is a lot of work to be done and Cheniere are a fair way ahead of LNG.ax but you can see were LNG.AX is heading.

Even 10% of Cheniere's market cap is $710m....more than 10 times LNG.AX market cap.

[Corporate]

LNG up 20% today so far!

[Corporate]

Hopefully some others got on board LNG after my original post. Looks like a 25.5c close today with still a huge amount of upside.

[Corporate]

Today LNG released a very straight forward presentation; http://www.asx.com.au/0CF87DA3-E8C3-...31f7yvd060.pdf

Some significant milestones coming.

If you don't read anything else, this is the key point. This month LNG will ink an equity deal with Stonepeak who will contribute US$660m + US$66m bonus for 50% of Magnolia LNG (MLNG). LNG is currently capped at $84m.

I have a lot of LNG and am watching carefully.

[KiwiGreen]

Just to give a more rounded view of corporates statement. The equity deal with Stonepeak was due 2 weeks ago but the date was delayed a month to Oct 23rd. These things are never 100% so definitely don't take it as fact that the deal will be signed with the original terms this month. Also their contributions of $660m + $66m are contingent on FID, due in 2015. And there are a lot of milestones to pass to get to that stage. So comparisons to current market cap need to be taken with a grain of salt and time value of money calculations - I know most people on sharetrader don't go rushing into things but just wanted to make that clear - i.e. I wouldn't invest in LNG without reading anything other than the comment above haha.

Interesting story though and I will potentially take a position if the equity agreement goes through and I can get it under 30c. I personally thought the price would take a dent on delay in the contract signing but can imagine the charts look good which may have triggered some TA interest to take the SP to its current level. Any TA analysis would be helpful for me.

[gazprom1]

Just to give a more rounded view of corporates statement. The equity deal with Stonepeak was due 2 weeks ago but the date was delayed a month to Oct 23rd. These things are never 100% so definitely don't take it as fact that the deal will be signed with the original terms this month. Also their contributions of $660m + $66m are contingent on FID, due in 2015. And there are a lot of milestones to pass to get to that stage. So comparisons to current market cap need to be taken with a grain of salt and time value of money calculations - I know most people on sharetrader don't go rushing into things but just wanted to make that clear - i.e. I wouldn't invest in LNG without reading anything other than the comment above haha.

Interesting story though and I will potentially take a position if the equity agreement goes through and I can get it under 30c. I personally thought the price would take a dent on delay in the contract signing but can imagine the charts look good which may have triggered some TA interest to take the SP to its current level. Any TA analysis would be helpful for me.

Need to look at the thread Kiwigreen. Corporate started the thread a few weeks ago....in capitals at the bottom....DYOR. Corporate was just highlighting the recent presentation. If the equity agreement goes through you will not purchase it under 30 cents unless the US govt goes into default and/ or there is some major economic disaster somewhere - which is always possible.

Re the charts, you should take a look at them...they look good.

Gazprom

Discl: do not hold

[Corporate]

Good post KG - I sometimes get excited about these type of opportunities.

The delay in signing the equity agreement was a shame - but not totally unexpected.

This is a very important legal agreement that will need to stand the test of time (at least 20-25 years). I would much rather both LNG and Stonepeak dot the I's and cross the T's so to speak.

A few weeks is nothing in the scheme of a £726m, 20+ year agreement.

I also never meant to lead anyone to believe that LNG would receive £660m and £66m imminently. This is the start of a relationship to develop a LNG plant and obviously there are milestones that need to be achieved prior to FID. For example, signed tolling agreements and debt financing.

As for getting in under 30c on signing - I doubt it.

Let be clear. This is a high risk infrastructure play on the US shale boom.

Just to give a more rounded view of corporates statement. The equity deal with Stonepeak was due 2 weeks ago but the date was delayed a month to Oct 23rd. These things are never 100% so definitely don't take it as fact that the deal will be signed with the original terms this month. Also their contributions of $660m + $66m are contingent on FID, due in 2015. And there are a lot of milestones to pass to get to that stage. So comparisons to current market cap need to be taken with a grain of salt and time value of money calculations - I know most people on sharetrader don't go rushing into things but just wanted to make that clear - i.e. I wouldn't invest in LNG without reading anything other than the comment above haha.

Interesting story though and I will potentially take a position if the equity agreement goes through and I can get it under 30c. I personally thought the price would take a dent on delay in the contract signing but can imagine the charts look good which may have triggered some TA interest to take the SP to its current level. Any TA analysis would be helpful for me.

[gazprom1]

Jumped on the LNG train (pun intended!!!) yesterday Corporate. Managed to buy in at 25 cents so happy with that. Just have to sit and wait for the news concerning the execution of the agreement with Stonepeak. Only taken a very modest position so may buy a few more in the coming days.

Gaz

[Corporate]

Jumped on the LNG train (pun intended!!!) yesterday Corporate. Managed to buy in at 25 cents so happy with that. Just have to sit and wait for the news concerning the execution of the agreement with Stonepeak. Only taken a very modest position so may buy a few more in the coming days.

Gaz

Great to hear you are on the LNG train Gaz, and already showing a profit after we closed at 28.5c! Well done.

In my opinion the challenge with LNG is going to be not selling on the way up, because if everything goes to plan people who buy and hold should do very very well out of LNG.

I think you just have to keep reminding yourself that this is not an oil and gas or mining company. It is an infastructure play and will be eventually valued as one.