Bear Head project purchased for $11m USD. Today the land is much more than when purchased in 2014. Additional sites were bought in 2016 on top of this. Separate to this is the value of the Lake Charles 30-year lease which is fully-permitted. Then there's the company's OSMR technology and associated IP. Then there's the human capital of the LNGL team.
"LNGL also pays a corporate tax rate of 25%"
No. LNGL does not pay any tax at present, and will not pay any tax for some time.
In 2019 LNGL had accumulated tax losses worth $17.9m in Australia plus $60.7m in the US plus $21m in Canada.
Magnolia and Bear Head are two very large projects and this is O&G. It is hard to attract and retain talent. Yet this is what has been done despite tough times. FY18 "Employee comp & benefits" $5.138m, FY19 reduced to $2.98m.
There are many financing options on the table and LNGL has diligently sought expert advice on selecting one (or more) that will align best with its strategic interests:
"In keeping with our promise to shareholders, we continue to manage our liquidity closely, consistent with our stated plans. We closed December 2019 with the Company’s total cash position at A$8.3 million and LNGL remains debt-free. The Company recognizes the need for immediate new sources of liquidity and is currently evaluating several strategic options. LNGL’s Board has engaged legal and financial advisors to assist the Company in its review of options."
Magnolia is also a low-cost provider of LNG, meaning it will be viable when other projects are not.
20 year deals are of course preferred, but not required to reach FID.
As stated previously, LNG and LNGL more specifically has had everything thrown at it, from trade tariffs to clement weather to coronavirus.
Now the news is changing and so is sentiment towards LNG and LNGL more specifically.
The weather will change like the weather and the LNG will spike once more just like last year.
Coronavirus hysteria will continue to dissipate.
And a Phase 2 LNG tariff lift is even more likely now that exemptions are to be granted.
IDG did not throw $28m at LNGL on a whim. The Vietnam MOU and govt approvals (now attained) were not done on a whim.
A whole lot more diligence was done by these entities (and is being done by others as we speak) than any HC commentator could hope to undertake solo in a year.
It's nice to pretend we all know everything but we really don't.
But it's very clear that LNGL will find a way through the so-called "liquidity problem" (even though it is not a problem, merely an area of focus in the interim). LNGL has Bear Head, which it could easily sell for more than double what it paid, it has OSMR licensing as a real option, with one HC poster alerting us to a 2-page spread in the latest LNGIndustry magazine all about OSMR. And there are several other options to choose from.
The only finance LNGL needs is that which will be sufficient to get the company to FID. And FID could come a lot sooner than many think. Tariff exemptions will begin in less than 2 weeks. And IDG asking for a project-based exemption (ie. beyond the 12 month limit) is not out of the question. What is more, many analysts say a Phase 2 negotiation will involve a complete tariff lift.
The technical signals (see LNG Chart thread and my posts on that thread this morning) do not lie and LNGL, having had everything thrown at it, has only one way to go now.
There are several HC commentators who see differently, but not one of them has provided any technical analysis in relation to what is happening with the LNG price or LNGL share price.
