Well... it always pays dividends to go to these AGM's and shareholders will be happy to know that our boss, El Capitan, truly spoke like a leader yesterday! Didn't stumble the slightest, showed quiet confidence & cruised through his entire presentation, even when the interrogation began! When i attended the last AGM at Lake Charles on Oct 25th 2017, you could see he was defensive, flustered and could feel he felt the weight of expectations weighing heavily on his shoulders (undeserved being early on in his tenure). Although I didn't get my opportunity to speak as GV cut short the questioning segment... I hung around till afterwards to make sure I was able to say my piece. The overall key take-aways for me were:
GV making strong references to our world class assembled squad! I don't believe the company has made known the credentials of a select few till today, not by my recollection anyways. I'm talking about Rafael Hernandez (21yrs experience), V.P. Engineering & construction - I had zero idea he was the construction director for the Sabine Pass LNG project + Chief construction engineer for 3 simultaneous mega LNG projects in Australia, QCLNG, GLNG & APLNG. A fellow shareholder suggested why he hasn't been poached by rival companies because of his highly respected expertise - Rafael sees the real promise with Magnolia and is chomping at the bits to get to construction. Maury Hudson, V.P. Operations & Maintenance - Vice President, Corpus Christi Operations after holdingvarious technical roles in support of Sabine Pass LNG. Almost 30yrs of operations experience.
Our partnership with IDG has taken low level talks with Chinese parties prior to IDG's arrival to now high level talks, with the company prompting potential off-takers to bring their delegations and join them for tours of our Houston HQs.
Henry Hub is emerging as a Global LNG Benchmark due to its very consistent, low, LNG pricing which has not been prone to wild swings (over last couple of years) like with Brent 13%, Singapore marker, Japan/ Korea marker etc.
I thought the AGM presentation report is the best the company has ever produced, I was impressed! Has given a crystal clear picture of our position and future outlook moving forward. It made new additions by highlighting A) Major Demand Growth Areas from 2017 - 2030 with an emphasis on the approximate mtpa quota needed by individual countries B) Additional 160mt of new supply required (chart) C) New liquefaction capacity FIDs since 2004 (chart) D) Charts reflecting the different, global, natural gas pricing markers.
A few finer details from a couple of one-on-one talks: IDG wished to purchase more than a 9.9% share but were restricted on their buying quota for specific reasons. I was assured that they are invested for the long haul and have already brought a NOC player to the LNG table!
- GV re-iterated what I've already shared with you previously in terms of the 10% tariff having absolutely no bearing as to why we're not able to sign contracts with the Chinese. Majority of the buyers are state owned and the tariffs are collected by the state, so the state pays the state and consequently no impact! The cause of our setbacks with the ongoing trade war is purely political!
- When GV joined the company he already was aware of the favourable lead time we had on rivals but made a point in saying we still have a big lead time today... EPC contracts & financing can be difficult to secure. Apparently Tellurian's EPC contract with Bechtel has expired.
- A couple of major fund companies recently have been knocking at the door showing interest in investing, asking all the right questions, as opposed to in the past asking all the wrong questions (whatever that all means).
- GV will be more wary about his choice of wording in the future, mentioning (as an example) he got a touch over enthusiastic when talking about how " discussions with potential off-takers during the 3rd Qtr of LNG's fiscal year will prove to be extremely valuable towards finalising agreements ". He still meant it but realises he needs to tone it down a notch! Have got to know GV a little on a personal note, certainly not in his character to send out misguided signals through buoyant FID speculations or slightly " over the top " wording when referencing how discussions are going.
Had a smile to myself when i caught Michael Steuert briefly dozing off to sleep several times during GV's presentation, also while Cavicchi spoke... classic!
We have to ignore the circus going on around us. Venture Global may have 8mt signed but their company is far from home. No EPC contract, No DOE Non-FTA, No FERC Order, No FERC NTP, No disclosed finance plan, Industry conjecture saying offtake being sold at very low value prices ($2 - $2.25). And remember, of the 29.16mt worth of SPAs signed in 2018 over 21 contracts + H-Energy's SPA with Petronas with contractual terms unknown, only 8.4mt has been contracted with next wave projects!
I asked JB in September what his motivations were for joining LNGL/ Magnolia... his exact response, " what basically inspired me here was the opportunity to make a step-change in the LNG project delivery, going the opposite direction to mid scale rather than larger, a clean sheet on how to effectively modularize, lower cost, faster, more standardized, highly efficient, highly reliable. I had been trying to move in this direction on the EPC contractor side but with limited success. Fundamentally, i think i spent 33yrs preparing for Magnolia! We have a better mousetrap and once we get one built we can make a significant mark in this market. Whenever I've liaised with John over the years, his passion has always radiated!
Rest assured our "all star" team want to get to construction as badly as long term holders do, that's evident! Our compelling story has not changed but has definitely had its fair share of twists and turns...
It's always been a matter of when for me!
JK.
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