Merry Christmas my fellow ants... and may i wish you all a "very prosperous", healthy, New Year!!
2017 certainly tested the patience and perseverance of a seemingly large herd of shareholders, understandably so. But in light of not getting a single BTA signed, from my prospective it was a successful year which has paved the way for an exciting, big 2018!
Key milestones/take-aways for me were:
Stonepeak re-signing contract to finance the full 8mt from original 4mt!
EPC contract with KBR renewed for a further 6 months (till June 30). I believe this short extension period is due to our discussions reaching boiling point with buyers.
Meridian extending their agreement by a further 3 months (till March 31st), another indication i believe reflects how close we are to securing BTAs - GV applying pressure/ pushing them to get their act together or face missing out.
Macro Environment is going from strength to strength, having turned in our favour. Oil price (Brent Crude) as of Nov 12' 2017, reaching its highest mark in 2 years since middle of 2015, now sitting at US $64 a barrel. Spot price is heading northwards in strong fashion... in Singapore it was priced at $10.26/MMBtu on the 18th Dec 17', double the $5.14 it cost in early June. The arrival of price-depressing glut of LNG is no longer seen as inevitable, thanks to surging Chinese demand and stories of gas shortages around the world, with indications from numerous news outlets that the glut is being soaked up on the spot market.
Only 1 project reached FID, Coral Mozambique, with very few to reach FID over the next few years. Fortuna & Woodfibre being the best bets in 2018.
A distinct change in tone coming from management. Having attended shareholder meeting in Lake Charles on Oct 25, got a great read on GV's character and having previously shared with you all, noted that he was a straight shooter and sincere! So in saying that, i trust in his restored optimism. What i have not previously shared is... was having a conversation with a representative/associate of our team at that meeting, who i won't mention, who at one point stated, " believe me, this is going to happen" in regards to Magnolia. Now, i obviously took this with a pinch of salt but there was no reason or agenda for him to loosely throw this comment out there just to appease me!
Major shareholders Baupost, Valinor have not changed their positions, both i'm sure approving the recent NED rights for our board of directors and leaders. A sign they are happy with how the company is progressing.
Cheniere's (with an office in China) Sabine Pass requires a further 7.25mtto be filled + Corpus Christi 3.25mt, Freeport 1.8mt, Cameron 1.4mt, Dominion Cove .6mt * No contracts were signed by these projects in 2017 *
Contracts signed:
Jera to supply Total with .4mt for 1-2yrs
Glencore to supply Egypt with 1.8mt for 2yrsstarting in 2017
Gazprom - Vitol .3mt for 2yrs 2018
Qatar - Botas 1.5mt for 3yrs 2017
Origin - ENN .28mt for 5yrs 2018/19'
Jera - Centrica .37mt for 5yrs 2019
Qatar - Shell 1.1mt for 5yrs 2019
Gunvor - PSO .9mt for 5yrs 2017
Qatar - OMV 1.1mt for 5yrs 2019
Vitol - Adnoc .5mt for 10yrs 2018
Woodside - Pertamina .6mt for 12yrs
Gazprom - Ghana 1000mw (= 2.5mt) for 12yrs 2019
Petronas - PTT 1.2mt for 15yrs 2017
Qatar - Bangladesh 2.5mt for 15yrs
Eni - Pakistan .7mt for 15yrs
Petronas - SK Oil .7mt for 15yrs 2018
BP - PTT 1mt for 20yrs
Edison - Venture Global 1mt for 20yrs
Total = 18.75mt
In closing, an important point to remember is... there is a glut of 68mt, including the 18.75mt sold this year in a depressed environment. With the market slowly but surely recovering every year as we approach 2020 - with demand proven and showing signs of flying - say 20mt gets signed each year over the next 3 years, GV is spot on when he stated that "by2022 the market will tighten", facing a likely deficit <--- IMO. All worldwide LNG SPA contracts i have in hand determine this current glut & back his calculation up. Investments in new Greenfield/Brownfield projects (4-5yr construction time) must happen in 2018/19 or face a shortage crisis. We're "shovel ready", a fortunate and wonderful position to be in!
Our challenging wait is nearly over... looking forward to celebrating!
Peace...
LNG Price at posting:
42.0¢ Sentiment: Buy Disclosure: Held
