Our story... Apart from small-scale terminals Woodfibre &...

Our story...

Apart from small-scale terminals Woodfibre & Fortuna, Magnolia is without a doubt the lowest cost, lowest risk of all worldwide export projects available on the market today. Feed gas supply will come from the highly liquid US Gulf Coast gas market via several gas suppliers. Gas supply will be delivered to the site via the Kinder Morgan Louisiana Pipeline (KMLP) to 4 2mt modular trains which in turn gets liquefied and cooled to -162C (-260F), loaded on-to LNG tankers and shipped (with no destination restrictions) to target markets in Asia, Europe or Sth America. Expansion of the Panama Canal has reduced shipping times from the US;

To Japan 34 days around southern tip of Africa or 31 days via Suez Canal to just 20 days.
To South Korea & Northern China 33 days around Africa or 30 days via Suez Canal to 22 days.
To Taiwan 31 days around Africa or 28 days via Suez Canal to 23 days.
To Southern China 30 days around Africa or 27 days via Suez Canal to 24 days.
To Chile 19 days around Africa to 9 days
To India via the Suez Canal takes 20 days
To Pakistan via the Suez Canal takes 20 days

The facts...

Magnolia has entered into a Precedent Agreement for 20yr binding pipeline capacity agreement with KMLP to deliver gas to the site for the full 8mtpa. We will charge a fixed monthly capacity fee over a possible 20yr tolling term of $2.50 - $3/MMBTU at 113% of HH.

* Lumpsum, turnkey EPC costs of $4.35B with KSJV (KBR/SKE & C joint venture) executed.
* Equity commitment with Stonepeak $1.5B executed. 30/70 equity to debt ratio
* No debt. As of Dec 31st 2017 our cash balance was $33 Million and the quarterly expenditures in 2017   
   read;  Jan 31 - Mar 31 $7.1m   Mar 30 - Jun 30 $4.5m   Jun 30 - Sept 30 $6m   Sept 30 - Dec 31 $5.3m
   Liquidity should last till Mar 2019 if burn an average of $6m a quarter + $3m still left in kitty.   
* Regulatory certainty
* Construction ready
* Time to market matters
* Reliabilty matters
* Economics matters
* Flexibilty matters
* Environment matters/cleaner fuel than oil or coal

Below are EPC costs for worldwide LNG projects that are under construction or awaiting FID. We have such a wonderful advantage being midscale/low cost and its inconceivable to comprehend how these Russian projects will be economically viable, unless oil heads back over $100/BBL;

Russia,  Yamal  $27B  16.5mt (under construction)
Russia,  Arctic  $18.8B  16.5mt
USA,  Rio Grande  $17.3B  27mt
USA, Tellurian  $16B  26mt
Russia,  Far East  $15.3B for 5.4mt (crazy)
Mozambique,  Anadarko  $15B  12mt
USA,  Sabine Pass  $13.6B  22.5mt (under construction/commisioning)
Papua New Guinea,  PNG  $13B  9mt (expansion)
USA,  Freeport  $12.5B  15mt (under construction)
USA,  Corpus Christi  $11.5B  13.5mt (under construction)
Russia, Baltic  $11.5B  10mt
USA,  Cameron  $10B  15mt (under construction)
USA,  Golden Pass  $10B 15.6mt
USA,  Lake Charles  $9.2B  15mt
USA,  Venture Global  $8.5B  10mt
USA,  Delfin  $8B  13mt
Canada,  Goldboro  $7.3B 10mt
USA,  Magnolia $4.35B  8mt
USA, Dominion Cove  $4B  5.25mt (under construction/commisssioning)
USA,  Corpus Christi Train 3  $2.36B  4.5mt
Equatorial Guinea,  Fortuna  $2.1B  2.2mt
USA,  Elba  $1.5B  2.5mt (under construction)
Canada,  Woodfibre  $1.3B  2.1mt

* Project costs unknown ---  Senegal,  BP's Mauritania 2.5mt (Pre Feed)  Congo, New Age's Brazzaville 1.2mt (Has Government approval, targeting FID late 2018)  USA, Cameron Trains 4&5  

A brush up on China's demand is as follows... Currently there are 15 terminals that have been commissioned;

Dapeng, CNOOC  -- 9MT Capacity
Fujian,  CNOOC  -- 5.2MT  + Phase 3 Expansion 1.1MT to come.
Dalian,  CNPC  -- 3MT + Phase 2 Exp 3MT + Phase 3 Exp 4MT
Rudong,  CNPC  -- 3.5MT + Phase 2 Exp 3MT (completed Nov 16)
Ningbo,  CNOOC  -- 3MT + Phase 2 Exp 3MT
Tangshan,  CNPC  -- 3.5MT + Phase 2 Exp 3MT
Tianjin,  CNOOC  -- 2.2MT + Phase 2 Exp 3.8MT
Zhuhai,  CNOOC  -- 3.5MT + Phase 2 Exp 3.5MT
Guangxi,  Sinopec  -- 3MT + Phase 2 Exp 2MT
Hainan,  CNOOC  -- 3MT
Qingdao,  Sinopec  -- 3MT + Phase 2 Exp 3MT
Shanghai,  CNOOC  -- 3MT + Phase 2 Exp 3MT
Yuedong,  CNOOC  -- 2MT
Dongguan,  JOVO  -- 2.3MT
Wuhaogou,  Shenergy  -- 2MT + Phase 2 Exp 2.5MT

Total 54.2 Handling Capacity. Of which 44.75MT is contracted.

11 Terminals Currently Under Construction and 3 Expansions;

Wenzhou,  Sinopec  -- 3mt Completion 2018
Wuhu,  CNOOC  -- 1mt Completion 2017  Phase 2 .5mt completion 20'  Phase 3 1.5mt 30'
Zhoushan,  ENN  -- 3mt Completion 2018
Qidong, Guanghui  -- 3mt Completion 2019
Shenzhen,  CNOOC  -- 4mt Completion 2020
Tianjin,  Sinopec  -- 3mt Completion 2017
Zhangzhou,  CNOOC  -- 3mt
Hua'an, Shenzhen Gas  --  .6mt
Fangchenggang,  CNOOC  --  .5mt
Yantai,  CNOOC --  3mt Completion 2020
Jieyang,  CNOOC --  2mt + 2mt Exp
Shanghai  -- 3mtPhase 2 Exp
Fujian  -- 1.1mt Phase 3 Exp
Wuhaogou  -- 2.5mt Phase 2 Exp completion was expected 2017

Total 32.7MT


NOCs proposed import terminals in the following cities;

CNOOC  --  Yancheng, Ezhou Yangtze River
CNPC  -- Fuqing, Zhejiang, Jieyang, Shenzhen(Guanhu)
Sinopec  --  Putian, Lianyungang

2nd Tier Players proposed import terminals. The top 10 companies are -- JOVO, Huadian, Guangzhou Gas, Beijing Energy, GCL, Shenzhen Gas, Guanghui Energy, Guangdong Yudean, ENN, Beijing Gas;

Huadian  --  Hainan 3mt, Ganyu, Hunan, Chengmai, Tongzhou, Taishan Guanghai Bay.
Hanas  --  Jiangyin, Putian.
Sino Gas & Energy  --  Shantou, Jiangyin, Taizhou.
GCL  --  Rudong, Nantong, Haiyan, Pengze.
Guangzhou Gas  --  Nansha.
Pacific Oil & Gas - Yangjiang, Huanghua Port (Cangzhou)
Shandong Gas  --  Qinzhou
Zhengda Energy  --  Yantai
Yudean Group  --  Shanwei
Zhongxin Gas  --  Haiyan
Baota Petrochemical Group  --  Penglai, Ningxia

Port Proposals

Huludao North Port
Jiaxing Port
Longku Port (Nanshan) 3.5mt
Taizhou Port (Damaiyu)


Terminals to look out for/ best chances to succeed;

Guangzhou Gas Nansha Terminal 2mt - May 17 2017 Reuters. Project possibly in partnership with Woodfibre... the Guangzhou company agreed in 2016 to buy 1mt for 25yrs (HOA) from an export facility that Woodfibre is building - a subsidiary of Singapore company Pacific Oil & Gas. Local government backed Guangzhou Gas is one of China's fast growing independent players in its LNG sector, outside dominant state giants CNOOC, CNPC, having emerged over the last few years as a niche gas importer and infrastructure investor. To secure the gas beyond the Woodfibre deal, company is looking for more flexible supplies under shorter terms, like 3-5yrs.

Shangdong Gas Qinzhou Terminal 3mt - March 30 2015 Reuters. Qatar's Qatar for Investment & Development (QID Group) and Hamad Bin Suhaim Enterprises have signed an initial deal to acquire 49% of China's Shandong Dongming Petrochemical Group worth $5 Billion. "The cash will be used to finance a number of projects that Shandong is currently working on. These projects will include building 1000 petrol stations across 6 provinces in China and a LNG terminal", Ibrahim El- Tinay, Chief Executive of QID told reports at a press conference in Doha. Also on Feb 28 2017, Hellenic Shipping News mentioned the terminal in an article titled, " Chinese Teapots - the game changer in China's oil industry".

CNOOC Yancheng Terminal 2.6mt - Proposed by CNOOC and the municipal government of Yancheng. In Aug 2013, was approved by National Energy Administration (NEA). As of 2014, the USD $1.7 Billion project was under construction. Dec 12 2016, on International Gas Union forum, statement made that a possible award date for the FSRU will be between 17'-19'.

CNPC Shenzhen Guanhu Terminal 3mt (+3mt exp) - June 10 2015, PetroChina scales back proposal because of environmental protection concerns according to a revised simplified environmental protection assessment report issued by local government recently. Plans now are to build 4 200,000 m3 tanks, 2 of which will be built in the first phase. As of May 5 2016, still pending approval.

Baota Petrochemical Group Ningxia Yantai Terminal - On June 7 2017,  Baota Petrochemical Group Co Ltd selected a tender agent for its USD $712 Million terminal in Yantai City, Shangdong province. Tenders will be issued after mid June through the end of next year. Construction of the project is expected to begin early 2018. Will be a joint venture with Enagas. China Petroleum Pipeline Bureau was retained as the projects EPC firm (in April 17') after it received regulatory approval from the Shangdong Development and Reform Commission at end of 2016.

GCL Yantai Terminal 3mt - 14 August 2017. Announcement made of a joint venture between Poly - GCL Petroleum Group Holdings, Yantai Port Group & Shangdong Pan-Asia International Energy Distribution Center. Will be in East China's Shangdong province, constructed in the western area of Yantai Port. "Yantai is strategically located where the waters of the Bohai Gulf meet the Yellow Sea, making it the ideal place for a gas facility" , according to Barton Yu, Chairman and President of GCL. To be commissioned by 2020.

Sino Gas & Energy Shantou Terminal 3mt - Sino Energy in March 2011 signed a SPA with Australia's Icon Energy for the delivery of 2mt for 20yrs. In June 2015 that deal got extended to June 30 2018. Currently awaiting import approvals from Chinese Government to allow the construction and operation of the regal terminal.

Hanas Jiangyin Terminal 1mt (+2mt exp)- 1st Phase FSRU 1mt FID 2019 with commercial operations by 2020. 2nd Phase Conventional 2mt FID 2022, commercial operations by 2023. Well documented on their website. On March 7th 2016, Huanqiu Contracting & Engineering Co. held the signing ceremony of the design of the Jiangyin terminal.

Hanas Putian Terminal (Zhuhai, Huangmao Island) 2.8mt (+5-6mt exp) - 1st Phase FSU 2.8mt FID 2017, commercial operations by 2019. 2nd Phase 5-6mt Conventional FID 2017, commercial operations by 2020. Well documented on their website.

Rizhao - 2MT Royal Golden Eagle. In May 2016 RGE - Singapore based parent company of Pacific Oil & Gas Ltd, which is behind the $1.7 billion Woodfibre project, announced a $3.9 billion investment in new receiving terminal in Rizhao.

Chaozhou - 3MT Chaozhou Huafeng. On Sept 10 2016, Chaozhou Huaying Natural Gas Co and Chinese Global Engineering Co Ltd held a signing ceremony in Beijing for the design of the project.

* Its worth noting that the NEA (National Energy Administration) has a current policy of expanding existing  terminals in a province rather than constructing new ones. Could add Lianyungang - 3MT + Jiangmen 6MT to the list above, both owned by Huadian and waiting to be approved by the National Energy Administration. However... both provinces (Guangdong & Jiangsu) already host terminals!

**  Current terminal handling capacity is 54.2mt + terminals/expansions under construction 32.7mt = 86.9mt The Chinese currently have SPA contracts for 44.75mt so when you take into account their terminal capacity utilisation rate which is roughly 56% (56% of 86.9mt) = 48.66mt in SPA contracts they are looking for. So right now one can ascertain China needs about 3.91mt worth of contracts signed. But, thats not including the 35.9mt in future expansion projects + proposed projects i mentioned! There's no stopping this LNG buying superpower!!

*** An important mention ---> the Chinese delegation that came to visit our Houston HQs, was hosted by the US Trade and Development Agency. The parties comprised of 2 of our key target companies who we've had discussions with prior, and some secondary organizations not directly involved in LNG trade.


In the Platts report on 1 March 2018, it said that Kogas will seek to diversify its LNG supply sources to include Russia and the US to ease its dependence on the Middle East and SouthEast Asia. Around 90% of its imports are currently sourced from 5 suppliers; Qatar 9mt, Australia 3.7mt, Oman 4.1mt, Malaysia 4mt, Indonesia 1.7mt  Their remaining imports are from; Brunei .7mt, Russia 1.5mt, Yemen 2.05mt. USA 3.5mt just commenced shipping.

"Kogas has started preparations for new term contracts and seeks to sign new deals at least 5 years before existing contracts expire" , the company official said.

I can tell you those existing contracts about to expire are;

7mt with Qatar 25yr contract which began in 2000
2mt with Malaysia 23yr contract starting in 1995
.7mt with Brunei 21yr contract starting in 1997
4.1mt with Oman 25yr contract starting in 2000
2.2mt with Australia (Pluto) 3yr contract starting in 2014 (expired)
1mt with Indonesia 20yr contract starting in 1998 (expired)


Further overwhelming proof on the demand side and reiterating ... on the 7th of Feb 2018 the Indian Government stated their intentions to more than double the natural gas share in its energy mix from 6.5% to 15% by 2022, while building 11 terminals over the next 7 years bringing importing capacity from the current 20mt (from 4 terminals) to 70mt!

Really positive signs deals are being signed in "next wave" projects with our rivals in the US/ worldwide, keep em rolling!

LNGL's evidence for success is undeniable and Magnolia's future inevitable! Our destiny is written so i accept the silence and keep looking forward!!