I think it's time for the long awaited thread change.
One last look in the rear view mirror and at TA. When LNG was at 30 cents, and poss and others were singing the praises of the stocks fundamentals, where were the TA people? Nowhere to be seen. Probably on the FMG thread saying how overpriced it was and taking credit for any pullbacks. By their very nature they will never partake in a ten bagger based on quality fundamentals. They simply can't. They will always be left to squabble over 10 % here or there, stopped out and/or wrong more often than not.
that said there are noble people amongst them who seriously believe their trade and act in a proper and orderly fashion. Mitta is one that conducts himself appropriately.
i should have left them alone myself as I was responsible for fuelling their involvement by giving their comments credibility. However I detest lying and will probably always react.
GOING FORWARD
to say nothing has changed for LNG recently is folly. Oils major drop is and will effect LNG the commodity because it makes oil competitive against natural gas again. Long term I expect it to work in our favour, because projects will become more commercially scrutinised. And we know we have an advantage there. Oils drop has nothing to do with TA. It is an oversupply issue arising from the US now being a major oil producer and OPEC not cutting production in an attempt to drop the price and make marginal oil producers go to the wall. It's a strange tactic but eventually oil will recover. I expect significant M/A action over the next six months as cheaper small to medium players become attractive to the Bigs. Our own Santos could easily be taken out by an Exxon for example. The situation is not dissimilar to what BHP, RIO and Vale are doing with iron ore. They are squeezing the littles to force them out, and it's working.
so the macro picture has clearly changed. The micro picture is also in a holding pattern as we await FERC and BTAs and also progress news on BH. LNG has been exemplary in its ability to hit targets of late. I raised concerns about hitting the FERC schedule months ago, it was always very tight. To some extent talk of the FERC news being partially factored in is probably correct, simply because we had hit so many targets on time recently.
originally I expect FERC approval in about June next year. Clearly I was over cautious. Seems more like January or February now which is an outstanding effort, but.some may be disappointed and this may not help the short term SP.
other than that the micro picture is still outstanding and the big bonus of BH is still yet to be factored in I believe. With clear local and national government support, a partially built project, a compressed approvals timeline, ample gas and proximity to Europeam markets that few others have BH is a veritable gold mine. Actually it's better because there are no mining or commodity risks.
pricing LNG from here is obviously very subjective but let's take a look at a likely very cautious approach. We know Stonepeak puts a value on Maggy at around $1.3B give or take. Which equates to an LNG share value of around $1.5. Yes this is very conservative as the deal was struck with LNG when we desperately needed a deal, it is highly unlikely we'll do that sort of deal again but it suited us then. Valuing BH is somewhat harder but given the project is bigger and likely to be somewhere near 100% owned by LNG makes it at least 2 x Maggy. Throw in FL for good measure and we know NA 3 and likely 4 will be announced in the New Year and you can see we have little to worry about in the medium term. All energy stocks are taking a hiding and we will not miss out. This is a fundamental fact, the TAs will trade this short, probably a good move too if they know their wares and are nimble enough. I'd rather watch and play the long game.
Based on Chenniere valuations which even now are still on multiples greater than 10 x forward earnings, you can see LNG valuations exceeding $50 by 2020 assuming that progress continues with project status. The challenge in the interim period is dialling in the increasing value as each risk abates and each milestone is hit. For long termers this is less relevant as our focus is on the end game not the price journey to get there.
So, my position is this, focus ahead, make sure I am happy with the macro picture and that future energy prices will recover, forget the smaller price gyrations that others can attempt to harvest at their peril, watch the micro picture unfold and keep the finger off the sell button. Prices will move, likely down in the short term, but the fundamentals got us our first ten bagger and it'll get us own next.
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