LNG Chart & Greg Vesey Thoughts

OK - so I don't think we should take the employee cuts as a negative - I think its normal that a NEW ceo has come in and made changes, also to get rid of expensive highly paid people who he doesn't value.

Ive found this Bloomberg article from 8th June - and direct comments from Vesey.. in my opinion we are very close to gas deals being made and therefore Final Investment Decision(FID). Buyers do need to look into the future to secure gas, and gas demand is expected to pick up in early 2020's. So given the timeframe from FID to first gas is 3.5 years then they have about 6 months to secure gas. Anyhow - onto Vesey's comments, and we do need to be able to trust our CEO - so lets see if he can deliver.

June 8th
(bloomberg):
"Conversations with buyers are becoming more serious, CEO Greg Vesey says in a telephone interview from Houston"
"Says customers are realizing they may need to start making deals with suppliers as demand for gas picks up again"
"Non-FTA approval expected in 2016 for Magnolia LNG project, CEO says"
AFR:
"A key regulatory decision from the US Department of Energy is expected by August."

Potential takeover target? I LIKE that the costs per tonne are LOW @ $550-$620. REMEMBER, Woodside shelved its $40b browse field due to costs running @ $2400 per TONNE. Also woodside said it wants to bring its LNG costs to $500. Woodside also said it wants to aim for deals at $1b. So no oil search, but perhaps LNG LTD? perhaps in the future.

KBR (ppl who will build Magnolia) Transcript -> April 30th:

"The update on Magnolia LNG, just to remind you, it's a $4.3 billion EPC project, is that they received their FERC approval and that FERC approval also included the Kinder Morgan pipeline. So all the component parts are in place now and all their effort is really about selling FLNG. They appointed a new CEO, Greg Vesey in the period. Having Greg, we think that's a good move. Greg has a very strong industry experience with Chevron and, particularly, in the gas treating site. So he brings a sort of new level to Magnolia LNG, and we extended our validity until December 2016."

So Greg has to deliver the offtakes by year end 2016 or all bets are off. we are PRIMED.

Now on to the CHART>

Points:
1. 100% retracement
2.RSI approaching 30(oversold)
3.breakdown below late june lows = stop losses
4. Stock should bounce tomorrow or Monday and recover 100day moving average, then make a move back towards 50 day.

I see risk/reward slanted to the buyside - and as noted I am now a holder @ 63 cents. Not sure this is the bottom but I feel its a BUY given they are at the low end of the cost curve, new CEO with lots to prove, shareholders that you can trust(baupost).

Goodluck all, I hope we don't see the 50's but if we do, then I recommend buying more.

PB.