Oil macro analysis, page-65

As mentioned by Timbo, from Alembics website:

LIQUEFIED NATURAL GAS LTD – GATING ITEMS REMOVED – FERC AND EPC CONTRACT SHOULD BREATHE LIFE INTO SHARES

• LNG Limited announced 2 significant developments – both should help to alleviate concerns over the viability of its Magnolia project while offering a clear path to project FID and regulatory approval, thereby resulting in material value creation
• The company received a Final Environmental Impact Statement (FEIS) from FERC, which is the final material hurdle in being granted full Notice to Proceed on its Magnolia project, which we expect in the next 90 days
• Enters into legally binding lump-sum turnkey (LSTK) EPC contract with KSJV for its Magnolia project for 4 trains (7.6mtpa) for USD4.35bn, representing an installed capacity cost / tonne range of USD495-USD544, making it the lowest-cost facility on the Gulf Coast
• Active conversations with 13-16 potential customers for 20-year take-or-pay tolling arrangements (roughly half are investment grade) – expect agreements for 4mtpa before material ramp in spending. FERC approval and EPC contract should expedite discussions towards tolling arrangements being finalized in the near term
• Expect shares to react favorably – like other LNG providers, with the steep decline in Asian LNG prices and concerns over SPA agreements being broken, LNGLY shares have been decimated, losing >50% of market cap over the last few months. Maintain Overweight rating and USD12/sh target price. Probability of Magnolia moving forward increases materially on these events

KBR – FINAL EPC CONTRACT FOR MAGNOLIA LNG SHOULD MATERIALLY IMPROVE EPS VISIBILITY BEYOND 2016

• Announced the signing of an EPC contract by Magnolia LNG for a 4 train (2mtpa per train), 7.6mtpa guaranteed production capacity for the Lake Charles, LA project – which also includes two, 160,000-m3, full-containment LNG storage tanks, LNG marine and ship-loading facilities, and supporting infrastructure. KBR is a 70% partner in the KSJV joint venture
• Contract valued at USD4.35bn, with KBR’s share likely ~USD3bn, which represents an installed capacity cost / ton range of USD495-USD544m, making it one of the lowest-cost LNG facilities in the world. Deal also includes potential revenue-sharing agreement with KSJV of USD0-USD30m annually, based on various production hurdles
• Pending final regulatory approval (FERC full notice to proceed) and FID, KBR expects construction mobilization on-site in Q1 2016 and will operate under a full notice to proceed at that juncture. Detailed design and early works production already underway under a limited notice to proceed
• Given the “early works program” that started in 2015 and the modularization of the trains, we expect the “profit” contribution of Magnolia to hit KBR’s financials at a more expedited rate relative to legacy LNG projects like Gorgon and Ichthys. We estimate the Magnolia project could contribute up to USD1.50/sh in incremental earnings spread over 2016-2018, providing enhanced out-year visibility while providing a “stop gap” for other LNG projects rolling off in 2017


From Alembics