[BCOLOR=rgba(255, 255, 255, 0)]Just to expand and bring attention to JB's comments on the recent Oil & Money report titled "Who's Ahead in Surfing Secknd US LNG Wave?"[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]“There really is a distinct separation between those first five projects and the rest of the projects that are planned,” said Magnolia COO John Baguley. [/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]While the first wave created a temporary oversupply in the market, delaying many new projects, demand is expected to outpace supply in the 2020s, Baguley said. A recent study by Shell predicted that demand would grow 4 percent to 5 percent each year between 2015 and 2030.[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]Magnolia LNG[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]Magnolia was Oil & Money’s No. 2 pick because of how advanced it is in the development process, according to the report.[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]The project, backed by Australia’s LNG Ltd., has approvals from both the Federal Energy Regulatory Commission and the Department of Energy, and its primary construction contract in place. All it’s waiting on is buyers for the offtake before making final investment decision.[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]“We were very happy to be listed as number two,” Baguley said. “I was a little surprised we weren’t listed as number one.”[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]The report says Magnolia’s unique design will allow it to produce LNG in smaller wedges. The facility will produce up to 8 million tons per year using four liquefaction trains, each with an annual capacity of 2 mtpa — a smaller train size than most. [/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]“Nobody in the world today wants to buy large volumes of LNG all at once,” Baguley said. “Today the buyers are looking at 1 to 2 million tons at a time, and so they like the fact that our train size aligns with their purchasing aspirations.”[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]Baguley said he’s “a little puzzled” by the lack of urgency among buyers. Now would be the ideal time to make commitments, he said, since commodity prices are low and demand is expected to increase by the time construction would wrap up on a new project.[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]“I really don’t understand what everybody’s waiting for,” he said. “The buyer’s market just doesn’t seem to go forward. It’s a curious situation.”[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]He expects that once the first buyers make commitments, the rest will follow.[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]It's been a while since I felt the need to comment so here goes. [/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]I'd remind folks that SHs must be given 1 month's Notice of Nov's AGM. As the review into LNG's potential NA listing is nearing completion (no brainer IMO), expect an ann. by 18 Oct. That should be the catalyst for a rerate, though accept BTAs are THE transformational event we are all waiting for.[/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]Whilst LNG is a plaything for algos, the sp simply doesnt reflect LNGs inate value. With CRs for BHs neighbour Goldboro ($50M, way behind BH with approvals), Total's $250M investment in Driftwood/ Tellurian, folks underestimate the deep pool of capital available for energy investments in NA. Throw in Stonepeak's $1.5bn, EPC certainty and God Forbid not BTAs are signed until late 2018 when LMG's CMP is exhausted and there are a myriad of ways for additional capital without significant SH dilution. [/BCOLOR]
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[BCOLOR=rgba(255, 255, 255, 0)]Painful as the share price is, I'm reminded Seth Klarman's Baupost holds 12.2% and if we all feel sick at the price decline, imagine how this value investor feels. Bought from HQC during their sell down in 2014, bought more on market (helping to drive the explosive sp northwards) and now the drop to below(!) that 50c CR price. [/BCOLOR]
LNG's prospects are not as bleak as the sp would suggest esp. as the market rebalances ahead of the next wave. Rereading the Annual Report comments from PC & GV should make that abundantly clear.
The question is, do you have the capital to buy more at this knockdown price?!
Go LNG!!!
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