The Oz: Trump’s China deal helps US LNG

Further comment in today's Oz from GV following Monday's Perth recording. My italics for emphasis.

The growing appeal of US LNG exports, as North American gas remains low-priced and plentiful, is being recognised by US investors, leading Mr Vesey to consider ditching LNG Limited’s ASX listing in favour of a US one that might deliver a big valuation uplift.

Speaking before a Melbourne investor briefing yesterday, the Houston-based LNG boss said global buyers were realising it was time to get serious about locking in LNG contracts as a forecast demand shortage loomed early next decade.

“There is a growing consensus that a shortage will start to open up around 2022 and the buyers are starting to take notice,” Mr Vesey told The Australian.

“The sentiment in the market seems to be that people are ready to sign these deals but no one wants to be first. I’ve charged our people with being first — let’s push it and be creative.”

Offtake agreements are the final major step for the Magnolia project, which has cleared all its government approvals and has had BNP Paribas working on a funding plan.

Contracts have proven hard for anyone to strike in an environment of depressed oil prices, a glut of LNG exports as new Australian projects start up and low US gas prices.

But there is a growing feeling, pointed out by Woodside Petroleum chief Peter Coleman last month at his company’s annual investor briefing, that buyers are returning to secure supply before the market tightens.

Last month, the Trump administration announced a trade deal that included agreement that China could receive LNG shipments and engage in long-term contracts with US suppliers.

While it did not appear to actually change the rules, US exporters have said it boosted talks with US LNG suppliers.
Mr Vesey said he had since had a marketing team in China for two weeks that had been in “some very good discussions.”

“We are seeing a response to the Trump administration,” he said.

“Buyers want to get in with the Trump administration and they see striking LNG contracts as a good way to do it.”
Last week, the officially Perth-based LNG Ltd said it would explore rerating the company and a major listing in the US on the New York Stock Exchange or the Nasdaq.

The company was started by Perth entrepreneur Maurice Brand and was originally focused on the Fisherman’s Landing project at Gladstone.

But as that project, which LNG Ltd officially exited last month, looked less promising, more secure gas supply was targeted in the US and the company now no longer has full-time staff in Perth.

Mr Vesey said the valuations being achieved in the US and talked about by new entrants Tellurian and Next Decade have illustrated the type of rerating a US listing could bring.

“We are sitting here farther along than anyone else with about a $US250 million valuation,” he said.

“We felt there was a responsibility to take a look at the US market and see if there was the chance for a more accurate valuation.”

Nasdaq-listed Tellurian is valued at $US2.1bn.

NextDecade has valued itself at $US900m.

http://www.theaustralian.com.au/bus...y/news-story/7c307c5f8e0d39e328fa273c2727cb76

And before you dismiss GV's comments too quickly, worth noting both above are 1-2 years behind MLNG having barely started the FERC process. And they are way up the cost curve. Go figure!

Go LNG!!!