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Cheniere Energy, Inc. Message Board

  • juliazxawg juliazxawg Nov 23, 2011 9:57 AM Flag

    LNG actually Citi puts it as high as $45 a share

    LNG from Citi

    Cheniere Energy Inc (LNG)
    Phase 1 Sold Out; FERC & Financing Expected Soon; Target $19

    Contract – Yesterday, Cheniere (through its subsidiary),n announced it entered into a sale and purchase agreement (SPA) with a subsidiary of Gas Natural Fenosa (GNF), the largest integrated gas and power company in Spain. GNF agreed to take 3.5 mtpa (~0.5 Bcf/d) of LNG for 20 years for a fixed fee of $2.49 MMbtu. This is higher than the BG deal at $2.25 MMbtu. The first shipment will begin upon the second train being built, and will likely become operational in the second half of 2016. The agreement is contingent on regulatory license approval and securing necessary financing for construction.

    Phase 1 Ready – With Cheniere’s first phase fully contracted,n we estimate the company could move to begin construction in 1H’12 of the $3.9 billion 8 mpta facility. We estimate this first phase will generate nearly $800 mm in EBITDA starting in 2016. We estimate Cheniere could earn another $85 mm in sales of excess cargoes during the winter and another $50 mm in revenues from the procurement of natural gas for their customers. In total, we estimate 2016 EBITDA could approach $1 billion from the phase 1 facility. We believe a final environmental assessment from the FERC should be forthcoming within the next 30 days with a potential final ruling on the construction permit in either January or February.

    Upside Potential – Assuming similar revenue, operating andn capital metrics for Phase 2, we estimate EBITDA for both phases would exceed $2.0 billion in 2018. We estimate that LNG and CQP could be worth $45 per share and $27 per unit. At this point we are not ascribing any value for Phase 2; however, we believe the demand is there.

    Recommendation – We reiterate ourn Buy-High risk rating on LNG. We are increasing our target price to $19 per share. We maintain our Neutral rating on CQP. Our new estimate includes the updated cost of construction for the liquefaction trains, revised tariffs, and revenues associated with transporting gas through the Creole Trail pipeline for the procurement of natural gas.

    Sentiment : Strong Buy

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