I live within 50 miles of both Cheniere's Sabine Pass (La. side) terminal and Exxon's Golden Pass (Tx side). I have watched both during the construction phase. The points I make are valid. CQP has only 50% of its capcity with credit worthy customers (Total and Chevron). LNG (the company) doesn't have a Moody's rating does it? I agree that LNG (the company) would be foolish to buy LNG cargo and sell at less than cost, but then again CQP holders ought to hope that LNG is willing to absorb a hit, which, I suspect they could given how many CQP units they own. In essence, they would be taking a loss but making it back on the distribution from the units they own (kind of poor mans subordination). The distribution is indeed safe until 2009 as you pointed out, in fact, if you read the prospectus, they set aside IPO dollars into a reserve fund specifically to pay the distributions while still in construction and ramp up. After that fund runs out, then they have to stand on their own 2 feet. CQP common holders have subordination protection as I remember, so this too is a good thing. I wonder though, if LNG (the company) is doing so well, why they would put themselves on the trading block.....hmmm
And to answer your question, No I am not a short. I never short stocks. I don't like to bet against capitalists. Please enlighten us what the term price is for Nigerian LNG since you seem to be so well in tune with the market. Would seem if it could be locked it for any meaningful time period, LNG (the company) would become an excercise in basic investing and one could simply figure the present value of the difference in what they could buy the cargo for, minus the cost to transport,re-gassify and sell into the market plus the distributions they receive. Maybe the market is doing that now...
What is wrong with calendar arbitrage? Buy spot LNG cargoes in the summer months opportunistically and use the storage capacity to hold the NG until it can be sold at a profit? The problem with this strategy for LNG (the company) is that they don't have the financial wherewithall to frontload their credit line like that. However, their announcement tonight regarding a strategic partner does alleviate some of that pressure.
Speculation is that recent term contracts for LNG have been in the $10 to $16 range per mmbtu. Those were with Qatar and Indonesia. I suspect that Nigeria has something of a risk discount. I have no regasfication facility nor transport at my disposal, and without those there is no real way to gauge the market price.
IMHO the stock market is far from efficient. If it was, LNG (the company) would never have seen its shares go so high in the first place. Without a crystal ball to know what the future of NG prices will be at the Henry Hub, the rest is an exercise in speculation. Cheniere could buy spot LNG cargoes for $14/mmbtu from now until August, and one Cat 5 hurricane could temporarily take out the GoM infrastructure and spike NG to $20. They'd look like freaking geniuses in that scenario.