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Cheniere (LNG) Moves FERC to Defer Corpus Christi Expansion

·5 min read

Cheniere Energy Inc. LNG recently asked the Federal Energy Regulatory Commission (FERC) for extra time to complete and operationalize its planned expansion at the Corpus Christi liquefied natural gas (LNG) plant in South Texas, citing challenges triggered by the COVID-19 outbreak.

When the FERC authorized Stage 3 construction in November 2019, it granted Cheniere five years or until November 2024 to complete the project.  Management stated that the energy player, which is one of the country's top gas customers and the largest LNG exporter, will require time until June 30, 2027 to complete the stage three of the Corpus project.

Due to the severity of the prevalent pandemic, unprecedented economic and logistical conditions hindered commercial development and prevented LNG from making a timely final investment decision (FID) on the stage three project to follow the existing approved construction schedule.

However, with the market conditions improving, Cheniere raised optimism about proceeding with the project in 2022, noting considerable growth in global LNG demand and its ramped-up long-term contractual activities in 2021. LNG and its affiliates secured about 6 million metric tons per year (mmty) of long-term contracts in the last 12 months alone, which coupled with the previously signed long-term deals, indicate that commercialization for the Stage 3 Project is nearing completion.

Cheniere now plans to complete the stage three of the FID program next year. The FERC approved a 60-month building schedule. The venture will add seven midscale liquefaction trains with a total capacity of 11.45 million mmty of LNG production. The constructions of the facility's 21-mile, 42-inch diameter pipeline and an LNG storage tank were also approved by FERC. At the moment, three liquefaction trains with a total capacity of 15 mmty are in operation at the terminal.

Apart from the Corpus Christi Project, Cheniere’s Sabine Pass is North America’s first large-scale liquefied gas export facility. LNG constructed six trains in all at the Sabine Pass with each train expected to have a capacity worth 4.5 Mtpa. The run-rate of LNG production is projected within 4.7-5 Mtpa.

While Trains 1 to 5 are functional, Cheniere recently informed that it loaded its first cargo from the Train 6 expansion at the Sabine Pass terminal in Louisiana. The terminal also has a regasification capacity of approximately 4 billion cubic feet per day with almost 50% reserved for Chevron and TotalEnergiesunder long-term agreements.

Zacks Rank & Key Picks

Cheniere currently has a Zack Rank #3 (Hold). Investors interested in the energy  sector might look at the following stocks worth considering with a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum Corporation OXY is an integrated oil and gas company with significant exploration and production exposure. OXY is also a producer of various basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020 end, Occidental Petroleum's preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.

In the past year, shares of Occidental Petroleum have surged 99% compared with the industry's growth of 96.6%. OXY's 2021 earnings are expected to soar 151.4% from the year-ago reported figure. Occidental Petroleum has also witnessed eight northward estimate revisions in the past 60 days. In the third quarter, OXY achieved its divestiture target of $10 billion by inking a deal to sell off its interest in two offshore Ghana assets for $750 million.

PDC Energy PDCE is an independent upstream operator dealing in exploration, development and production of natural gas, crude oil and natural gas liquids. PDCE, which reached its present form following the January 2020 merger with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020 end, PDC Energy's total estimated proved reserves were 731,073 thousand barrels of oil equivalent.

In the past year, shares of PDC Energy have gained 169% compared with the industry's growth of 108.6%. PDCE's earnings for 2021 are expected to surge 273.4% from the prior-year reported figure. In the past 60 days, the Zacks Consensus Estimate for PDC Energy's 2021 earnings has been raised 26.8%. Earnings of PDCE beat the Zacks Consensus Estimate in all the last four quarters, the average being 51.06%.

Callon Petroleum Company CPE solely focuses on exploring, and producing oil and gas resources in the Permian Basin. CPE boasts an impressive footprint throughout the core of the Permian Basin, the highest-producing shale play in the United States. CPE, currently valued at $2.9 billion, entered the basin in 2009 and has been strengthening its foothold in the region ever since.

In the past year, shares of Callon Petroleum have soared 234.6% compared with Zacks Exploration and Production industry's growth of 90.7%. CPE's 2021 earnings are expected to skyrocket 222.7% from the prior-year reported figure. CPE currently has a Zacks Style Score of A for both Growth and Momentum. CPE has witnessed six upward revisions in the past 60 days.

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