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Cheniere shares up on 'Buy' rating, credit upgrade

NEW YORK (AP) -- Shares of Cheniere Energy Inc. rose Friday, boosted by optimism that turmoil surrounding the natural gas company's future has calmed.

THE SPARK: A Citi analyst reinstated coverage of Cheniere with a "Buy" rating and a $26 price target. Also on Friday, Standard & Poor's Ratings Services raised the Houston-based company's non-investment grade corporate credit rating by two notches to "B+" from "B-."

THE BIG PICTURE: Federal regulators in April approved the construction of Cheniere's Sabine Pass LNG terminal in Cameron Parish, La. It's the first large-scale natural gas export facility in the U.S. The company expects the facility to be operational as early as 2015.

There's greater emphasis on exports now with the country awash in more natural gas than it could consume for years to come. So much natural gas has been produced in the U.S. that storage facilities may be reaching full capacity. Prices have been driven to record lows by those huge supplies.

THE ANALYSIS: Analyst Faisel Khan said that over the past year, Cheniere has taken steps to lower its risks, noting that it's secured a license to export liquefied natural gas and received a permit to start construction on the Sabine Pass terminal.

At the same time, Cheniere has signed contacts to sell 16 million tons per year of natural gas and secured billions in financing for its projects. The company's stock has fallen significantly, dropping about 30 percent from its April peak, he said.

S&P said its upgrade of Cheniere's credit rating stemmed from the company's recent repayment of $284.5 million in debt due with proceeds from equity offerings totaling about $682 million since the end of last year.

The ratings service said that the remaining proceeds and lower debt levels stemming from the repayment of $580 million in debt so far this year have boosted the company's cash position and will allow it to repay the $205 million in debt maturing in August.

THE SHARES: Up 58 cents, or 4.5 percent, to $13.62 in midday trading, after peaking at $13.94 earlier in the day. Over the past 52 weeks, the company's shares have traded between $3.17 and $18.92.