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Sempra Energy' (SRE) Cameron LNG Train 1 Begins Operations

Zacks Equity Research

Sempra Energy’s SRE subsidiary — Sempra LNG — recently announced that the first train of the Cameron LNG's liquefaction-export project has initiated service. The Cameron LNG project is located in Hackberry, LA. The project is a joint venture (JV) of Sempra LNG and three project co-owners. Notably, the company indirectly holds 50.2% equity interest in Cameron LNG JV.

Details of the Project

Sempra LNG is constructing a natural gas liquefaction export facility, which includes three trains.  The projected export capacity of the trains is 12 million tonnes per annum (Mtpa) of LNG, or nearly 1.7 billion cubic feet per day (Bcf/d) of natural gas. The JV has 20-year liquefaction and regasification tolling capacity agreements with affiliates of TOTAL S.A. TOT, Mitsui & Co., Ltd. and Japan LNG Investment, LLC, a company jointly owned by Mitsubishi Corporation MSBHY and Nippon Yusen Kabushiki Kaisha.

Construction of the three trains began in the second half of 2014. In May 2019, the construction of one of the trains was completed and the first commissioning cargo carrying LNG was shipped. On Jul 26, 2019, Cameron LNG JV received authorization from the FERC to place Train 1 in service. Production from Train 2 and 3 can be expected in the first and the second quarter of 2020, respectively.  When commercial, all three trains are expected to generate $400-$450 million annual earnings for Sempra Energy.

Investments

The company is making systematic investments on its infrastructure development and LNG development projects. For the 2019-2023 period, the company expects to make investments of approximately $18.2 billion that includes $13.3 billion for California Utilities and $4.9 billion for other subsidiaries. The company will also fund the capital projects in Mexico and South America along with the development of LNG projects.

Increase in LNG Export

The U.S. Energy Information Administration (EIA) estimates that U.S. LNG exports set new records in June and July  at 4.8 (Bcf/d) and 5.2 Bcf/d, respectively. Sempra Energy with its Cameron LNG project is well positioned to benefit from higher demand for LNG.

Price Performance


In the past 12 months, shares of the company have rallied 21% compared with the industry’s rise of 8.5%.

Zacks Rank & Key Pick

Sempra Energy currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chesapeake Utilities Corporation CPK is a better-ranked stock holding Zacks Rank #2 (BUY). The company’s long-term (3 to 5 years) earnings growth is pegged at 7%. Shares of Chesapeake Utilities have outperformed the industry in the past 12 months.

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