Infrastructure and LNG market - Stifel Updates
Posted: Mon Mar 04, 2019 12:33 pm
Energy Infrastructure - LNG Bus Tour Takeaways; Still a Knife Fight in the Gulf Coast - Benjamin J. Nolan - This week we hosted our third annual LNG bus tour in Houston meeting with 10 different companies involved in various aspects of the energy business including LNG infrastructure, E&C, and pipeline development. The LNG market is piping hot with the announcement of Calcasieu Pass FID, Golden Pass FID, and the boatload of international projects like LNG Canada, Arctic LNG 2 in Russia, expansions in Qatar, and Mozambique LNG. New Gulf Coast projects will certainly cross the finish line, but price is unquestionably the most important factor unless you have the balance sheet wear risk. Consequently, we come away believe the support functions such as equipment and pipelines may be the best way to play U.S. LNG growth.
Cheniere Energy, Inc. (LNG, $64.00, Buy; Target $80.00) - China's Knocking and Cheniere is Ready to Open the Door - Benjamin J. Nolan - The Wall Street Journal is reporting that the U.S. and China are close to a trade deal that would lift some tariffs. Importantly as part of the reported deal, China would buy $18 billion of LNG from Cheniere. While no exact terms were given, assuming standard 20-year contracts, this would imply $900 million of additional annual revenue to Cheniere relative to just over $8 billion of total sales in 2018. We expect any deal would also likely put an end to the current 15% tariff on U.S. LNG into China, certainly opening the door to other exporters. Thus should this change in trade policy materialize, we believe it would be beneficial to all U.S. LNG equities, but first and foremost to Cheniere (LNG, $64.00, Buy).
Cheniere Energy, Inc. (LNG, $64.00, Buy; Target $80.00) - China's Knocking and Cheniere is Ready to Open the Door - Benjamin J. Nolan - The Wall Street Journal is reporting that the U.S. and China are close to a trade deal that would lift some tariffs. Importantly as part of the reported deal, China would buy $18 billion of LNG from Cheniere. While no exact terms were given, assuming standard 20-year contracts, this would imply $900 million of additional annual revenue to Cheniere relative to just over $8 billion of total sales in 2018. We expect any deal would also likely put an end to the current 15% tariff on U.S. LNG into China, certainly opening the door to other exporters. Thus should this change in trade policy materialize, we believe it would be beneficial to all U.S. LNG equities, but first and foremost to Cheniere (LNG, $64.00, Buy).