Cheniere, Endesa in Second LNG Pact - Analyst Blog

By Zacks Equity Research,

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Publicly traded energy firm Cheniere Energy Inc. ( LNG ) announced that it has signed a second liquefied natural gas ("LNG") sale and purchase agreement (SPA) with Spanish electric utility firm, Endesa Genercion S.A. The deal involves the sale of about 0.75 million tons per annum (mtpa) of LNG from Cheniere's planned Corpus Christi Liquefaction Project.

The total quantity under agreement now stands at 2.25 mpta, including the 1.5 mtpa LNG SPA signed earlier this month. This additional purchase of 0.75 mtpa will be used by Endesa's parent firm Enel.

The Corpus Christi, TX-based LNG export facility is expected to produce 13.5 mtpa of LNG and has permits for three trains. With these contracts, Cheniere has secured SPAs for its first LNG train, and looks toward securing additional contracts for the facility.  Under this SPA, Endesa would buy the produce at a price indexed to the monthly Henry Hub price, in addition to a fixed price, on a Free on Board basis.

The company expects to reach a final investment decision and commence construction of the facility in 2015. First commercial delivery from the facility under this 20-year agreement is expected in 2018. The SPA also has a 10-year extension option.

Located in Houston, Texas, Cheniere Energy is mainly involved in operations related to liquefied natural gas. The company is the owner and operator of western Cameron Parish, LA-based Sabine Pass liquefied natural gas terminal. In addition, Cheniere Energy possesses and operates Louisiana-based Creole Trail Pipeline.  

Cheniere Energy holds a Zacks Rank #2 (Buy), indicating that it will outperform the broader U.S. equity market over the next one to three months.

In addition to Cheniere, one can consider players from the industry such as Range Resources Corp. ( RRC ), World Point Terminals, LP ( WPT ) and EOG Resources, Inc. ( EOG ). While Range Resources and World Point sport a Zacks Rank #1 (Strong Buy), EOG holds a Zacks Rank #2.

EOG RES INC (EOG): Free Stock Analysis Report

CHENIERE ENERGY (LNG): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

WORLD POINT TER (WPT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: SPA , EOG , LNG , RRC , WPT

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