Cheniere Energy, Inc.
) announced that it will get the much needed financing to set up
the country's first liquefied natural gas export facility in
Louisiana. Eight banks have assured a cumulative $3.4 billion to
develop the export facility.
The export facility will be able to export 1.1 billion cubic
feet a day by the end of 2015 and will surely ease out the mounting
stock piles of natural gas. Moreover, the export of liquefied
natural gas will correct the declining natural gas prices in the
United States has abundant reserves of natural gas and its clean
burning nature makes it environmentally friendly. However, improved
drilling techniques from oil and gas operators in addition to its
natural abundance led to an oversupply glut and plummeting prices
in the market.
Despite the soft drilling approach undertaken by many operators,
the natural gas reserves held in underground storage in the lower
48 states rose by 33 billion cubic feet (Bcf) for the week ended
July 6, 2012, above the guidance range (of 24-28 Bcf gain) as per
the analysts surveyed by Platts, the energy information arm of
McGraw-Hill Companies Inc.
Natural gas prices dropped 63% from the 2011 peak of $4.92 per
million Btu (MMBtu) in June to a 10-year low of $1.82 in late April
2012 (referring to spot prices at the Henry Hub, the benchmark
supply point in Louisiana). The declining natural gas prices forced
the U.S. oil and gas operators to trim down natural gas activities
and concentrate on liquid operations.
We believe this new export terminal will benefit the U.S oil and
gas operators, whose major source of revenue comes from natural gas
activities. The export market will open new avenues for natural gas
skewed operators like
Devon Energy Corporation
SandRidge Energy Inc
) among others.
We believe this liquefied natural gas export facility armed with
the necessary funding and government approval can act as a game
changer in the U.S. natural gas industry. Increasing global demand
will help to bring down the U.S. natural gas stock pile and at the
same time assure a fair return to the producers of natural gas.
Natural gas, despite the weak current prices, is expected to fuel
most of the power needs in the coming decades.
Based in Houston, Texas, Cheniere Energy is an energy company
mainly dealing with liquefied natural gas related businesses.
Cheniere Energy presently holds a Zacks #3 Rank, which translates
to a short-term Hold rating.
CHESAPEAKE ENGY (CHK): Free Stock Analysis
DEVON ENERGY (DVN): Free Stock Analysis Report
CHENIERE ENERGY (LNG): Free Stock Analysis
MCGRAW-HILL COS (MHP): Free Stock Analysis
SANDRIDGE ENRGY (SD): Free Stock Analysis
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