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Cheniere’s LNG Plants to Get a Fillip From Increasing Feedgas


Bringing in some encouraging news for Cheniere Energy, Inc. LNG, Federal Energy Regulatory Commission (FERC) recently gave approval to two pipeline operators to start up facilities that will boost the amount of feed gas serving Cheniere’s LNG terminals.

FERC gave its go-ahead to Kinder Morgan, Inc.’s KMI Louisiana Pipeline to start up its remaining facilities and serve Cheniere’s Sabine Pass LNG terminal. Further, Williams Companies’ WMB Transcontinental Gas Pipeline was also granted approval to start up facilities on its Gulf of Connector Expansion Project. Notably, Gulf Connector Expansion will provide 475 million cubic feet per day (MMcf/d) of feed gas capacity to various interconnections with Cheniere’s Corpus Christi terminal. The Louisiana pipeline will provide 600 million MMcf/d of transportation capacity to Sabine terminal.

Just a few weeks back, Cheniere commenced production from the Corpus Christi plant and the facility is now ready for its first cargo shipment. Notably, the CCL project is the third export facility in the United States that produces LNG, after Cheniere’s Sabina Pass and Dominion Energy, Inc’s D Cove Point terminal. In fact, over the next two years, the nation is likely to have six operating terminals that will be accounting for around 17% of the global capacity. These developments will surely boost United States’ efforts to become a global gas power. The same will in fact make the country the third-largest LNG supplier after Qatar and Australia.

Importantly, Cheniere currently exports to around 30 countries worldwide, as the firm aims at turning the natural gas glut in the United States into export revolution. Being the first company to receive FERC approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal in Cameron Parish, LA, Cheniere definitely enjoys a distinct competitive advantage. As it is, the company has been exporting LNG from the Sabina Pass since 2016. While four trains under the Sabine Pass project are already functional, train 5 is undergoing commissioning and likely to begin exporting in 2019. Train 6 is being commercialized with the necessary regulatory approvals.

The company, being one of the few LNG exporters of the United States, shipped more than 190 LNG vessels on a year-to-date basis, marking a solid y/y increase of 43%. The company posted robust year-over-year results in the last reported quarter. Cheniere looks well positioned to maintain its revenue growth trajectory over the coming years, on the back of solid operations and long-term contracts. Of late, the company has entered into long-term sale and purchase agreements with CPC and Vitol, which bode well for revenue and growth prospects of the firm, thereby helping LNG generate excellent cash flow visibility for investors. As it is, Cheniere has been witnessing a consistent improvement in revenues over the past few years. Over the last 3 years (2015-2017), the Zacks Rank #3 (Hold) company’s revenues recorded a CAGR of 354.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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