A Race for the Rest, Cheers for Cheniere

11/12/2014 10:03 pm EST


Jim Jubak

Founder and Editor, JubakPicks.com

Already the leading US company most likely to be the first to export liquefied natural gas (LNG) in 2015, MoneyShow's Jim Jubak thinks the news that it has just secured funding for its second Corpus Christi plant may be even better.

It’s increasingly a race with the bulk of profits going to the first few US exporters of liquefied natural gas (LNG), while the laggards in the US, Australia, and elsewhere, are stuck with half-finished projects that have been mothballed for a lack of funding.

If most of the liquefied natural gas plants now planned (and, in some cases, under construction) actually reach production, the LNG market is likely to move from very profitably under-supplied now, to adequately supplied (with lower profits) around 2020, to oversupplied (with low profits) by 2025.

That’s why the news—that Cheniere Energy (LNG) (already the US LNG producer likely to be the first to ship LNG in 2015 from its Sabine Pass plant) has secured funding for its second Corpus Christi plant to the tune of $2.5 billion from an investment group that includes EIG Management and RRJ Capital—is great. RRJ Capital will have the right to transfer part of the $1 billion in convertible notes that it is buying to Singapore’s state-owned investment company Temasek Holdings. For RRJ Capital and Temasek, this is a second investment in Cheniere. The two investors bought shares in Cheniere in 2012 for $468 million. Temasek sold 9.2 million Cheniere shares in 2013 after the stock had tripled.

Cheniere Energy plans to begin construction on the Corpus Christi project in 2015.

Shares of Cheniere, a member of my Jubak’s Picks portfolio, are up 69% in 2014, having recovered from  $61.90 on October 14 to close at $71.87, down 1.3% on the day, on November 12.

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