LNG 0.00% 46.5¢ liquefied natural gas limited

Does the oil price fall threaten Magnolia and Bear Head LNG plants? We argue not

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    Looking at the share volatility and the fall of oil prices in recent months, investors may be concerned that the risks to the Magnolia project have increased. There are good reasons to believe that these fears may be overstated.

    Magnolia LNG (and all other LNGL projects) will take no commodity pricing risk, purely taking a tolling fee from processing the gas into LNG. The risk therefore lies with the tolling partners, which will be responsible for sourcing the gas and selling the resulting LNG. Should those partners be concerned that profits from LNG trading may not be profitable, they may back out. However, we believe this is unlikely.
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