LNG 0.00% 4.3¢ liquefied natural gas limited

SMH: LNG Ltd soars on takeover rumour

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    Aspiring US gas exporter Liquefied Natural Gas Ltd has profited from another buoyant trading session with its shares now up 66 per cent this week. Photo: Robert Shakespeare

    Aspiring US gas exporter Liquefied Natural Gas Ltd has profited from another buoyant trading session with its shares now up 66 per cent this week with speculation of a possible takeover tilt rumoured in the market.

    The former market darling has suffered a disastrous 12 months with its market capitalisation slashed from nearly $2 billion a year ago to less than $300 million last week.

    The share price fall was attributed to the worsening global energy price outlookand delays in signing up customers for its $US2.2 billion ($3 billion) Magnolia LNG project in Louisiana.

    However, the combination of an 80 per cent surge in the price of oil in the last few months, better confidence around offtake agreements and increasing speculation it may be a takeover target has boosted sentiment.

    LNG Ltd shares rose by up to 45 per cent in intraday trade on Wednesday, its biggest gain in nearly three years, before retreating to close up 25 per cent to $1.02, handing the company a market value of $516 million.

    That followed a 13 per cent share price jump on Tuesday and 16 per cent bounce on Monday as investors surged back into the stock.

    "I think it's a clear takeover target on the basis it is construction ready and proven to have the lowest capital cost for development of a greenfield LNG site," said Martin Corolan, an executive director with Foster Stockbroking which acted as a lead manager in a $174 million equity raising for LNG Ltd last year.

    "The stock was heavily sold off on energy sentiment and our view is the risk/reward begins to look appealing again as it moves towards signing its final long-term supply contracts and achieving a final investment decision which we think could occur this calendar year."

    The company on Tuesday said it was unaware why its shares had run up sharply since last week.

    One source close to LNG Ltd said Woodside's call to put a cap on any future deals at about $US1 billion meant it could be an obvious suitor for the junior LNG hopeful as it gets close to securing supply deals and making a final investment decision on Magnolia.

    LNG Ltd is thought to be making good progress in its pitch to sign up customers and has opened talks with buyers in Asia, Latin America and Europe, according to the source.

    While the stock still remains down 73 per cent on the $3.71 level where shares were trading a year ago, chief executive Greg Vesey told Bloomberg on Wednesday the interest in the stock may reflect that conversations with buyers from the proposed LNG project are becoming more serious.

    LNG Ltd had been targeting a final investment decision on the Magnolia project in the first half of 2016 but sources now expect that to be delayed until year-end.

    A key regulatory decision from the US Department of Energy is expected by August.

    A presentation released on Wednesday by the company as part of a New York investor roadshow this week said the Magnolia project would have costs per tonne in the range of $US549 to $US628 depending on the final design outline.

    Woodside Petroleum, which in March called off its plans for a $US40 billion-plus floating LNG project at the Browse fields off the far northwest coast, said this week it is aiming to bring capex for LNG plants down to $US500 per tonne, from as high as $US2400 tonne two years ago, and wants to construct plants in half the time.

    http://www.smh.com.au/business/lng-ltd-soars-on-takeover-rumour-20160608-gpefvh.html

    Go LNG!
    Last edited by Timbogold: 08/06/16
 
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