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Cheniere Energy, Woodside Pen 20-Yr LNG Sale and Purchase Deal


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An affiliate of midstream energy company Cheniere Energy Inc. (LNG - Snapshot Report) , Corpus Christi Liquefaction LLC, has signed a liquefied natural gas (LNG - Snapshot Report) sale and purchase contract with Woodside Energy Trading Singapore Pte Ltd – a subsidiary of Australian petroleum exploration and production company, Woodside Petroleum Limited.

Per the 20-year agreement, Woodside will buy roughly 0.85 million tonnes of LNG every year (mtpa) from Corpus Christi Liquefaction’s under-construction export terminal near Corpus Christi, TX. However, Woodside will start purchasing LNG once the second LNG train of the facility is operational. The Corpus Christi Liquefaction project which is being developed will operate up to three trains with a total capacity to produce 13.5 mtpa of LNG.  

Cheniere Energy revealed that the agreement can be extended up to 10 years. The company added that it will sell LNG on a free on board basis under which it will incur the shipping costs. Moreover, Cheniere Energy is likely to receive 115% of the monthly Henry Hub price plus a fixed component from the sale. LNG from the second train will be delivered to Woodside from 2019.

To date, Cheniere Energy has signed 6 mtpa LNG SPAs and is discussing such contracts with several other parties.

Houston, TX-based Cheniere Energy currently carries a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next one to three months.

One can also consider players in the oil and gas exploration and production sector like Encana Corporation (ECA - Analyst Report) , QEP Resources Inc. (QEP - Analyst Report) and VOC Energy Trust . All the stocks sport a Zacks Rank #1 (Strong Buy).