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Cheniere (LNG) to Repurchase Shares Worth $350M From Icahn

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Cheniere Energy, Inc. (LNG - Free Report) recently declared that it has entered into a purchase agreement to buy back roughly $350 million worth of its common shares owned by Icahn Enterprises (IEP - Free Report) .

The Houston, TX-based liquefied natural gas (“LNG”) company will pay a purchase price of $130.52 per share, the closing price of Cheniere’s common shares on Jun 14, 2022. Cheniere stated that this repurchase, which represents approximately 1.1% of its current market value, is part of the larger $1-billion buyback authorization. LNG also mentioned that it would use its cash in hand to fund this repurchase from Icahn.

The deal involves a purchase of more than 2.68 million shares and is anticipated to be closed by Jun 21, 2022.

Per an earlier agreement, Cheniere agreed to give IEP one board seat for as long as it continued to hold at least 7,741,412 common shares in the company. However, this repurchase deal suggests that Icahn Enterprises’ holding in Cheniere will now fall below the required threshold. As a result of this, Icahn's remaining director designee, Andrew Teno, will resign from LNG's board of directors within two business days of the transaction’s closing.

Cheniere’s President and Chief Executive Officer, Jack Fusco, stated that the repurchase reflects the efficient execution of the company’s long-term capital allocation plans and underscores conviction in Cheniere’s industry-leading LNG platform at a time when environmental priorities and energy security have made natural gas an important focus worldwide. He ended by appreciating Carl Icahn and his Board representatives for their support in making Cheniere what it is today.

Carl Icahn mentioned that his company’s investment in Cheniere is a prime example of its activism efforts and that Icahn Enterprises’ holding was instrumental in appointing CEO Jack Fusco, who unlocked value for LNG. “As we have said many times, when the time for activism is over, we generally take a profit on a portion of our stock. To date, we have made over $1.3 billion in realized and unrealized gains on Cheniere and, even after the sale today, we still remain sizeable owners of Cheniere stock,” Icahn ended.

Cheniere Energy Inc. is primarily engaged in businesses related to LNG through its two business segments: LNG terminal and LNG and natural gas marketing. The company, through its controlling interest in Cheniere Energy Partners L.P., owns and operates the Sabine Pass LNG terminal in Louisiana – North America’s first large-scale liquefied gas export facility.

Icahn Enterprises L.P., formerly known as American Real Estate Partners, L.P., is a diversified holding company engaged in a variety of businesses. Their businesses currently include investment management, metals, real estate and home fashion. IEP is a Delaware master limited partnership.

Cheniere currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the energy space that warrant a look include Riley Exploration Permian (REPX - Free Report) and Marathon Petroleum (MPC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Riley’s 2022 earnings has been revised upward by about 41% over the past 60 days from $3.32 to $4.68 per share.

The Zacks Consensus Estimate for REPX’s 2022 earnings is projected at $4.68 per share, up about 249.2% from the projected year-ago earnings of $1.34.

Marathon Petroleum is valued at around 47.2 billion. Marathon Petroleum beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 65%.

The Zacks Consensus Estimate for MPC’s 2022 earnings is projected at $13.72 per share, up approximately 460% from the projected year-ago earnings of $2.45.

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