Cheniere Energy, Inc. (LNG - Free Report) recently achieved a major milestone with the commencement of liquefied natural gas (LNG - Free Report) production at its Corpus Christi liquefaction (CCL) project. With production having already begun from the plant, the facility is now ready for its first cargo shipment, possibly within a month or so.
Notably, the CCL project is the third export facility in the United States that produces LNG, after Cheniere’s Sabina Pass and Dominion Energy, Inc’s (D - Free Report) Cove Point terminal. In fact, over the next two years, the nation is likely to have six operating terminals that will be accounting for around 17% of the global capacity. These developments will surely boost United States’ efforts to become a global gas power. The same will in fact make the country the third-largest LNG supplier after Qatar and Australia.
Under the CCL project, Cheniere intends to develop three trains, each having a nominal production capacity of 4.5 million metric tons per year of LNG. While the first train is likely to come online this year or early next year, the second and third train is expected to be operational within the second half of 2020 and in 2023, respectively. It has already entered into long-term contracts with the Indonesian state-owned oil and gas company, Pertamina Corporation and Spain-based Endesa S.A. to supply liquified natural gas from Train 1 of its CCL project to these firms for 20 years.
Importantly, Cheniere currently exports to around 30 countries worldwide, as the firm aims at turning the natural gas glut in the United States into export revolution. Being the first company to receive Federal Energy Regulatory Commission’s (FERC) approval to export LNG from its 2.6 billion cubic feet per day Sabine Pass terminal in Cameron Parish, LA, Cheniere definitely enjoys a distinct competitive advantage. As it is, the company has been exporting LNG from the Sabina Pass since 2016. While four trains under the Sabina Pass project are already functional, train 5 is undergoing commissioning and likely to begin exporting in 2019. Train 6 is being commercialized with the necessary regulatory approvals.
The company, being one of the few LNG exporters of the United States, shipped more than 190 LNG vessels on a year-to-date basis, marking a solid y/y increase of 43%. The company posted robust year-over-year results in the last reported quarter. Cheniere looks well positioned to maintain its revenue growth trajectory over the coming years, on the back of solid operations and long-term contracts. Of late, the company has entered into long-term sale and purchase agreements with CPC and Vitol, which bode well for revenue and growth prospects of the firm, thereby helping LNG generate excellent cash flow visibility for investors. As it is, Cheniere has been witnessing a consistent improvement in revenues over the past few years. Over the last 3 years (2015–2017), the company’s revenues recorded a CAGR of 354.6%.
Cheniere currently carries a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like Hess Corporation (HES - Free Report) and Murphy Oil Corporation (MUR - Free Report) . While Hess currently sports a Zacks Rank #1 (Strong Buy), Murphy Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hess pulled off average positive earnings surprise of 230.48% in the trailing four reported quarters.
Murphy Oil recorded a positive earnings surprise in each of the trailing four quarters, with average beat of 76.16%.
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