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Liquefied natural gas (LNG) stock analysis for 2014 shows even more potential upside for share prices than years past, as companies get closer to exporting.
That's because several already-approved LNG terminal projects, with a focus on energy-hungry Asian customers, will proceed this year.
In addition, other companies are expected to receive approvals from the Obama administration to move forward with their planned LNG export facilities.
These specific developments will affect a number of individual firms. Check out these four when you're hunting for profits in one of the best energy sectors to buy into today.
LNG Stock Analysis for 2014
LNG Stock Analysis No. 1 - Cheniere Energy (NYSEMKT: LNG)
The first company on the list is a Money Morning favorite, Cheniere Energy (NYSEMKT: LNG). Since Dr. Kent Moors first talked about LNG, Cheniere has gone from $6 to $46 a share.
It was the very first company to receive the nod, in 2011, from the Obama administration to proceed with an LNG export project.
Its Sabine Pass project in Louisiana is the most advanced of the LNG export projects in the United States. It is the only project to hold all the necessary government permits to export LNG.
Cheniere's $12 billion construction project (headed by Bechtel) is well underway on four of a possible six trains (LNG processing facilities). LNG exports, starting at 500 million cubic feet of natural gas per day, are expected to begin from Sabine Pass in 2015.
This year will continue to see forward progress on the company's other planned three-train LNG facility in Corpus Christi, Texas.
In December, Cheniere and Bechtel signed two contracts totaling $9.5 billion to begin construction on its facility in Corpus Christi this year. It should be in operation sometime in 2018. Cheniere has already signed a contract with Indonesia's PT Pertamina to sell some of the LNG from this facility.
The stock is up more than 6% so far in 2014.
LNG Stock Analysis No. 2 - Sempra Energy (NYSE: SRE)
Another LNG-related company to watch in 2014 is Sempra Energy (NYSE: SRE).
Its planned Cameron LNG facility in Louisiana is next on the Department of Energy list to possibly receive the go-ahead for exports to countries without a free trade agreement with the United States. Like Cheniere's Sabine Pass project, it involves conversion of an LNG import facility to an export one.
Major Japanese firms including Mitsui and Mitsubishi are involved in the project. Japan is the world's leading consumer of liquefied natural gas.
Both companies are also buyers of some of the LNG to be exported. In addition, other buyers include Tokyo Electric and GDF Suez. The French firm is Europe's largest LNG importer and the third-biggest seller of LNG in the world.
Sempra (SRE) stock is up 2% this year and 25% over the past year. It comes with a nice 2.74% dividend yield. It currently trades at 22 times earnings compared to the S&P 500's P/E ratio of 19.56.
LNG Stock Analysis No. 3 - ConocoPhillips (NYSE: COP)
ConocoPhillips (NYSE: COP) is in partnership with Michael Smith on the Freeport LNG project in Louisiana. The company is one of the four to date that have Department of Energy approval - received in May 2013 - to proceed.
Freeport LNG also has signed contracts already to sell its LNG (about 2 billion cubic feet of gas a day) overseas to five customers. These include the likes of Japan's Osaka Gas, Chubu Electric, and South Korea's SK.
However, it did delay the start of construction of its facility from the first quarter of 2014 to the second quarter. The company blames a delay in approval from FERC (Federal Regulatory Energy Commission) to proceed.
The Wall Street Journal quotes company spokeswoman as saying FERC approval will occur "more likely late second quarter."
COP has climbed 13% over the past year to around $67 per share, and it's P/E ratio is 10.04 with a 4.09% yield.
LNG Stock Analysis No. 4 Dominion Resources (NYSE: D)
The fourth LNG-related company to look at in 2014 is Dominion Resources Inc. (NYSE: D).
Its Cove Point Maryland project (another import to export conversion) got Department of Energy approval in September.
The $3.5 billion construction project is expected to begin this year, with LNG exports from Cove Point slated to start in 2017. Like the others, it has signed up customers for its LNG exports already. Its customers include Japanese companies Tokyo Gas and Sumitomo along with Indian energy firm Gail.
After Dominion received the government nod, it announced that it would spin off Cove Point LNG.
The company said it would put the new LNG facility and its share of the $1.5 billion Blue Racer Midstream joint venture in Ohio into a master limited partnership (MLP) sometime in 2014.
Dominion stated that the partnership may generate $1 billion of earnings before interest, taxes, depreciation, and amortization annually.
Dominion (D) stock is up 25% in the past year and offers a dividend yield of 3.39.
These facility-related stocks are not the only ones to profit from moving LNG around the globe, as something needs to transport the liquefied gas from port to port. Check out Golar LNG stock - a shipping play on this global energy revolution.
- The Wall Street Journal:
Cheniere Energy, Bechtel Agree to Two Contracts Worth $9.5 Billion
- The Wall Street Journal:
Freeport LNG Pushes Back Groundbreaking on Gas Export Project
Dominion Resources to Form Master Limited Partnership