By Ben Lefebvre
Cheniere Energy (LNG) said Thursday it expects to receive about
$3.4 billion in financing by the end of the month for what will be
the first liquefied-natural-gas export facility in the continental
U.S.
"They have all the capital they need, they have all the
permitting they need," said Will Frohnhoefer, analyst at equity
brokerage BTIG. "I think they're good to go."
The export facility in the lower 48 states would allow U.S.
natural gas producers to export the fuel, a glut of which has
developed thanks to advances in new drilling techniques that have
unlocked natural gas from shale formations throughout the country.
The swelling supplies of natural gas have driven prices to a decade
low of $1.90 a million British thermal units in April, from nearly
$14 in July 2008.
The low prices have crimped the balance sheets of energy
companies extracting the fuel.
Cheniere's financing from eight banks, together with $2 billion
in equity the company offered in May, will allow it to export 1.1
billion cubic feet a day of LNG from its Sabine Pass, La., terminal
by the end of 2015. The Houston-based company expects to close on
the financing at the end of the month and sign a final investment
decision by the end of summer.
Cheniere opened the Sabine Pass facility as an LNG import
terminal in 2008, when it was widely believed that the U.S. would
need to import natural gas to meet its energy needs. But the shale
drilling in recent years has turned that on its head.
Now, low prices in the U.S. are attracting customers from
overseas, where natural gas costs are exponentially higher.
Cheniere has signed long-term supply agreements for 2.2 billion
cubic feet a day of LNG to the U.K's BG Group PLC. (BG.LN), Gas
Natural Fenosa of Spain, Gail India Ltd. (532155.BY) and Korea Gas
Corp. (036460.SE). Japan in particular has lobbied the U.S. to
allow more LNG exports as the country tries to diversify its energy
supply after the Fukushima nuclear disaster last year.
Cheniere already has permits to export LNG, which were issued
before low natural gas prices stirred interest in exports. But the
U.S. Department of Energy has suspended approval of new LNG export
permit applications as it studies the possible economic effects of
LNG exports. Its report is expected after November.
After trading lower through most of Thursday's session, natural
gas rebounded following the Cheniere announcement. Nymex natural
gas futures settled 0.7% higher at $2.874 a million British thermal
units.
Cheniere also expects to lock in another round of financing by
the end of 2013 to construct an additional 1.1 billion cubic feet a
day in export capacity at Sabine Pass. The company used Bank of
Tokyo-Mitsubishi UFJ, Ltd., Credit Agricole Corporate and
Investment Bank, Credit Suisse Securities (USA) LLC, HSBC, J.P.
Morgan Securities LLC, Morgan Stanley, RBC Capital Markets, and SG
Americas Securities LLC to secure its current financing.
--Jerry Dicolo contributed to this article.
Write to Ben Lefebvre at ben.lefebvre@dowjones.com
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