As its ticker symbol suggests, Cheniere Energy, Inc. (NYSEMKT:LNG) is a company focused on the liquification and exportation of natural gas to other countries. Let’s take a look at a recent development surrounding the energy player, while broadening our focus to the entire domestic natural gas market.
An important development
The Company recently announced that it had completed financing and began construction on Trains 3 and 4 for its Sabine Pass Liquefaction Project. Each train can liquify approximately 1 billion cubic feet of natural gas per day. Cheniere Energy, Inc. (NYSEMKT:LNG)’s subsidiaries have obtained around $5.9 billion in financing for the project.
The Sabine Project is located in Cameron Parish, Louisiana, well positioned about four miles from the Gulf of Mexico. Cheniere Energy, Inc. (NYSEMKT:LNG) has obtained the necessary FERC and DOE approvals for trains 1 and 2, which are now 26% complete. The Company still has a ways before it reaches profitability, as its first quarter results showing that it is operating at a loss. The Company reported a loss of $117.1 million, at $.54 per share, versus a $56.4 million loss reported in the prior year quarter. This was higher than analysts’ prediction of $.34 per share.
Still, Cheniere Energy, Inc. (NYSEMKT:LNG)’s stock price has performed well, up over 50% year to date, but is down 3.4% in the past month. The stock has a high short float of 5.7%, with over 13 million shares being shorted as of May 15th. The stock is trading well above its 50-day and 200-day SMAs. The stock chart shows a possible head and shoulders topping pattern, with a recent drop below the “neckline” around $28.
In addition, there have been 29 insider sales of shares, representing 2 million shares in the past 3 months. Multiple insider sales can often be a bearish indicator, but it’s tough to be sure. Some hedge fund managers are betting on the eventual profitability of the Company, and that’s what we’re watching the closest. Dan Loeb of Third Point, for example, holds a large position of 4 million shares. Click here to see a discussion of Loeb’s other holdings.
Cheniere Energy, Inc. (NYSEMKT:LNG) has a competitor the natural liquid gas market in ConocoPhillips (NYSE:COP). ConocoPhillips (NYSE:COP) has an ownership interest in the Freeport Liquid Natural Gas Project. The Department of Energy recently approved this project to export domestic liquefied natural gas to countries without a free trade agreement with the United States. The project is still subject to environmental review, but could eventually export up to 1.4 billion cubic feet per day.