Cheniere Energy (LNG) Begins Long-Term Agreement With GAIL

Cheniere Energy, Inc. (NYSE:LNG) and GAIL (India) Limited have started their 20-year Sale and Purchase Agreement to deliver liquefied natural gas sourced from the United States to India.

The liquefied natural gas will be supplied from Cheniere Energy’s Sabine Pass liquefaction facility in Louisiana, with one of GAIL’s first shipments departing from the facility.

The agreement was signed in December 2011 but came into effect from Mar 1, 2018. Per the terms, Cheniere Energy will sell and make available for delivery to GAIL about 3.5 million tons of liquefied natural gas every year.

The agreement is expected to strengthen ties between the companies. Cheniere Energy is likely to gain exposure to one of the fastest growing nations.

Separately, the company announced that its Corpus Christi export terminal in Texas is likely to begin producing its first liquefied natural gas in 2018.

Management stated that the construction of two 0.7 billion cubic feet per day (4.5-million tons per annum) units at Corpus Christi is more than 80% complete.

Cheniere Energy intends to construct up to six trains at Sabine Pass, with each train expected to have a capacity of about 4.5 million tons per annum. In October 2017, the company announced the completion of the fourth liquefaction train, which is set for first commercial delivery in March 2018, under a 20-year sale and purchase contract with GAIL (India) Limited. With the completion of Train 4, total capacity at the export terminal has risen from 13.5 million tons per annum (Mtpa) to 18 Mtpa. Train 5 is under construction and is expected to begin exporting in the second half of 2019. Train 6 is being commercialized and has secured the necessary regulatory approvals.

Cheniere Energy is also developing a liquefaction and export terminal in Corpus Christi, TX. Trains 1 and 2 are under construction, and Train 3 has been commercialized with necessary approvals in place. The facility is expected to come online in 2019.

Price Performance

During the last three months, Cheniere Energy’s shares have gained 13.8% compared with the industry’s 1.3% rally.

Zacks Rank & Key Picks

Cheniere Energy carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Occidental Petroleum Corporation (NYSE:OXY) , Pioneer Natural Resources Company (NYSE:PXD) and ConocoPhillips (NYSE:COP) . All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based Occidental Petroleum Corporation is an integrated oil and gas company. The company delivered an average positive earnings surprise of 24.57% in the preceding four quarters.

Headquartered at Irving, TX, Pioneer Natural Resources Company is an independent oil and gas exploration and production company. The company delivered an average positive earnings surprise of 66.92% in the preceding four quarters.

ConocoPhillips, based in Houston, TX, is a major global exploration and production company. The company delivered a positive earnings surprise of 144.45% in the preceding four quarters.

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