By Arasu Kannagi Basil
(Reuters) -Venture Global is seeking up to $110.38 billion valuation in its New York initial public offering, the second-largest U.S. liquefied natural gas producer said on Monday, setting the stage for the first blockbuster stock market flotation in 2025.
The Arlington, Virginia-based company is seeking to raise up to $2.30 billion in what is likely to be the largest listing by an energy company in the U.S. in more than a decade.
Conoco's $4.4 billion offering in 1998 was the biggest energy New York IPO ever by a U.S.-based company, followed by Kinder Morgan (NYSE:KMI)'s $3.3 billion flotation in 2011, according to data compiled by LSEG.
Reuters exclusively reported on Saturday that Venture Global was set to formally pitch the IPO to investors this week.
The company is offering 50 million shares priced between $40 and $46 each.
Global LNG demand has been growing as the world shifts toward cleaner energy. The U.S., a major LNG supplier to Europe and Asia, has emerged as the largest exporter of the superchilled gas, thanks to abundant natural gas reserves and development of LNG terminals along the Gulf Coast.
North America's LNG export capacity should more than double by 2028, according to the U.S. Energy Information Administration.
President-elect Donald Trump's incoming administration is widely expected to end President Joe Biden's pause on LNG export approvals.
"Venture Global's IPO couldn't have been better timed. Investors are eagerly looking for companies that will benefit from Donald Trump's policies and Venture Global ticks the right boxes," said Dan Coatsworth, investment analyst at AJ Bell.
The company has five LNG projects in various stages of development near the Gulf of Mexico in Louisiana, and expects to have total peak production capacity of 143.8 million tonnes a year.
A big risk to the flotation is "multi-billion-dollar arbitration claims being pursued by clients which allege it (Venture Global) reneged on contracts when LNG prices jumped as a result of Russia's invasion of Ukraine," Coatsworth said.
Venture Global has raised roughly $54 billion of capital for its projects and generated about $19.6 billion in gross proceeds from LNG sales as of Sept. 30.
METEORIC RISE
Venture Global was founded in 2013 by two industry outsiders - former investment banker Michael Sabel and financial lawyer Robert Pender.
The two men received a total of $127 million in compensation for the last two years and are expected to be the biggest beneficiaries of a $160 million dividend payout, according to the Venture Global's IPO filing.
Chief Executive Officer Sabel received a total of $70 million for 2023 and 2024 while Executive Co-Chairman Pender received $57 million.
Venture Global has become one of the biggest U.S. LNG exporters, competing with names such as Cheniere Energy (NYSE:LNG), Freeport LNG, and Sempra.
Venture Global began generating proceeds in 2022 when its first facility, Calcasieu Pass, started producing the superchilled gas.
But the facility is still being commissioned. The lengthy testing and optimizing process before commercial operation has led to contract disputes from customers including BP (NYSE:BP), Shell (LON:SHEL) and Edison, over non-receipt of contracted cargoes.
Venture Global has maintained that with the Calcasieu facility still in the commissioning phase, it relieves the company from fulfilling the long-term contracts yet.
The company said in its filing that its compensation package to Sabel, Pender and other executives include base salaries and achieving milestones such as starting commercial operations. Still, neither of its projects have yet reached commercial operations.
Plaquemines, Venture Global's second facility, began producing LNG last month, the first new U.S. LNG plant to start operations since 2022.
Once fully operational, Plaquemines will be among the world's biggest LNG facilities.
The plant is on track to pull 1 billion cubic feet of gas on Monday, according to data from financial firm LSEG.
Sabel and Pender will continue to control over 50% of the voting power after the offering.
Goldman Sachs, J.P. Morgan and BofA Securities are the lead underwriters for the offering.
Venture Global, which has tapped 21 banks for the IPO, will be listed on the New York Stock Exchange under the symbol "VG".
The company said it will use IPO proceeds for general corporate purposes, including funding projects and continuing operations.