Edison issues outlook on Liquefied Natural Gas Ltd (LNG AU; LNGLY US)

LONDON, UK / ACCESSWIRE / February 13, 2018 / Liquefied Natural Gas’s (LNGL) (OTC PINK: LNGLY) (ASX: LNG) Magnolia development is up to 30 months ahead of other US-based greenfield liquefaction plants in regulatory approvals, putting it in prime position for buyers/traders looking to take advantage of the expected rebalancing of the LNG market in 2022-23. With low capex/opex/gas prices, the project has the potential to be very lucrative for partners selling to Europe/Asia. As a result, we now expect LNGL to sign tolling agreements and move towards FID in 2018, with first production in 2023. We have updated our valuation, which falls from A$1.25/share (US$3.79/ADR) to A$1.00/share (US$3.23/ADR). On a longer-term basis, this valuation should grow as the project is de-risked by tolling agreements and moves towards first LNG.

We retain our risked DCF approach which implies a valuation of A$1.00/share (US$3.23/ADR). This has fallen from A$1.25/share, mainly due to refined assumption inputs (including taxes and interest rates), timeline and exchange rates. While this valuation suggests substantial upside at this point, we note there is significant uncertainty on timelines and project delivery. However, we firmly believe the project is in a near unique position to deliver low cost LNG from US shale gas and we would expect our valuation to increase markedly as and when tolling agreements can be signed, FID taken and first LNG approaches.

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