Liquefied Natural Gas Limited shares jump: Here's why

Up 1,637% in the past 12 months, is there more to come for Liquefied Natural Gas Limited (ASX:LNG)?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Liquefied Natural Gas Limited (ASX: LNG) shares have popped more than 3.5% in mid-afternoon trading to $4.11, while the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is trading up just 0.2%.

Still, that 3.5% jump is nothing compared to the 1,637% gain in the company's shares over the past 12 months. To put that into perspective, a $10,000 investment in LNG on October 1, 2013, would have risen to $163,700 today.

The company has released a string of good news in recent weeks, including the appointment of Mike Mott as Chief Financial Officer (CFO) yesterday, extended the Managing Director's contract out to June 2017, and an extension of the site lease for the company's proposed Fisherman's Landing Liquefied Natural Gas Project at Gladstone, Queensland.

But Fisherman's Landing is not the company's flagship project – rather it's the Magnolia LNG project currently under development in Louisiana, US that is receiving the most attention.

Liquefied Natural Gas has developed its own proprietary technology that allows lower cost, more efficient LNG processing facilities. The Magnolia LNG project is expected to require capital of around US$2.2 billion to produce 8 million tonnes of LNG annually.

By comparison, Woodside Petroleum Limited's (ASX: WPL) Pluto project cost around $15 billion, while Chevron's Gorgon project's estimated costs are currently at US$54 billion – and it's not complete yet. Pluto currently has one plant (train) processing around 4.3 million tonnes of LNG each year, while Gorgon is expected to produce 15.6 million tonnes per annum.

Back in June this year, a number of high profile US investors took substantial stakes in the company, with the Magnolia LNG project tipped to be one of the first US LNG export plants when it becomes operational in 2018.

It seems clear that they plenty of faith in Liquefied Natural Gas (the company), despite the company yet to earn a cent of LNG revenue. The attraction appears to be a combination of its proprietary technology, plus the booming cash flows that should come once the Magnolia project is up and running.

If everything goes to plan, $4.11 may still appear to be a cheap price, but there are some substantial risks still to be overcome.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »