As if a 115% gain since early January wasn't enough, shares of Liquefied Natural Gas Ltd (ASX: LNG) ("LNGL") have skyrocketed another 17.6% today to be trading at $4.88, after having hit an all-time high of $5 earlier in the session.
Source: Yahoo! Finance
The massive gain followed a market-sensitive announcement this morning which showed that the company is getting closer to signing a landmark binding tolling agreement for its Magnolia LNG project, located in Louisiana.
LNGL said that Meridian LNG Holdings Corp had notified it of its intentions to progress on a 20-year liquefaction tolling agreement with Magnolia (LNGL's 100% owned project company) for a total of 2 million ton per annum (Mtpa), after having signed a 20-year gas sales agreement with E.On Global Commodities SE. Notably, Magnolia will comprise of four liquefaction trains, each of which will be capable of producing up to 2Mtpa of LNG, equating to a total of 8Mtpa.
You can read more about the agreement, here.
Are you too late to the Liquefied Natural Gas Ltd party?
Investors need to remember that Liquefied Natural Gas Ltd's Magnolia project, together with its Bear Head project (located in Nova Scotia, Canada) are still years away from production while regulatory and operational risks also remain high. Exacerbated by the enormous run-up in share price enjoyed by LNGL over the past few months (it's also up more than 1,500% since January 2014), an investment in the stock today is by no means risk-free.
However, the pending agreement with Meridian is a huge step in the right direction for LNGL and could be just the beginning of great things to come. Investors considering building a position in the company would be wise to take a small bite to begin with, whilst also ensuring they maintain a diversified portfolio.
