Why Liquefied Natural Gas Ltd's share price surged today

Liquefied Natural Gas Ltd (ASX:LNG) shares rose as much as 20% today.

a woman

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

Shares of Liquefied Natural Gas Ltd (ASX: LNG) ("LNG Ltd") have skyrocketed today, surging nearly 19% to $1.55 after the company released two market-sensitive announcements this morning. That compares to a 0.7% decline for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

Source: CMC Markets
Source: CMC Markets

Indeed, LNG Ltd has come under enormous selling pressure in recent months, falling from a high of $5 to a low of $1.23 recently. This was largely due to the collapsing oil prices which threatened the economic viability of its various projects.

In a big win for the company today however, it said its wholly owned subsidiary, Magnolia LNG LLC ("Magnolia"), had chosen the KBR-SKE&C joint venture to provide engineering, procurement and construction (EPC contract) work for the Magnolia LNG project.

The EPC contract, costing a little over US$4.35 billion (AU$6.12 billion), is for four LNG production trains with design capacity of 2 million tonnes per annum (mtpa) or greater each; two 160,000 cubic metre full containment storage tanks; LNG marine and ship loading facilities; supporting infrastructure and all required post-FID approvals and licences.

It also includes guaranteed production of 7.6 mtpa, or 0.8 mtpa greater than previous guidance.

LNG Ltd's Managing Director and CEO, Maurice Brand, said: "The total EPC capital cost in the range of US$495 to US$544 per tonne of LNG plant capacity (for the 8 mtpa or greater plant) establishes a new low for U.S. Gulf Coast projects and is substantially lower compared with recent LNG projects around the world" (emphasis added).

The company also believes the deal can provide a "sustainable long-term business platform that can be replicated in future projects."

What's more, the company also announced it had received a final environmental impact statement from the United States Energy Regulatory Commission (FERC), finding limited adverse impacts for the project. When combined, this is great news for the company and its shareholders.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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 »