Just days after receiving a 6.7% investment from Seth Klarman’s Baupost Group, Liquefied Natural Gas Ltd (ASX: LNG) is set to add three more powerful US investors to its share register.
According to the Australian Financial Review (AFR), Third Point LLC, a US$20 billion-plus fund founded by hedge fund guru Daniel Loeb; Claren Asset Management, a US$8 billion-plus fund owned by The Carlyle Group, and Fairview Capital Investment Management have all taken up stakes in the company. Third Point and Claren are expected to post substantial shareholder notices (more than 5% holdings) in the near future.
Just last week, LNG took US based investors on a tour, which may have prompted the flurry of activity by US investors.
Shares in LNG are up more than 6% today, 68% in the past week alone, and an astonishing 676% since January 2014.
So what’s all the fuss about?
Well, LNG is developing what could be one of the US’s first LNG export plants at its Magnolia LNG Project in Louisiana, USA. Magnolia is expected to process 8 million tonnes of LNG annually when operational in 2018. But perhaps the greatest excitement is that LNG’s proprietary technology means the LNG plant will be massively cheaper than the multi-billion LNG plants being built in Australia.
Magnolia is initially expected to cost around US$2.2 billion – compared to A$15 billion for Woodside Petroleum Limited’s (ASX: WPL) Pluto project for one and Chevron’s Gorgon LNG project which has seen costs blow out to a whopping US$54 billion. While the Woodside and Chevron projects are larger, it seems LNG’s technology allows for very low costs.
If Magnolia rolls out smoothly, LNG’s technology may well be worth as much if not more than the Magnolia project.
With some way to go before Magnolia becomes operational, Liquefied Natural Gas still faces some uphill battles, which are not without risk. But, the arrival of more heavyweight investors on the register may signal that there is still some value to be had.
Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga
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