What’s the smartest way to play the LNG Boom?

The Liquefied Natural Gas (LNG) industry is undergoing a massive production-led boom both in Australia and North America at present. Investors looking to gain exposure to LNG have a number of appealing opportunities – here are a few of them.

  1. Seven Group Holdings Ltd (ASX: SVW) is controlled by savvy billionaire investor and media magnate Kerry Stokes and run by Managing Director Don Voelte who was previously head of Australia’s leading oil and gas group Woodside Petroleum Limited (ASX: WPL).
  2. It appears likely that Seven Group will gain control of Nexus Energy Limited (ASX: NXS). Nexus is currently in administration – so there are obviously some issues. However if Seven does acquire Nexus it will gain control over a number of appealing assets including a 15% interest in the Crux gas development project in the Browse Basin. Crux could potentially develop a floating LNG gas and liquids facility.
  3. Liquefied Natural Gas Limited (ASX: LNG) has been one of the stand-out stocks of the year – its share price has risen 1,926% in 12 months and has attracted high profile investors including Seth Klarman’s Baupost. The company is currently developing the Magnolia LNG facility in the USA utilising its patented LNG plant technology.
  4. PNG LNG is Oil Search Limited’s (ASX: OSH) single largest exposure – the development project recently entered production ahead of schedule and has set the scene for a step-change in earnings for the group. It has also opened up the potential for further growth and expansion in PNG for Oil Search.

The smartest play

While all of the above companies offer exposure to the burgeoning LNG industry, personally I think the potential for Stokes and Voelte to create significant value for Seven Group’s shareholders through a shrewd acquisition of Nexus is particularly enticing and a space worth watching.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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