Up 46% in the past month, shares of wonder-stock Liquefied Natural Gas Ltd (ASX: LNG) (LNGL) are up 5% today, to around $3.40 per share in early afternoon trade.
Whilst investors have been eagerly awaiting news from the company regarding its LNG tolling and export facility, named Magnolia, in Louisiana, USA; it's been a host of other positive commentary and a rebounding oil price which have given support to its share price of late.
Binding tolling agreements and regulatory approvals remain important catalysts for Magnolia to reach financial close by mid-2015. However further north, in Nova Scotia, Canada, the company is developing another LNG tolling site, named Bear Head LNG.
LNGL purchased the Bear Head LNG facility in July 2014 from a subsidiary of Anadarko Petroleum. It is aiming to obtain all regulatory clearances for the project by mid-2015.
Today's announcement from LNGL highlighted that recent findings from the Canadian Environment Assessment Agency (CEAA) are a "major step" forward in the Bear Head regulatory process. The company noted CEAA had reviewed the additional Bear Head project information and concluded:
- The design of the project will be substantially the same as was previously submitted to CEAA.
- Since some of the construction has been completed, the CEAA Act 2012 does not apply to the LNG component of the project; and
- The proposed installed gas-fired power generation is not considered a trigger for CEAA 2012, since the project will not use natural gas to generate electricity.
Buy, Hold or Sell?
Up 924% in the past 12 months, LNGL has been a great investment for those investors – like myself – who are lucky enough to have held the stock in recent times. However it's important to note that despite being a $1.56 billion company included in the S&P/ASX200 (ASX: XJO) (INDEX: ^AXJO), LNGL's future is still uncertain.
Indeed at $3.40 per share, the risk-reward trade-off does not appear anywhere near as promising as it was 12 months ago. In saying that however, I continue to hold a large chunk of shares because if it can secure necessary approvals and binding tolling agreements, then move onto construction, its share price will appear cheap at today's prices (in hindsight!).
