Liquefied Natural Gas Ltd (ASX: LNG) stunned investors today as its shares soared as much as 12% to a high of $3.09, before retreating marginally to trade at $3.05.
Liquefied Natural Gas was the ASX's glory stock for much of 2014 and soared to a record high of $5.00 per share in April this year – a stunning 16-month return of more than 1,650% (you read that correctly). But it's been all downhill since that time with the stock shedding more than half its market price, hitting a low of just $2.49 late last week.
Today's gain will certainly come as a relief for shareholders and comes on the back of a lift in oil prices overnight as a result of strong Chinese demand for the resource. International shipments of liquefied natural gas, or LNG, are generally price indexed to crude oil meaning that a lift in oil prices is beneficial to the LNG market as well.
Another factor likely benefiting Liquefied Natural Gas's share price today is news that Valinor Management, one of the company's major shareholders, has increased its stake in the business – possibly taking advantage of the recent price slump.
According to a filing on the ASX, the New York-based hedge fund acquired nearly 6.9 million shares in the company, lifting its stake from 7.96% to 9.32%.
Indeed, Liquefied Natural Gas has recently signed its first legally binding tolling agreement with Meridian LNG Holdings Corporation which covers capacity rights of up to 2 million tonnes per annum (Mtpa) (out of a possible 8Mtpa at the Magnolia site) for a total 20 years.
Although it remains a risky investment prospect, Liquefied Natural Gas Ltd could be worth a second look at today's discounted price.
