Liquefied Natural Gas Ltd shareholders: Look away now

Liquefied Natural Gas Ltd (ASX: LNG) shareholders, look away now…

Source: Google Finance

Source: Google Finance

Shares of the prospective liquefied natural gas (LNG) exporter today edged down towards their 52-week low, trading as much as 8% lower.

Indeed, despite recovering to trade at 62 cents, or 6.5% below Friday’s close, in the early afternoon, shares of LNG Ltd remain almost 80% lower year-over-year.

However, perhaps surprisingly, today’s share price fall came despite the company announcing what may ordinarily be considered a positive operational update.

In a statement to the ASX, LNG Ltd said its Canadian subsidiary, Bear Head LNG, received final authorisation from the United States’ Department of Energy (DOE) to export LNG produced in the US to countries that do not have free-trade agreements (FTA) with the US.

“Today’s DOE decision is an extremely positive milestone for Bear Head LNG as it removes a significant risk for the project,” Bear Head LNG President and LNG Ltd CEO, Maurice Brand, said. “Bear Head LNG is appreciative of the cooperation between the U.S. and Canada in working out key energy regulatory issues,”

Bear Head LNG is seeking to build an LNG export facility in Nova Scotia, Canada. Together with the DOE approval to ship to non-FTA countries, Bear Head has received all the initial regulatory approvals to commence project construction.

“Bear Head is negotiating for gas supplies from Western and Central Canada, from offshore Nova Scotia, and from the abundant supplies available in the U.S,” Mr Brand said. “With DOE’s nonFTA export approval, we are able to continue forward on U.S. gas production as the third leg of our gas supply portfolio.”

Foolish Takeaway

In 2014, LNG Ltd’s ASX shares were one of the best-performing and in 2015 climbed to a high of $5. However, following significant falls in oil prices, investors now appear to be growing wary of the group’s ability to secure the tolling contracts necessary to secure funding and develop its portfolio of multi-billion projects. As it stands, LNG Ltd shares are a speculative investment proposition in my opinion.

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Motley Fool writer/analyst Owen Raszkiewicz owns shares of LNG Ltd. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

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