Cheniere Energy (LNG) said Thursday it expects to receive about $3.4 billion in financing by the end of the month for what will be the first liquefied-natural-gas export facility in the continental U.S.
"They have all the capital they need, they have all the permitting they need," said Will Frohnhoefer, analyst at equity brokerage BTIG. "I think they're good to go."
The export facility in the lower 48 states would allow U.S. natural gas producers to export the fuel, a glut of which has developed thanks to advances in new drilling techniques that have unlocked natural gas from shale formations throughout the country. The swelling supplies of natural gas have driven prices to a decade low of $1.90 a million British thermal units in April, from nearly $14 in July 2008.
The low prices have crimped the balance sheets of energy companies extracting the fuel.
Cheniere's financing from eight banks, together with $2 billion in equity the company offered in May, will allow it to export 1.1 billion cubic feet a day of LNG from its Sabine Pass, La., terminal by the end of 2015. The Houston-based company expects to close on the financing at the end of the month and sign a final investment decision by the end of summer.
Cheniere opened the Sabine Pass facility as an LNG import terminal in 2008, when it was widely believed that the U.S. would need to import natural gas to meet its energy needs. But the shale drilling in recent years has turned that on its head.
Now, low prices in the U.S. are attracting customers from overseas, where natural gas costs are exponentially higher.
Cheniere has signed long-term supply agreements for 2.2 billion cubic feet a day of LNG to the U.K's BG Group PLC. (BG.LN), Gas Natural Fenosa of Spain, Gail India Ltd. (532155.BY) and Korea Gas Corp. (036460.SE). Japan in particular has lobbied the U.S. to allow more LNG exports as the country tries to diversify its energy supply after the Fukushima nuclear disaster last year.
Cheniere already has permits to export LNG, which were issued before low natural gas prices stirred interest in exports. But the U.S. Department of Energy has suspended approval of new LNG export permit applications as it studies the possible economic effects of LNG exports. Its report is expected after November.
After trading lower through most of Thursday's session, natural gas rebounded following the Cheniere announcement. Nymex natural gas futures settled 0.7% higher at $2.874 a million British thermal units.
Cheniere also expects to lock in another round of financing by the end of 2013 to construct an additional 1.1 billion cubic feet a day in export capacity at Sabine Pass. The company used Bank of Tokyo-Mitsubishi UFJ, Ltd., Credit Agricole Corporate and Investment Bank, Credit Suisse Securities (USA) LLC, HSBC, J.P. Morgan Securities LLC, Morgan Stanley, RBC Capital Markets, and SG Americas Securities LLC to secure its current financing.
--Jerry Dicolo contributed to this article.
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