One may look at the commodity price of natural gas and wonder why anybody would be interested in investing in it. Others look at the investment as a long-term play. One way or another natural gas will be having its day in the sun and investing strategically today will potentially be very profitable.
Cheniere Energy Inc., owns and operates on-shore receiving terminals for natural gas. The company currently owns and operates six facilities located primarily along the gulf coast of the United States. It also engages in off shore oil and natural gas exploration along with activities in the pipeline business of transporting natural gas and oil.
Cheniere has been working at a solid pace of late as the market for natural gas has settled. It is now poised to benefit from low inventories and likely production increases. To this end it is also working to reduce debt so that it can be best prepared for coming production through its receiving terminals. Recent reports indicate that the company is selling a 30% stake in its Freeport unit for $104 million in order to pay down a $400 million obligation to a subsidiary. Although it may appear to be an interesting time to sell a portion of the business as new production is appearing, it will give the company additional room to move in other areas where additional revenue opportunities may exist.
Perhaps the company’s biggest opportunity in this regard is its signing on with JP Morgan as relationship partner at its Sabine Pass facility (the world’s largest receiving terminal according to the company). This relationship, once consummated, will give the company access to a wide variety of clients and capital stability going forward in the 38 billion cubic foot market for natural gas. JP Morgan understands that natural gas is going to be a leading energy source for the US in coming decades and wants to be a long-term player as the market develops. If JP Morgan is interested perhaps this one may rate a look.
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