Cheniere Energy, Inc. (LNG)

leminotaurus (53.59) Submitted: 10/03/06 10:10 AM : Start Price: $27.80 LNG Score: -54.12

Gas demand is soaring and for the forseable future LNG is the next big thing in the energy sector. Cheniere has secured the money from the banks (including 800mln construction loan in August 2006) and it will construct at least two terminals, being a major player in LNG in the US. There are already contracts with Toatal and Chevron in place for half of the capacity utilization, which guarantees substantial revenues. There is nothing wrong with the operations to justify negative valuation - the construction process has just been started as planned. Quatar and Gazprom develop new gas fields and are intersted in buying some terminals in the US. This will boost the American LNG business. Current market value puts Cheniere near some overvalued internet start-ups. Business model is rather strightforward and not very risky - in the nature of a utility, but the growth potential is much higher. Citi and JPMorgan value the company at about $50. Overall with the current price, there is a very reasonable balance of risk and growth potential.

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