The global demand for natural gas is up, a boon for any gas company that has a liquefied natural gas export terminal tied to the end of one of its pipelines. Besides providing much-needed energy in countries such as Japan and China, it turns out that natural gas may also play hero to the damsel in distress that is the shipping industry.
Woe is dry shipping
Shippers such as DryShips
On the other hand, LNG tankers -- specially designed for transporting liquefied natural gas -- are in very high demand, and rates are going through the roof. Daily rates for LNG shippers have already doubled, and analysts expect that they will continue to climb by as much as 20% in 2012.
Four LNG shippers to know
Golar LNG
Here's a snapshot of a few key metrics.
Company |
P/E |
Dividend Yield |
TTM Revenue |
Debt/Equity |
---|---|---|---|---|
Golar LNG | 96.71 | 3.20% | $276.5M | 163.81% |
Source: Yahoo! Finance.
Teekay LNG Partners
Company |
P/E |
Dividend Yield |
TTM Revenue |
Debt/Equity |
---|---|---|---|---|
Teekay LNG | 40.03 | 7.40% | $375.14M | 222% |
Source: Yahoo! Finance.
Overseas Shipholding Group
Company |
P/E |
Dividend Yield |
TTM Revenue |
Debt/Equity |
---|---|---|---|---|
Overseas Shipholding | N/A | 5.60% | $1,027M | 123% |
Source: Yahoo! Finance.
Eni's
Company |
P/E |
Dividend Yield |
TTM Revenue |
Debt/Equity |
---|---|---|---|---|
Eni | 9.39 | 4.90% | $105,201M | 49.54% |
Source: Yahoo! Finance.
I'm concerned
Fifty-five LNG carriers were ordered this year and will come online between 2014 and 2015. All of these orders look like the sign of a healthy business, but keep in mind that increased supply could potentially drive prices down for LNG transporters. No one wants to see a repeat of the rise and fall of dry-bulk shipping.
It's a problem you can see coming a mile away, but in the near future it shouldn't be a concern. At least three LNG export facilities are expected to come online between 2014 and 2016 in North America alone. Noble Energy
Foolish takeaway
If companies begin to over-order ships, falling rates will become a industrywide problem. Right now it looks as if there will be enough product to ship by the time the new tankers hit the seas, but investors should keep an eye on the number of LNG carrier orders placed over the next six months to a year.
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