What Is Driving Cheniere Energy Inc’s Stock Higher?

What is driving up shares of Cheniere Energy? Let’s examine the recent developments and determine whether recent developments can keep the stock ticking higher.

May 16, 2014 at 8:38AM

The natural gas market heated up over the past several months, and this development may have drawn more attention to natural gas companies such as Cheniere Energy (NYSEMKT:LNG), a company primarily engaged in the liquefied natural gas business. Since the beginning of the year, the company's stock has jumped by over 28%. Besides these recent natural gas market developments, what could have contributed to the recent rally in shares of Cheniere Energy? And, looking forward, what could keep this company's stock rising?

Closing additional contracts
The company recently closed two LNG sale agreements related to its Corpus Christi project. Under these contracts, Cheniere Energy will sell 2.25 million tonnes of LNG per year. The Corpus Christi terminal is expected to start its operations by 2018-2019. These closed contracts reduce Cheniere Energy's risk because these are long-term contracts (20 years); they will provide a stable stream of revenue for the years to follow. 

Local market developments
Even though Cheniere Energy is first in line to export U.S natural gas, the U.S Department of Energy has recently approved for Jordan Cove Energy  to export 1.2 Bcf per day of LNG to free trade agreement countries for 30 years and 0.8 Bcf per day to non-FTA for 20 years. This company is one of 35, which has a license to export to FTA countries and one of seven to export non-FTA countries. These companies, however, will start to export after Cheniere Energy. Jordan Cove Energy isn't any different and plans to start exporting by 2019. But the rise in local competition could make it harder for Cheniere Energy to secure closing the remaining unassigned LNG related to its Corpus Christi project.

Global market developments
The global LNG market is expected to grow by 8% per annum in the coming years. One of the reasons for this steady growth is the rise in Australia's exports; some analysts even estimate this country could pass Qatar as the world's leading exporter of LNG. The U.S is also likely to become a prominent LNG exporter in the coming years, which could further increase the global LNG market. The steady rise in the LNG market will also improve the odds of Cheniere Energy signing contracts for the rest of its LNG operations in the Corpus Christi project.

In conclusion...
Cheniere Energy is progressing in the right path by closing contracts for its LNG terminals. The higher prices of natural gas are likely to result in higher revenue for the company. Finally, the ongoing expanding global LNG market will raise the demand for Cheniere Energy's LNG operations, which will lead to additional signed contacts for its Corpus Christi project.

OPEC is absolutely terrified of this game-changer
Imagine a company that rents a very specific and valuable piece of machinery for $41,000… per hour (that’s almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company’s can’t-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we’re calling OPEC’s Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock… and join Buffett in his quest for a veritable LANDSLIDE of profits!


Lior Cohen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers