LNG extends Magnolia’s EPC Contract – set to lead next generation US LNG export projects
Liquefied Natural Gas Limited (ASX: LNG) develops and operates small and medium scale liquefied natural gas projects in Australia. LNG’s projects include Magnolia LNG project at Lake Charles in United States and Bear Head LNG project in Canada.
The Company uses stranded gas which is already discovered natural gas but with no identifiable markets for it. The Company also uses flared or vented gas, which is gas that is vented into the atmosphere. These are low-cost gas reserves which replace oil-based fuels.
As per today’s ASX announcement, the company stated that it has successfully extended the validity of the current EPC (Engineering, Procurement and Construction) pact with KSJV for its wholly owned subsidiary Magnolia LNG. KSJV is a KBR led joint venture between the KBR and SKE&C. This binding lump sum turnkey (LSTK) EPC contract which is valued at US$4.354 billion is now valid till the period of 30 June 2019.
The original pact with KSJV was inked on the November 16th, 2015. This had an installed capacity of US$495 to US$544.
The company seems hold bright future in marking its footprint as a leading LNG exporter in US. The company’s project is construction-ready and has secured equity financing. It has also got the various notices and approvals from the US regulatory authorities to proceed for the export.
Company's subsidiary Magnolia LNG proposes to build and operate up to four liquefaction production trains, each having a capacity of 2.2 m.t p.a. using the company’s patented OSMR LNG process technology. This development includes two 160,000 m3 full containment storage tanks, ship, barge, and truck loading facilities, and required additional infrastructure. The EPC contract has got all the necessary ingredients which are considered a prerequisite for the facility to guarantee robust production operations.
As of September 30, 2018, net operating cash outflow was A$4.8 million, vis-a-vis A$6.2 million for the three months of the earlier quarter. The company's total cash & cash equivalents was reported to be A$46.4 million (inclusive of $25.2 million of restricted cash), via-a-vis A$50.7 million which stood at June 30, 2018. Hence reflecting a net decrease in reported cash of A$4.3 million.
Historically, the company has maintained a substantial amount of its existing cash and cash equivalents in $ US and will continue doing so in the future to maintain synchronization in the cash reserves with the forecasted cash outflows. As the company's reporting currency is AUD, the $ US denominated cash balances are translated to AUD at each balance sheet date & the net effect is reflected as unrealized gain (loss) from translation as a period end?to?period end reconciling item in reported cash balances. At the quarter end, the company had no debt.
Meanwhile, the share price of the company has fallen by 8.65 percent in the past six months. The company’s shares closed at $0.47, down by 1.053%. The company has a market capitalization of circa $271.58 Million as on 20 December 2018.
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