Half Year Report
REVIEW AND RESULTS OF OPERATIONS
Our LNG capacity contract pricing offer is very market competitive. This pricing, when combined with our execution and delivery strategy, mature regulatory status, and financing plans, presents buyers with a very attractive commercial opportunity - Magnolia LNG.
LNGL continued its emphasis on signing long-term offtake contracts for Magnolia LNG while ensuring that our best in class project execution and delivery strategy is fully ready to meet customer needs arising in this LNG market environment.
Most LNG industry participants are bullish on the prospects for execution of new long-term offtake agreements in 2019. Consistent with this thesis, active negotiations for Magnolia LNG capacity continue with focus on Asian and European customers. Efforts with select Asian counterparties progressed substantially in the period despite uneven trade discussion rhetoric. Similarly, we are making positive progress with key counterparties in Europe. We are also vigorously pursuing potential customers in other parts of the world as well.
Our marketing efforts continue with an appropriate balance for the need to close capacity sales at Magnolia LNG while providing acceptable returns to shareholders.
During the reporting period:
- Our binding lump sum turnkey contract with KSJV was extended to June 30, 2019;
- We did not extend our offtake agreement with Meridian LNG; the decision to allow this agreement to lapse frees up desired capacity from Magnolia LNG for offtakers that are more closely aligned with Magnolia's development needs;
- We moved to finalize design capacity at Magnolia LNG through filings made with both the U.S. Federal Energy Regulatory Commission (FERC) and the Department of Energy (DOE); and
- LNGL held its 2018 Annual General Meeting (AGM).
As we envision a final investment decision (FID) for Magnolia LNG, we incurred one-time charges during the quarter working with our existing project partners. Payments made for work performed with the Kinder Morgan Louisiana Pipeline (KMLP) and KSJV (a KBR - SKE&C joint venture led by KBR), to refresh and update the project's pipeline capacity and engineering, procurement and construction (EPC) elements, increased cash outflow in the quarter relative to previous periods. We closed December 2018 with the Company's total cash position at A$36.6 million and remain debt free. We continue to manage our liquidity closely, consistent with our stated plans.
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About Liquefied Natural Gas Ltd
- Magnolia LNG, LLC (Magnolia LNG), a US-based subsidiary, which is developing an eight mtpa or greater LNG export terminal, in the Port of Lake Charles, Louisiana, USA;
- Bear Head LNG Corporation Inc. (Bear Head LNG), a Canadian based subsidiary, which is developing an 8 mtpa or greater LNG export terminal in Richmond County, Nova Scotia, Canada with potential for further expansion;
- Bear Paw Pipeline Corporation Inc. (Bear Paw), proposing to construct and operate a 62.5 km gas pipeline lateral to connect gas supply to Bear Head LNG; and
- LNG Technology Pty Ltd, a subsidiary which owns and develops the Company’s OSMR(R) LNG liquefaction process, a mid-scale LNG business model that plans to deliver lower capital and operating costs, faster construction, and improved efficiency, relative to larger traditional LNG projects.
Liquefied Natural Gas Ltd