Samantha Fischler is a Junior Financial Analyst at I Know First.

Cheniere Energy Stock Prediction

Summary

In May 2016, Jack Fusco replaced Charif Souki as CEO of Cheniere Energy

Cheniere Energy became the first US company to export liquefied natural gas to Europe

The opening of the Panama Canal Expansion will make exporting LNG easier

The price of natural gas has been on the rise

I Know First’s is currently bullish on LNG

What They Do

Cheniere Energy, Inc. is a company that is working to develop a liquefied natural gas, or LNG for short. Cheniere Energy, Inc. is a US based company headquartered in Houston, Texas. Originally, Cheniere Energy was founded to secure permits from the government to allow gas to be imported into the US after a gas shortage was predicted over 10 years ago. However, now Cheniere Energy expects to provide approximately 9% of the world’s LNG by 2020. The company has 2 LNG terminals. The first is in Cameron Parish, Louisiana where Cheniere Energy is working to develop and operate a liquefaction process. The second facility is operated by Corpus Christi Liquefaction, LLC, a Cheniere Energy subsidiary, and is located on the La Quinta Channel in Texas. At the second facility, Corpus Christi Liquefaction is working to construct a terminal to export liquefied natural gas.

Getting to Know Cheniere Energy More Personally

In May 2016, a new CEO stepped up to the plate to enhance Cheniere Energy, Inc. in a number of ways. Meet Jack A. Fusco, Director, President, and CEO of Cheniere Energy. Before taking on his new role at Cheniere Energy, Fusco was CEO for 6 years and then Executive Chairman for 2 at Calpine Corporation until Fusco left to lead Cheniere Energy. This change came about after Back in December, Cheniere Energy terminated their founder and then-CEO, Charif Souki, amidst pressure from Carl Icahn to do so. Under Fusco’s contract, he is obligated to purchase $10 million worth of Cheniere stock by the end of 2016.

A Global Takeover

Back in February, the company was the first company to sell Gulf-Coast gas to foreign countries when it exported liquefied natural gas to Brazil and subsequently to Asia. In April, the company broke new ground by exporting natural gas to Europe. Cheniere Energy sold LNG to a Portuguese energy company Galp Energia. A US company breaking into the European gas market is expected to create competition and potentially a price war that would drive gas prices down for consumers because the US is a major entrant into the market. Most of Europe’s gas is currently supplied via pipeline from Russia and many view US entrance into the European gas market as a ploy to challenge Russian domination of energy supplies and prices. Cheniere has already secured deals with a few European gas companies and has signed long-term contracts with the UK’s BG Group and Spain’s Natural Gas, among others.

After the project was started back in 2007, the Panama Canal Expansion finally opened on June 26, at a time when shipping is in a big slump. The canal now has a third lane for ships to pass through and the new lane has the capacity for much larger ships to pass through than the other two lanes. Despite the shipping slump, shipping companies are looking to jump on the opportunity of this new export and LNG is expected to be among the top exports that go through the canal by 2020. The Panama Canal Expansion will be of great help in the global expansion of Cheniere Energy, allowing for easier exportation of LNG. Since the opening of the Panama Canal Expansion less than 3 weeks ago, LNG’s had share price increased by $5.29 up to $39.04 at close on July 12.

The Natural Gas Industry

In a more general discussion, the industry for natural gas has been booming as of the last few months, despite the slight drop since peaking on July 1st. The price increased by $0.58 in the 4-month period between March 14 and opening on July 13, 2016. This means good things for Cheniere Energy who will be able to sell LNG at higher prices and reap the profits from this price increase.

Source: oilprice.com

As of now, Cheniere Energy’s Sabine Pass terminal in Cameron Parish, LA, is the only US facility in the Gulf Coast capable of processing natural gas to be exported. Cheniere Energy’s advances in the energy industry are expected to mean big things for the United States. The US is projected to be a net exporter of gas by 2017, exporting more than they import.

What Can We Expect for LNG

I Know First’s algorithm is currently bullish on LNG. On June 28, 2016, I Know First’s algorithm forecast positive growth for LNG. As of 14-days later on July 12, the stock price had risen 15.67%, showing the accuracy of I Know First’s prediction.

Conclusion

We can continue to expect big things from Cheniere Energy. The company has already won the race within the US natural gas industry to be the first to export natural gas. With the opening of the Panama Canal expansion, trade becomes much easier for Cheniere and will surely help the company grow even more. Cheniere is continually working to develop LNG at both of their facilities and more improvements can be expected. Once, Cheniere is able to develop LNG to export from the Corpus Christi Liquefaction facility, Cheniere Energy will have a greater profit margin because it will be able to export more natural gas than it does now.

I Know First’s algorithm forecasts how stocks are going to perform for 3 days, 1 month, 3 months, and a year. In the case of Cheniere Energy (LNG), the middle row represents the signal strength and the bottom number represents the predictability indicator, the historical correlation which is heavily weighted on the algorithm’s recent predictions. To learn more about how I Know First’s algorithm operates, click here.