Tag: Cheniere Energy

Natural Gas Prices Rise Amid Global Shortages: Is Cheniere Energy (LNG) the Best Play?

Posted on by The INO.com Team

The global natural gas market is facing a critical imbalance, driven by surging winter demand and constrained supply chains. This dynamic has triggered significant price hikes in recent weeks. In the U.S., natural gas spot prices at the Henry Hub rose to $2.34/MMBtu from $2.10/MMBtu—a 24-cent jump in just one week. The international landscape reflects similar trends, with East Asia's LNG prices averaging $14.17/MMBtu, a signal of strong, sustained demand.

Natural gas consumption has soared across key regions. In the U.S., colder temperatures in the Northeast and California have pushed residential and commercial demand higher, while Europe continues to grapple with energy security concerns amid geopolitical tensions. The tight supply scenario underscores the strategic importance of LNG exporters like Cheniere Energy, Inc. (LNG), which are uniquely positioned to bridge the widening gap between global demand and supply.

Supply Chain Issues: The Crux of the Shortage

Global natural gas shortages stem from an intricate web of challenges. Europe’s reliance on LNG imports has deepened as pipeline deliveries from Russia remain restricted. U.S. LNG has become a critical supplier for European markets, particularly during the winter season when energy needs peak.

Domestically, production levels are growing, but not without obstacles. Dry gas production in the U.S. has seen a 1.3% weekly increase to 102.4 Bcf/day, yet operational hurdles persist. Recent maintenance activities on the Permian Highway Pipeline, combined with reduced Canadian gas exports to the U.S., have limited flow capacity. Furthermore, natural disasters, such as atmospheric rivers in the Pacific Northwest, have disrupted operations and added pressure on the supply chain.

Storage levels also present a mixed picture. Although U.S. gas storage is above its five-year average, withdrawals are beginning to accelerate with the onset of colder weather, adding another layer of complexity to an already fragile supply-demand equation.

Cheniere Energy’s Market Position: A Dominant LNG Exporter

Cheniere Energy, as the largest LNG exporter in the U.S., plays a pivotal role in addressing global energy needs. Its Sabine Pass and Corpus Christi terminals collectively operate with a production capacity of 45 MTPA, and ongoing expansions will boost this figure further. In Q3 2024, the company exported 568 TBtu of LNG through 158 cargoes, representing an increase in volumes compared to the previous year.

The company’s strategy revolves around securing long-term contracts that offer consistent revenue streams. These agreements ensure stability even during volatile pricing environments. The anticipated completion of its Corpus Christi Stage 3 expansion is set to add over 10 MTPA of capacity, reinforcing Cheniere’s position as a leader in the LNG sector.

Cheniere is not just expanding its capacity but also enhancing its reputation for environmental responsibility. The company has set an ambitious methane emissions target for its facilities, aligning with global efforts to decarbonize the energy industry.

Investment Potential: Capturing Value in a High-Price Environment

The financial performance of Cheniere underscores its resilience in a volatile energy market. For Q3 2024, the company reported revenues of $3.8 billion and a net income of $893 million. This robust performance is further supported by an adjusted EBITDA of $1.5 billion for the quarter. For the full year, Cheniere has raised its adjusted EBITDA guidance to $6.0-$6.3 billion, reflecting strong market dynamics and operational excellence.

Cheniere's strategic focus on long-term contracts has positioned it well to capitalize on high LNG prices. Its portfolio of contracted volumes insulates it from short-term price fluctuations while enabling participation in the lucrative spot market when opportunities arise. The company's ongoing expansion projects will likely enhance its ability to meet surging demand in Europe and Asia, both of which are prioritizing LNG to diversify their energy sources.

Global LNG demand is expected to remain robust, with analysts projecting tight market conditions into 2025. The company’s ability to execute efficiently on its expansion projects and maintain operational reliability positions it as a key beneficiary of this favorable macro environment.

Risks: Challenges on the Horizon

Despite its strong market position, Cheniere faces a range of risks. Regulatory pressures to reduce greenhouse gas emissions are increasing globally, and compliance could add to operational costs. For instance, the company’s commitment to lowering methane intensity at its facilities reflects both a proactive environmental strategy and the growing scrutiny from regulators and investors alike.

Infrastructure remains another area of concern. Limited shipping capacity and potential delays in expansion projects could hinder Cheniere’s ability to fully capitalize on market opportunities. Additionally, natural gas prices, while currently elevated, remain susceptible to seasonal and geopolitical fluctuations. A milder-than-expected winter or a surge in global production could pressure margins.

Lastly, the company’s financial performance, while impressive, is partly contingent on maintaining favorable international LNG prices. Any sharp declines in these prices could adversely affect profitability, particularly for uncontracted volumes.

Investor Takeaway: A Strategic Bet in the LNG Market

For investors looking to capitalize on the global natural gas shortage, Cheniere Energy presents a compelling opportunity. Its expansive LNG infrastructure, secure contractual base, and strategic growth initiatives align with long-term demand trends. Moreover, its strong financial performance and commitment to environmental sustainability add to its appeal as a forward-looking energy company.

While the stock carries risks, including regulatory hurdles and market volatility, its prospects for growth in a high-price environment make it an attractive option for energy-focused portfolios. Investors bullish on the future of LNG as a cornerstone of the global energy mix may find Cheniere a strategic addition, particularly as its expansion projects come online and further bolster its market position.

Natural Gas Prices Plummet: Opportunities and Risks for Investors

Posted on by The INO.com Team

So far this year, natural gas prices have plummeted to record lows, driven by record-high production, mild winter weather, and a resulting surplus. Between January and June, the average price at the Henry Hub benchmark fell 20% to $2.56 per million British thermal units (MMBtu), hitting their lowest levels since 1997. These price declines have created a volatile market, presenting both risks and opportunities for investors.

The energy sector faces a mix of challenges and prospects. U.S. production has slightly decreased since peaking at 106 billion cubic feet per day in late 2023, but the current inventory levels remain high, keeping prices suppressed. The Energy Information Administration (EIA) forecasts that natural gas prices will remain below $3.00/MMBtu for the remainder of 2024, averaging around $2.20/MMBtu.

Concerns about China's demand and ongoing global market fluctuations have added to the uncertainty. The ongoing wildfires in Canada’s oil sands region have impacted production, providing some support to oil prices, which often correlate with natural gas prices. Analysts suggest that while the market faces uncertainties, the expected Federal Reserve interest-rate cuts could boost oil demand, indirectly influencing natural gas prices.

For those looking to navigate these choppy waters, investing in EQT Corporation (EQT) could be promising with its strong financial performance and growth potential. On the other hand, it could be wise to steer clear of Cheniere Energy, Inc. (LNG), given its bleak financial outlook. Let’s look at these stocks in detail.

Stock to Buy:

EQT Corporation (EQT)

EQT Corporation (EQT) is the leading independent natural gas producer in the United States, with a core asset base across the Appalachian Basin. Recently, the company closed its acquisition of Equitrans Midstream Corporation earlier than expected, which resulted in some savings. The operation of the Mountain Valley Pipeline, facilitated by this acquisition, is set to transport a significant amount of Marcellus production from the oversupplied Marcellus Basin to markets with solid pricing.

This move is expected to boost the average price received for their production, regardless of whether natural gas prices recover as anticipated. Plus, the acquisition is expected to materially decrease the cost of supply on a per-unit basis.

On July 16, EQT announced a quarterly dividend of $0.16 per share, payable on September 1, 2024. It pays an annual dividend of $0.63 per share, which translates to a yield of 1.79% at the current share price. EQT offers an attractive proposition for income-oriented investors seeking exposure to the energy sector. Also, it has a four-year average dividend yield of 0.85% and has grown its dividend payouts at a CAGR of 41.8% over the past five years.

Despite industry struggles, EQT reported profitable second-quarter results. During the quarter that ended June 30, 2024, the company’s total sales volume increased 7.8% year-over-year to 508 billion cubic feet equivalent (Bcfe). A slight increase in the average realized price per millions of cubic feet equivalent (Mcfe) boosted EQT’s attributable net income by a robust 114.3% rise from the same period last year to $9.52 million.

In addition, the company’s earnings per share was $0.02, compared to the previous quarter’s $0.18 loss per share. In addition, EQT’s adjusted operating cash flows grew 18.8% from its year-ago value to $405.04 million.

Analysts expect EQT’s revenue for the third quarter (ending September 2024) to increase 31.3% year-over-year to $1.56 billion, and its EPS for the ongoing quarter is expected to grow 18.6% year-over-year to $0.36. Furthermore, the company has topped the consensus EPS estimates in each of the trailing four quarters.

While the stock has lost nearly 19% over the past nine months and more than 11% year-to-date, this dip presents a potential buying opportunity. EQT’s solid financials, coupled with its attractive dividend yield and growth potential, make it a compelling choice for investors looking to capitalize on the natural gas sector.

Stock to Sell:

Cheniere Energy, Inc. (LNG)

Cheniere Energy, Inc. (LNG) is the leading producer and exporter of liquefied natural gas in the United States. It provides a clean, secure, and affordable solution to the increasing global demand for natural gas. As a full-service LNG provider, Cheniere manages everything from gas procurement and transportation to liquefaction, vessel chartering, and LNG delivery.

The company is due to reveal its fiscal 2024 second-quarter earnings on August 8, and the outlook isn't promising. Revenue is forecasted to dip by 13.5% year-over-year to $3.55 billion. Meanwhile, its EPS is anticipated to plummet by 70.4% from the previous year to $1.66.

This downward trend is expected to continue throughout the fiscal year ending December 2024; Cheniere Energy’s revenue and EPS are expected to decrease by 21.3% and 80.3% year-over-year to $16.05 billion and $8.04, respectively.

Further, the financial strain is reflected in the company's performance in the first quarter that ended March 31, 2024. LNG’s total revenues decreased 41.8% year-over-year to $4.25 billion, and its income from operations fell 85.6% from the prior year’s quarter to $1.15 billion.

Moreover, LNG’s net income and net income per share attributable to common stockholders came in at $502 million and $2.13, down 90.8% and 90.4%, respectively. Its consolidated adjusted EBITDA decreased 50.7% year-over-year to $1.77 billion.

Despite these deteriorating financial metrics, LNG’s Board of Directors approved an additional $4 billion in share repurchase authorization through 2027. It further announced a plan to increase its quarterly dividend by approximately 15% to $2.00 per common share annualized, commencing with the third quarter of 2024.

On June 17, the company announced a quarterly dividend of $0.435 per share, payable to its shareholders on August 16, 2024. LNG pays an annual dividend of $1.74, which translates to a yield of 0.99% at the current share price. It has a four-year average dividend yield of 0.57% and a payout ratio of 8.3%.

Shares of LNG have gained over 4% over the past six months and nearly 3% year-to-date, but these modest gains do little to counteract the company's broader financial challenges. The current outlook suggests that the risks outweigh the potential rewards, making LNG a less attractive investment option.

Can These 2 Natural Gas Stocks Heat up Your Portfolio This Winter?

Posted on by The INO.com Team

During the winter months, energy prices typically experience favorable conditions due to increased heating demand in colder weather, which widens the gap between supply and demand. The use of natural gas tends to reach its peak at the beginning of the winter season as households and office buildings turn to heaters.

The Energy Information Administration (EIA) raised U.S. natural gas consumption estimates by 230 MMcf/d to 93.28 Bcf/d for the fourth quarter of 2023 and by 240 MMcf/d to 104.22 Bcf/d for the first quarter of 2024.

Colder U.S. Conditions Drive Energy Prices Higher

Natural gas prices yesterday added to Tuesday’s gains and reported a 4-week high. Gas prices surged Wednesday on forecasts for colder U.S. temperatures, which would drive heating demand for natural gas. Forecaster Maxar Technologies said that a storm next week will bring wintry conditions to the nation’s eastern half and snow in the Midwest from June 8 to June 12.

On the other hand, the U.S. Climate Prediction Center stated that there is a greater than 55% chance the present EI Nino weather pattern will remain strong in the Northern Hemisphere through March, keeping temperatures above average and weighing on gas prices. As per AccuWeather, El Nino will limit snowfall across Canada this season in addition to causing above-normal temperatures across North America.

Last Thursday’s weekly EIA report was bullish for natural gas prices as natural gas inventories for the week ended December 22 declined by 87 Bcf to 3,577 Bcf, a larger draw than expected 79 Bcf decline; however, less than the 5-year average draw of – 123 Bcf.

As of December 22, natural gas inventories were up 12.1% year-over-year and 10% above their 5-year seasonal average, signaling adequate gas supplies.

Record U.S. Oil and Gas Production and Exports

Winter weather can be a significant tailwind for natural gas prices, with colder temperatures more supportive of heating demand, particularly from residential and commercial segments. But with high gas inventories, a price rally may not persist this winter.

U.S. oil and gas production has grown at a much faster pace, offsetting most of the OPEC+ efforts to push up energy prices by coordinated supply cuts.

Earlier, various OPEC+ oil producers announced voluntary production cuts totaling 2.2 million barrels per day (bpd) for the first quarter of 2024. Leading the cuts is OPEC's kingpin and the world’s biggest crude exporter, Saudi Arabia, which extended a voluntary oil output cut of 1 million bpd, priorly intended by the end of December 2023.

The U.S. is currently producing more than 13 million bpd of crude oil and is headed to a continued increase in the short and medium term. According to data from the EIA, U.S. output hit a new monthly record of 13.252 million bpd in September 2023 and kept the pace at 13.248 million bpd in October. As a result, the country’s crude oil exports also surged.

Meanwhile, U.S. LNG exports are breaking records. The U.S. exported more LNG during the first half of 2023 than any other nation, the EIA reported earlier this year. The average LNG exports during this period were 11.6 billion cubic feet per day (Bcf/d), up 4% from the first half of 2022. Also, October 2023 witnessed record LNG shipments, as per EIA data.

2 Natural Gas Stocks Which Could Benefit from Strong Winter Demand

With a $40.35 billion market cap, Cheniere Energy, Inc. (LNG) is an energy infrastructure company that mainly engages in liquified natural gas (LNG) related businesses in the U.S. The company owns and operates the Sabine Pass LNG terminal in Cameron Parish, Louisiana and the Corpus Christi LNG terminal near Corpus Christi, Texas.

In addition, Cheniere Energy owns the Creole Trail pipeline, a 94-mile pipeline interconnecting the Sabine Pass LNG terminal with several interstate pipelines and operates the Corpus Christi pipeline, a 21.5-mile natural gas supply pipeline interconnecting the Corpus Christi LNG terminal with various interstate and intrastate natural gas pipelines.

On November 29, 2023, LNG and Cheniere Energy Partners, LP (CQP) announced that Sabine Pass Liquefaction Stage V, LLC entered a long-term Integrated Production Marketing (IPM) gas supply agreement with ARC Resources U.S. Corp., a subsidiary of ARC Resources Ltd. (ARX), a prominent natural gas producer in Canada.

Under the IPM, ARC Resources agreed to sell 140,000 MMBtu per day of natural gas to SPL Stage 5 for 15 years, commencing with commercial operations of the first train of the Sabine Pass Liquefaction Expansion Project. This deal will allow Cheniere to deliver high quantities of Canadian natural gas to Europe.

“We are pleased to build upon our existing long-term relationship with ARC Resources, and further demonstrate Cheniere’s ability to construct innovative solutions that help meet the needs of customers and counterparties along the LNG value chain while delivering value to our stakeholders,” said Jack Fusco, Cheniere’s President and CEO.

On November 2, LNG’s subsidiary, Cheniere Marketing, LLC, entered a long-term liquified natural gas sale and purchase agreement (SPA) with Foran Energy Group Co. Ltd, a leading natural gas company based in China.

Under the SPA, Foran will purchase nearly 0.9 mtpa of LNG for 20 years from Cheniere Marketing on a free-on-board basis for a purchase price indexed to the Henry Hub price, plus a fixed liquefaction fee. Deliveries will commence upon the start of commercial operations of the second train of the SPL Expansion Project in Louisiana.

Also, on October 30, Cheniere’s Board of Directors declared a quarterly cash dividend of $0.435 ($1.74 annualized) per common share, up nearly 10% from the previous quarter, paid on November 17, 2023, to shareholders of record as of the close of business on November 9, 2023. The dividend increase reflects the company’s commitment to return enhanced value to its shareholders.

LNG’s trailing-12-month gross profit margin of 86.74% is 83.3% higher than the 47.32% industry average. Likewise, its trailing-12-month EBITDA margin and net income margin of 85.84% and 50.83% are considerably higher than the industry averages of 34.76% and 13.93%, respectively.

Furthermore, the stock’s trailing-12-month ROTC and ROTA of 41.15% and 29.82% favorably compared to the respective industry averages of 9.30% and 7.49%.

In the third quarter that ended September 30, 2023, LNG reported total revenues of $4.16 billion, while its LNG revenues came in at $3.97 billion. Its income from operations was $2.76 billion, compared to a loss from operations of $3.02 billion in the previous year’s quarter.

Also, the company’s net income attributable to common stockholders came in at $1.70 billion, or $7.03 per share, compared to a net loss attributable to common stockholders of $2.39 billion, or $9.54 per share in the prior year’s period, respectively.

During the quarter, the company generated a distributable cash flow of approximately 1.2 billion. As of September 30, 2023, Cheniere’s cash and cash equivalents stood at $3.86 billion, compared to $1.35 billion as of December 31, 2022.

For the full year 2023, the management expects consolidated adjusted EBITDA to be between $8.30 and $8.80 billion. The company’s distributable cash flow is projected to be in the range of $5.80-$6.30 billion.

CEO Jack Fusco commented, “Persistent volatility in commodity markets continues to reinforce the value of our commercial offering and the stability and visibility of our cash flows, and we are confident in achieving full year 2023 results at the high end of our guidance ranges.

“Looking ahead to 2024, construction on Corpus Christi Stage 3 continues to progress ahead of plan, and I am optimistic first LNG production from Train 1 will occur by the end of 2024,” Fusco added.

Analysts expect LNG’s EPS for the fiscal year (ended December 2023) to increase 519.5% year-over-year to $34.94. Further, the company’s EPS is expected to grow 23.3% per annum over the next five years. Moreover, Cheniere topped the consensus EPS estimates in all four trailing quarters, which is impressive.

Shares of LNG have surged more than 10% over the past six months and approximately 20% over the past year.

Another stock, Pioneer Natural Resources Company (PXD), could benefit from solid natural gas demand during the winter season. PXD operates as an independent oil and gas exploration and production company in the U.S. It explores for, develops, and produces oil, natural gas liquids (NGLs), and gas. The company has operations in the Midland Basin in West Texas.

During the third quarter of 2023, Pioneer’s continued operational excellence in the Midland Basin allowed the company to place 95 horizontal wells on production. More than 100 wells with lateral lengths of 15,000 feet or greater were placed for production during the first three quarters of last year.

In total, the company has more than 1,000 future locations with 15,000-foot lateral lengths in its drilling inventory.

On November 2, PXD’s Board of Directors declared a quarterly base-plus-variable cash dividend of $3.20 per common share, comprising a $1.25 base dividend and a $1.95 variable dividend. This represents a total annualized dividend yield of nearly 5.4%. The dividend was paid on December 22, 2023, to stockholders of record at the close of business on November 30, 2023.

PXD’s trailing-12-month gross profit margin of 52.23% is 10.4% higher than the 47.32% industry average. Moreover, its trailing-12-month EBITDA margin and net income margin of 48.07% and 26.22% compared to the industry averages of 34.76% and 13.93%, respectively.

Additionally, PXD’s trailing-12-month ROCE, ROTC, and ROTA of 22.32%, 14.57%, and 14.04% are higher than the respective industry averages of 19.99%, 9.30%, and 7.49%. The stock’s trailing-12-month levered FCF margin of 11.96% is 104.1% higher than the 5.86% industry average.

For the third quarter that ended September 30, 2023, PXD’s total production averaged 721 thousand barrels of oil equivalent per day (MBOEPD), near the top end of quarterly guidance. The company’s revenues and other income from the oil and gas segment came in at $3.46 billion. Cash flow from operating activities during the quarter was $2.10 billion, leading to a solid free cash flow of $1.20 billion.

However, the company’s net income attributable to common shareholders was $1.30 billion and $5.41 per share, down 34.4% and 31.8% from the prior year’s quarter, respectively.

As per the updated full-year 2023 guidance, Pioneer increased the midpoints of full-year 2023 oil and total production guidance with ranges of 370-373 MBOPD and 708-713 MBOEPD, respectively. But it decreased drilling, completions, facilities and water infrastructure capital guidance to $4.375-$4.475 billion.

Also, the company lowered full-year 2023 capital guidance for exploration, environmental and other capital to $150 million.

Street expects PXD’s revenue and EPS to decline 19.8% and 30.5% year-over-year to $19.50 billion and $21.25, respectively. But for the fiscal year 2024, the company’s revenue and EPS are expected to grow 14.8% and 8.8% from the prior year to $22.38 billion and $23.12, respectively.

PXD’s stock has gained nearly 12% over the past six months and more than 10% over the past year.

Bottom Line

Colder temperatures prompt households and office buildings to rely more heavily on natural gas as a heating fuel. As a result, natural gas prices witness a surge.

However, with natural gas inventors still above the five-year average, the prices may not witness a sustained rally this winter.

Despite relatively weaker prices, oil and natural gas production will continue to climb, creating ample growth opportunities for energy infrastructure companies. Amid this backdrop, investors could consider adding fundamentally sound energy stock LNG to their portfolio for potential gains.

However, given its mixed last reported financials and bleak near-term outlook, it could be wise to wait for a better entry point in PXD.

4 Stocks Set to Benefit From Natural Gas Pipeline

Posted on by The INO.com Team

 

Natural gas is used as a fuel to make materials and chemicals. It is also used for electricity generation, heating, cooking, and as a transportation fuel. In the United States, natural gas accounts for about 30% of the energy used. The exploration, drilling, and production of natural gas affect the environment and is one of the significant contributors to climate change.

The ambitious Mountain Valley Pipeline (MVP) project has been in the news lately. It is a natural gas pipeline system that spans about 303 miles from northwestern West Virginia to southern Virginia. It will be regulated by the Federal Energy Regulatory Commission (FERC).

The pipeline has faced several challenges since construction began in 2018. The project found opposition from groups that claimed it would contribute to climate change by increasing the use of natural gas.

The project got a boost after President Biden signed the debt limit bill, which canceled the $31.4 trillion debt ceiling. Raising the national debt ceiling helped acquire the necessary permits, authorization, and verifications for Mountain Valley’s construction and initial operation at full capacity.

Earlier this year, Energy Secretary Jennifer Granholm, in a letter to the Federal Energy Regulatory Commission, said, “MVP project will enhance the Nation’s critical infrastructure for energy and national security.”

On August 11, 2023, a three-judge panel of the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, rejected a challenge to the federal approvals for the Mountain Valley Pipeline, ending the long legal battles which have delayed its construction and operation.

On July 27, the U.S. Supreme Court lifted orders of temporarily blocking construction issued by the 4th U.S. Circuit Court of Appeals in the final 3.5-mile section of the pipeline, dealing a blow to the environmental groups protesting against the pipeline construction. The pipeline will transport natural gas from the Marcellus and Utica shale formations to the growing markets of the mid-Atlantic and southeastern regions of the United States.

The MVP will have a delivery capacity of 2 billion cubic feet per day of natural gas, approximately one-third of marketed natural gas produced in West Virginia. The MVP will ensure reliable and affordable access to domestic energy while providing national energy security at the same time.

Although the project is due for completion this year, the Pipeline and Hazardous Materials Safety Administration have notified MVP’s owner Equitrans Midstream to undertake safety inspections across the 300-mile project. The agency wants the safety inspections to be conducted as the segments of pipe left exposed or buried since the project’s inception could pose a safety risk.

In a Notice of Proposed Safety Order, the agency said, “The commissioning and operation of the MVP pipeline without appropriate inspection and corresponding corrective measures first being undertaken would pose a pipeline integrity risk to public safety, property, and the environment.”

Despite the order, the MVP project will likely come live this year. This is expected to benefit fundamentally strong natural gas companies like Shell plc (SHEL), Occidental Petroleum Corporation (OXY), Cheniere Energy, Inc. (LNG), and Chesapeake Energy Corporation (CHK).

Let’s discuss these stocks in detail.

Shell plc (SHEL)

Headquartered in London, the United Kingdom, SHEL operates as an energy and petrochemical company. The company operates Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments. It explores for and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; produces gas-to-liquids fuels and other products.

On February 20, 2023, SHEL’s wholly owned subsidiary Shell Petroleum NV, announced the completion of the acquisition of 100% of the shares of Nature Energy Biogas A/S (Nature Energy). Nature Energy is Europe’s largest renewable natural gas (RNG) producer. The acquisition would help SHEL build an integrated RNG value chain globally and profitably grow its low-carbon offerings to customers across different sectors.

On July 25, 2023, SHEL’s subsidiary Shell Upstream Overseas Services (I) Limited, announced that it had agreed to sell its participating interest in Indonesia’s Masela Production Sharing Contract to Indonesia’s PT Pertamina Hulu Energi and Petronas Masela Sdn. Bhd. SHEL’s Integrated Gas and Upstream Director said, “The decision to sell our participation in the Masela PSC is in line with our focus on disciplined capital allocation.”

In terms of the trailing-12-month levered FCF margin, SHEL’s 8.72% is 42.3% higher than the 6.13% industry average. Likewise, its 12.27% trailing-12-month Return on Total Capital is 18% higher than the industry average of 10.40%. Furthermore, the stock’s 0.83x trailing-12-month asset turnover ratio is 36.1% higher than the industry average of 0.61x.

In terms of forward non-GAAP P/E, SHEL’s 7.33x is 29.9% lower than the 10.45x industry average. Its 3.56x forward EV/EBITDA is 38.7% lower than the 5.80x industry average. Likewise, its 5.32x forward EV/EBIT is 44.3% lower than the 9.56x industry average.

SHEL’s revenue for the second quarter ended June 30, 2023, declined 25.5% year-over-year to $74.58 billion. Its adjusted earnings decreased 55.8% year-over-year to $5.07 billion. Its adjusted EBITDA declined 37.6% over the prior-year quarter to $14.44 billion. The company’s adjusted EPS came in at $0.75, representing an increase of 51.3% year-over-year.

Analysts expect SHEL’s EPS and revenue for fiscal 2024 to increase 2.5% and 3.3% year-over-year to $8.49 and $352.16 billion, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 15.1% to close the last trading session at $60.68.

Occidental Petroleum Corporation (OXY)

OXY engages in acquiring, exploring, and developing oil and gas properties. It operates through three segments: Oil and Gas, Chemical, and Midstream and Marketing.

On August 15, 2023, OXY announced the acquisition of Carbon Engineering Ltd. for $1.1 billion to help it develop a string of carbon-capture sites. OXY President and CEO Vicki Hollub said, “We expect the acquisition of Carbon Engineering to deliver our shareholders value through an improved drive for technology innovation and accelerated DAC cost reductions.”

“The technology partnership also adds new revenue streams in the form of technology licensing and royalties. Importantly, the acquisition enables Occidental to catalyze broader development partnerships for DAC development in the most capital-efficient and valuable way,” she added.

In terms of the trailing-12-month net income margin, OXY’s 21.55% is 53.3% higher than the 14.06% industry average. Likewise, its 51.70% trailing-12-month EBITDA margin is 38.2% higher than the industry average of 37.40%. Furthermore, the stock’s 18.31% trailing-12-month Capex/Sales is 33.9% higher than the industry average of 13.68%.

In terms of forward non-GAAP P/E, OXY’s 17.01x is 62.7% higher than the 10.45x industry average. Its 6.02x forward EV/EBITDA is 3.8% higher than the 5.80x industry average. Likewise, its 2.69x forward Price/Book is 60.8% higher than the 1.67x industry average.

For the second quarter ended June 30, 2023, OXY’s revenues and other income declined 37.3% year-over-year to $6.73 billion. Its adjusted income attributable to common stockholders decreased 79.6% over the prior-year quarter to $661 million. Its adjusted EPS came in at $0.68, representing a decline of 78.5% year-over-year.

Street expects OXY’s EPS for the quarter ending March 31, 2024, to increase 6.2% year-over-year to $1.16. Its revenue for fiscal 2024 is expected to increase 3.3% year-over-year to $28.81 billion. Over the past three months, the stock has gained 7.6% to close the last trading session at $62.55.

Cheniere Energy, Inc. (LNG)

LNG is an energy infrastructure company that is engaged in LNG-related businesses. The company provides clean, secure LNG to integrated energy companies, utilities, and energy trading companies worldwide. The company owns and operates two natural gas liquefaction and export facilities at the Sabine Pass LNG and Corpus Christi LNG terminals. It also owns the Creole Trail pipeline.

On June 26, 2023, LNG announced that its subsidiary Cheniere Marketing, LLC, entered into a long-term liquefied natural gas sale and purchase agreement with ENN LNG (Singapore) Pte. Ltd., a wholly-owned subsidiary of ENN Natural Gas Co., Ltd. ENN agreed to purchase approximately 1.8 million tonnes per annum of LNG under the sale and purchase agreement.

In terms of the trailing-12-month EBIT margin, LNG’s 48.11% is 98.9% higher than the 24.18% industry average. Likewise, its 52.11% trailing-12-month EBITDA margin is 39.3% higher than the industry average of 37.40%. Furthermore, the stock’s 0.70x trailing-12-month asset turnover ratio is 14.8% higher than the industry average of 0.61x.

In terms of forward non-GAAP P/E, LNG’s 7.83x is 25.1% lower than the 10.45x industry average. Its 5.12x forward EV/EBIT is 46.5% lower than the 9.56x industry average.

On the other hand, its 7.57x forward EV/EBITDA is 30.4% higher than the 5.80x industry average.

LNG’s revenues for the second quarter ended June 30, 2023, declined 48.8% year-over-year to $4.10 billion. Its consolidated adjusted EBITDA decreased 26.5% over the prior-year quarter to $1.86 billion. The company’s net income attributable to common stockholders rose 84.8% year-over-year to $1.37 billion. Also, its EPS came in at $5.61, representing an increase of 93.4% year-over-year.

For fiscal 2023, LNG’s EPS is expected to increase 479.3% year-over-year to $32.67. It surpassed the Street EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 12.1% to close the last trading session at $160.19.

Chesapeake Energy Corporation (CHK)

CHK is an independent exploration and production company that engages in acquiring, exploring, and developing properties to produce oil, natural gas, and natural gas liquids from underground reservoirs in the United States. The company holds an interest in natural gas resource plays in the Marcellus Shale in the northern Appalachian Basin in Pennsylvania and the Haynesville/Bossier Shales in northwestern Louisiana.

On August 14, 2023, CHK announced its agreement to sell its remaining Eagle Ford assets to SilverBow Resources, Inc. (SBOW) for $700 million, taking the total proceeds from the Eagle Ford exit to more than $3.5 billion.

CHK’s President and CEO Nick Dell’Osso said, “We are pleased to have successfully completed the exit of our Eagle Ford asset, allowing us to focus our capital and team on the premium rock, returns, and runway of our Marcellus and Haynesville positions.”

In terms of the trailing-12-month net income margin, CHK’s 58.38% is 315.4% higher than the 14.06% industry average. Likewise, its 60.28% trailing-12-month EBITDA margin is 61.2% higher than the industry average of 37.40%. Furthermore, the stock’s 19.55% trailing-12-month Capex/Sales is 43% higher than the industry average of 13.68%.

In terms of forward EV/EBITDA, CHK’s 4.95x is 14.8% lower than the 5.80x industry average. Its 8.33x forward EV/EBIT is 12.9% lower than the 9.56x industry average. Likewise, its 1.11x forward Price/Book is 33.5% lower than the 1.67x industry average.

On the other hand, its 2.79x forward Price/Sales is 87.3% higher than the 1.49x industry average. Its 3.10x forward EV/Sales is 39.2% higher than the 2.23x industry average.

CHK’s total revenues and other income for the second quarter ended June 30, 2023, declined 46.3% year-over-year to $1.89 billion. Its net income available to common stockholders decreased 68.4% year-over-year to $391 million. Also, its EPS came in at $2.73, representing a decline of 67% year-over-year.

Analysts expect CHK’s EPS and revenue for fiscal 2024 to increase 45.5% and 1.5% year-over-year to $6.28 and $3.98 billion, respectively. It surpassed the consensus EPS estimate in each of the trailing four quarters. Over the past three months, the stock has gained 4.1% to close the last trading session at $82.58.