Consensual Hallucination: Natural Gas ‘Exporters’ Spike Fabulously (With Nothing to Export) | Wolf Street

by Wolf Richter • August 5, 2014

America is on the verge of becoming a natural gas net exporter in a year or two. It can relieve energy-starved Japan from extortionary prices and free Europe from the clutches of Gazprom. A number of liquefied natural gas (LNG) export facilities on the Gulf Coast and on the West Coast have been approved, are under construction, or are in the pipeline, so to speak. Untold riches await daring investors.

Or so it would seem, according to the hype, often as thick as San Francisco fog in the summer, that has shrouded the segment of the industry. Some stocks of companies hoping to ride that LNG export boom are soaring. Billions, mostly borrowed from unsuspecting or blind lenders of one type or another, have already been spent, and many more are going to be spent, on highly capital-intensive LNG export terminals.

For example, Cheniere Energy which by now is famous for producing ever increasing losses on declining revenues: in 2013, it generated $507 million in losses on $267 million in revenues – which is quite a feat! The losses are up 156% from 2011, while revenues are down 8%. It now has $9.5 billion in debt, up from $3.3 billion in 2011. Its stock price soared from penny stock in 2003 to over $40 a share in 2006 and 2007, before it revisited the penny stock purgatory in 2008. Then in 2012, the LNG export hype began wafting around its operations, and the stock soared again, and it recently spiked, and closed today at $72. It’s been one heck of a ride.

…(read more).

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