LNG

Cheniere Energy is ending its boardroom links with US activist investor Carl Icahn who swooped on the company in 2015 to force boardroom changes in what he said was in the interests of shareholders.

Cheniere has just signed an agreement to repurchase about $350 million of the company’s common shares beneficially owned by Carl Icahn and certain of his affiliates.

The deal was at the purchase price of $130.52 per share, the closing price of Cheniere’s common shares on June 14.

The purchase of the shares will be funded from Cheniere’s cash on hand and is part of the company’s $1 billion share repurchase authorization. The transaction was expected to close no later than June 21.

“Pursuant to a nomination and standstill agreement entered in 2015, the company agreed to give Icahn Enterprises one board seat for as long as it continued to hold at least 7,741,412 common shares,” explained Cheniere, the owner of the Sabine Pass export plant in Louisiana and the Corpus Christi plant in Texas.

The arrival of Icahn as an investor in Cheniere saw the eventual departures of founder and then CEO and Chairman Charif Souki along with other executives.

Souki went on to start Tellurian Inc. and to develop the Driftwood LNG plant in Louisiana, which has now entered the construction phase.

Last director

“This transaction will result in Icahn Enterprises’ holdings in the company to be under this threshold and the remaining director designee, Andrew Teno, will resign from the board of directors within two business days following the closing of the agreement,” said Houston, Texas-based Cheniere.

Cheniere said the $350M repurchase reflected “efficient execution” of its long-term capital allocation plan at a time when environmental priorities and energy security have natural gas as a key focus globally.

“We appreciate Carl Icahn and his Board representatives for their support of Cheniere over these last almost seven years as we have become the world’s second-largest LNG operator,” said Jack Fusco, Cheniere’s President and CEO.

“They have provided guidance and insight which has meaningfully contributed to Cheniere’s growth and strategy over that time,” added Fusco.

Icahn said his investments in Cheniere was a key example shareholder activism efforts.

“We were instrumental in hiring CEO Jack Fusco, who has assembled a great team and unlocked the value of a fantastic asset,” explained Icahn.

“As we have said many times, when the time for activism is over, we generally take a profit on a portion of our stock. To date, we have made over $1.3 billion in realized and unrealized gains on Cheniere and, even after the sale today, we still remain sizeable owners of Cheniere stock,” he stated.

The Cheniere Energy-owned Corpus Christi LNG export plant in Texas is the first of the four US Gulf Coast-based facilities to recommence cargo liftings since activities were temporarily halted as Hurricane Laura approached last week, while seven LNG carriers are standing by in the Gulf to load.

The Corpus Christi plant began loading cargoes again just two days after the hurricane made landfall farther north in the Gulf of Mexico near Lake Charles on the Louisiana-Texas border.

The first cargo was loaded on August 30 onto the 177,200 cubic metres capacity “Sohshu Maru”, with another cargo being taken by the 140,645 cubic metres capacity “Golar Arctic” and a third on August 31 by the 155,000 cubic metres capacity “Gaslog Shanghai”, according to shipping data.

Renewed cargo liftings helped to boost Gulf Coast LNG cargo futures to their highest levels in 2020. These are settled derivatives contracts available through to October 2022 and based on the average free-on-board (FOB) cargo prices.

The value of a US GCL cargo for October 2020 rose to $3.600, up from $3.250 per MMBtu on August 31, while November jumped to $4.486 from $4.347 per MMBtu.

The December GCL contract increased to $4.973 per MMBtu from $4.905 per MMBtu on August 31.

Before the Corpus Christi plant began cargo liftings the last cargo loaded in the GoM had been on August 23, the shipping data showed.

There were also seven unladen LNG carriers on September 2 either in a holding pattern offshore or entering the Gulf.

Other plants were also on the way back. Cheniere said that a comprehensive facility and operational assessment of its Sabine Pass plant in Louisiana, the largest facility in the US with 22.5 MTPA of nameplate capacity, had revealed no significant damage as a result of the hurricane.

“Cheniere has started to execute on its plan to restart LNG production at Sabine Pass,” said the company.

Sempra Energy, the owner of the Cameron LNG export plant in Louisiana, said its teams had been able to conduct preliminary visual inspections of the Cameron facility and the site of the proposed Port Arthur LNG project in Texas and of other infrastructure in the region.

“The initial evaluation indicates minimal flooding and no catastrophic wind damage,” said Sempra.

“Thorough inspections are planned pending confirmation of sufficient site safety and security. The team at Cameron LNG is committed to the restoration of full operations as soon as safely practicable,” added the company.

Venture Global, the Virginia-based company developing three liquefaction and export plants in Louisiana, said its Calcasieu Pass facility under construction in Cameron Parish had sustained minimal impacts from the hurricane, which passed directly over the project site.

“A walk-through inspection of most areas of the site following the storm confirmed that the project site’s robust storm protection system, including a perimeter wall and storm water pumping system, performed as designed,” said Venture Global.

“While we are relieved by the minimal impacts to Calcasieu Pass LNG, we are mindful that the surrounding communities of Cameron and Lake Charles have suffered significant damage from this powerful and historic storm,” the company added.