With so much natural gas coming from our shale fields, the promise of exporting that bounty is quickly becoming a reality for the U.S. As one of the first firms to win export approvals for its Sabine Pass facility, Cheniere Energy (LNG) shares have surged nearly 120% year to date.
With the Sabine Pass scheduled to begin liquefied natural gas (LNG) shipments in 2015 and construction starting on a second LNG facility in Corpus Christi, the long-term promise is certainly there for LNG stock.
However, the glaring problem is that LNG doesn’t actually make any money right now. Contract royalties from when it was an importer still trickle in, but as an exporter, LNG hasn’t yet produced a profit.
On the flipside, competing energy stocks — Dominion (D) and Spectra (SE) — have a breath of assets that continue rack up earnings and pay dividends. Investors are being paid to wait while their LNG facilities take shape.
LNG has no such cushion, and with the stock up so huge in 2013, investors may have already priced in much of the export growth into the stock. It’ll be better in the longer term, but as we go into the new year, trimming Cheniere is prudent.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.