Energy production, storage and transportation firm Stabilis Solutions (NASDAQ:SLNG) doubled during Wednesday trading following an announcement that it received authorization to export liquefied natural gas. The massive catalyst for SLNG stock comes amid Russia cutting off natural gas outflows to Europe. As well, Russia announced a partial mobilization initiative on Wednesday.
Earlier today, Stabilis Solutions disclosed that the U.S. Department of Energy (DOE) granted authorization to the company to ship LNG to “all free trade and non-free trade countries, including Asian, European, and Latin American importing nations.”
Further, under the DOE order, “Stabilis received authority to export on its own behalf, or as agent for others, up to the equivalent of 51.75 billion cubic feet per year of domestically produced LNG. The authorization is for a term of 28 years.”
The length of the term is significant because of major geopolitical implications. As the U.S. and Western allies have supported Ukraine with military hardware, Russia cut natural gas supplies to Europe. Unsurprisingly, the move left the region struggling for alternative inflows.
Moreover, President Vladimir Putin announced a partial military mobilization involving 300,000 troops. This has strengthened investors’ fears that Russia could further constrain energy supply to European countries.
SLNG Stock Becomes a Cynical Beneficiary
Similar to other energy-related companies, Stabilis Solutions performed well this year as the industry received a massive spotlight. However, the ability to ship LNG – or gas which has been cooled to a liquid state for convenient storage and transportation – may be a gamechanger for SLNG stock. Certainly, the market seems to think so, with shares now up 103% on a year-to-date basis.
The news may also help gird the Western alliance against Russia. As Bloomberg recently reported, Europe braces for a brutal, cold winter. A combination of economic headwinds (i.e. inflation) and geopolitical consequences for supporting Ukraine may lead to skyrocketing utility bills, rationing and blackouts. Therefore, any assistance would be critical, thus boosting SLNG stock.
Still, some energy experts warned that no hydrocarbon bailout will rescue Europe, at least for the interim. Effectively, production will largely remain the same. Specifically, the energy sector has not added new drilling rigs, implying very little net improvement.
At the same time, with President Joe Biden committed to holding Russia accountable, the greenlight of Stabilis’ exports may be an early sign of a strategic directive. Whatever the case, the total addressable market for the company appears to have expanded significantly, boding well for SLNG stock.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
