Magnolia progresses

The Magnolia project has received two positive pieces of news in the last few weeks, which helps move the process towards project sanction and possible first LNG in 2022. The Department of Energy (DoE) has authorised non-FTA exports for Magnolia’s LNG, following a decision by the US Federal Energy Regulatory Commission (FERC) to deny a rehearing on the Magnolia project requested by the Sierra Club. This is a big step as it allows for exports to all LNG markets globally including Europe, China and Japan. For the moment, we leave our valuation unchanged at A$1.3/share (falls slightly on an ADR basis to US$3.8), but note these announcements pave the way to signing offtake and financing agreements and project sanction in 2017/18.