Liquefied Natural Gas confirmed that wholly owned subsidiaries of the company and Stonepeak Partners have signed a legally binding Equity Commitment Agreement, including the agreed final form of the Magnolia LLC Agreement, to provide 100% of the construction equity for the company’s Magnolia LNG Project in Louisiana, United States. The total Stonepeak equity contribution is estimated to be US$660 million.
Stonepeak and the company signed an equity funding and strategic alliance term sheet on 26 July 2013, the key terms of which are incorporated in the Equity Commitment Agreement. Based on the Project’s current financial model, Stonepeak’s US$660 million equity investment will provide it with an approximate 50% equity interest in the project, with the company retaining around a 50% equity interest.
The Stonepeak equity transaction comprises two documents, namely:
This marks a major milestone for the Company in the development of the project with equity funding plans for the Project’s construction and operations now in place. The key terms of the Equity Commitment Agreement include:
Stonepeak Managing Director and co founder, Trent Vichie , said that “We are delighted to enter into this partnership with the Company for the Magnolia LNG Project. We look forward to working with the Company’s Projet management team to bring the Project to FID and ultimately commercial operations.”
The Company’s Managing Director, Maurice Brand , commented: “The Stonepeak Equity Commitment Agreement is a significant milestone in the development of the Magnolia LNG Project, and has considerably de‐risked our path to LNG production. The Project is set to be within the first 5 LNG export projects in the US to commence LNG supply.”
“Obtaining equity funding in a short period of time from a well‐regarded infrastructure fund is a solid endorsement of the Project, the OSMR® LNG Liquefaction Process, and the Company’s ability to develop and operate a major US LNG export facility.”
The Project is based on the development of 2 x 2mtpa LNG trains in Stage 1. First production is anticipated in the first half 2018. The Project can be increased by an additional 2 x 2mtpa LNG trains at a marginal cost for a total nominal capacity of 8mtpa.
Key milestones, “Conditions Precedent”, that Magnolia LNG will need to satisfy prior to Stonepeak commencing the Project equity financing, which are all usual for the nature of the Project, include:
As previously announced, the company has signed a non‐binding Tolling Agreement Term Sheet with Brightshore Overseas Ltd (an affiliate of Gunvor) and a non‐binding Heads of Agreement with Gas Natural SDG SA (GNF), for the 4mtpa planned output of Stage 1.
Brand added, “The Company is now focused on signing the definitive Tolling Agreements for the 3.4 mtpa Stage 1 firm capacity of the Project with Gunvor and GNF, selecting its preferred EPC Contractor, and progressing the required FERC approvals. We will continue to update shareholders on our progress on a monthly basis and when material agreements have been executed.”
[mappress] LNG World News Staff, October 24, 2013; Image: LNG Ltd