Magnolia LNG in Strategic Alliance with Stonepeak (USA)

Liquefied Natural Gas Limited announced that it has entered into a Project Development Cooperation and Equity Term Sheet (Agreement) with Stonepeak Partners LP, in relation to the Company’s 100% owned Magnolia LNG Project (MLNG Project), in Louisiana, United States.

The Agreement details the key terms of proposed definitive agreements to be negotiated and entered into between Stonepeak and the Company, pursuant to which:

• Stonepeak and the Company will cooperate in the development of the MLNGProject; and
• Stonepeak will provide 100% of the project equity finance from financial close, for the construction and commissioning of the MLNG Project, in consideration of a % interest in the MLNG Project (at financial close) determined by an agreed Stonepeak internal rate of return on its investment at such time.

Based on the initial development plan of 2 LNG trains, with a total capacity of 4 million tonne of LNG per annum, it is assessed that Stonepeak would hold ~50% of the MLNG Project for contributing the full US$660million project equity requirement. The Company would retain ~50% of the MLNG Project.

The estimated capital cost of the initial development remains as previously advised, at US$2,200 million.

The Company plans to finance the MLNG Project based on 70% project debt financing, with the 30% project equity financing provided by Stonepeak. The ownership split between Stonepeak and the Company will be determined at financial close, based on the MLNG Project financial model agreed between Stonepeak and the Company.

The Company and Stonepeak will now proceed to progress Definitive Agreements, within the agreed term of 60 days from the date of the Agreement.

In summary,the key terms under the Agreement include:

• Stonepeak and the Company to form a strategic alliance dedicated to the development, construction and operation of the MLNGProject;
• Stonepeak will commit to provide 100% of the MLNGProject equity from financial close, which is estimated at ~US$660million;
• Stonepeak will pay to the Company a one‐offsuccessfee on the MLNGProject achieving financial close, calculated on 3% of the total MLNGProject capital cost(such fee is estimated atUS$66 million);
• Stonepeak will assist the Company secure long term project debt financing, which is estimated at US$1,540million. In this regard, Stonepeak will work with the Company in ensuring all MLNGProject material agreements and other documents are in bankable form; and
• Stonepeak will be entitled to appoint one manager to the Board of Magnolia LNG, LLC (MLNGProject ownership company), but the manager will have no voting rights prior to financial close and the commencement of Stonepeak’s project equity financing contribution.

The Company’s Managing Director, Maurice Brand, said that “the Company was extremely pleased with the strategic alliance with Stonepeak and its early commitment to provide 100% of the MLNG Project equity from financial close. This early equity commitment will allow the MLNG Project to proceed in a timely manner and reduces the time from receipt of all permits and environmental approvals and completion of all bankable project documentation to achieve financial close and proceed to construction. In addition, it provides an increased level of confidence for LNG tolling parties and other stakeholders in relation to the MLNGProject achieving financial close.”

“With the Stonepeak strategic alliance and the recently announced Tolling Term Sheet signed with Brightshore Overseas Ltd (Gunvor Group), for LNG supply to the Panama and other US Free Trade Agreement countries, the key building blocks are coming together quite rapidly and will help to build shareholder value,” said Mr Brand.