Venture Global costs rise, stock price plunges
The controversial U.S. LNG exporter Venture Global reported lower revenues, and higher-than-expected costs for one of its LNG export terminals. The company has presided over the worst-performing energy IPO in three decades.
Venture Global’s stock price plunged on March 6th after the company revealed higher-than-expected costs for one of its LNG export terminals, while also posting lower-than-expected revenues from a dip in sales.
The company, the second largest U.S. LNG exporter, saw its share price crater by more than 35 percent, closing the day at $9.10 per share. That capped off a string of losses since the company debuted on the New York Stock Exchange in January at $25 per share.
Venture Global’s Plaquemines LNG terminal in southeast Louisiana, which is officially in the commissioning process but has begun exporting cargoes, will now cost between $23.3 billion to $23.8 billion, about $2 billion higher than previously expected. In the company’s 10-K filing, it warned that costs for Plaquemines could continue to rise due to an array of unknown factors, including tariffs and inflation. As a result, actual costs for Plaquemines LNG could be “materially higher than our current estimates,” the company said.
Revenues were also lower than Wall Street analysts had expected. Fourth quarter LNG export volumes were down by more than 13 percent, dragging down revenue by 6 percent. Analysts expected quarterly profit of $1.34 billion, but instead it posted $700 million in earnings, according to Reuters.
Venture Global did not respond to a request for comment.
The market cap for the LNG company is down to just $22 billion, a far cry from the $110 billion valuation it was seeking before its public offering. Venture Global has had the worst-performing energy IPO in over 30 years. A law firm announced a class-action lawsuit against Venture Global for alleged violations of securities law.
Separately, Venture Global is the target of a contentious arbitration case brought by the company’s own customers, including Shell, BP, and Galp. The LNG buyers allege that Venture Global has not delivered LNG cargoes under contract, and has instead exported cargoes at much higher spot prices for the last few years. Venture Global argues that the Calcasieu Pass facility is still commissioning and not 100 percent complete, meaning the contracts have not come into effect.
The fight has burned goodwill and angered prospective customers. For instance, TotalEnergies CEO Patrick Pouyanné said in February that his company wouldn’t sign contracts with Venture Global’s Plaquemines facility because he didn’t trust them.
“I don’t want to deal with these guys, because of what they are doing. … I don’t want to be in the middle of a dispute with my friends, with Shell and BP,” Pouyanné told Reuters.
Despite the financial turmoil, Venture Global held a festive rally at Plaquemines on Thursday, where it announced a major expansion of the site. If it goes forward, it would add another 18 million tonnes of annual capacity.
In attendance was U.S. Department of Energy Secretary Chris Wright.
“America is back!” Secretary Wright exclaimed to a crowd of workers at the plant. “God bless what you do today, and what you do every day.”
Secretary Wright is the former CEO of Liberty Energy, a Colorado-based oil and gas producer. The oil and gas industry spent upwards of $100 million to help elect Trump. The Trump administration is now rolling out an aggressive set of policies to hamstring renewable energy and promote oil and gas.
“I cannot overstate how important what you are doing is, and how aligned it is with the agenda of President Donald Trump,” Wright said.
On a quarterly earnings call, Venture Global CEO Mike Sabel said he felt “pretty good” about receiving all necessary permits from the Department of Energy based on what he has heard from the administration both “publicly and privately.”