Liquefied Natural Gas Ltd (LNG Ltd) has confirmed that its wholly owned subsidiaries and Stonepeak Partners LP (Stonepeak) 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 LNG Ltd’s Magnolia LNG Project (MLNG) in the US state of Louisiana. The total Stonepeak equity contribution is estimated to be US$ 660 million.
Stonepeak and LNG Ltd 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 MLNG 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 LNG Ltd retaining around a 50% equity interest.
The Stonepeak equity transaction comprises two documents, namely:
- Equity Commitment Agreement, which governs the relationship, cooperation, rights and obligations between Stonepeak and the Company in relation to the project through to a Final Investment Decision (FID).
- Magnolia LLC Agreement, which sets out the respective rights and obligations of Stonepeak and LNG Ltd from the FID, including the project’s construction and funding, management and governance, the allocation and distribution of its future profits, and other related matters.
This marks a major milestone for LNG Ltd in the development of the Magnolia LNG project with equity funding plans for the project’s construction and operations now in place.
Stonepeak Managing Director and co-founder, Trent Vichie, said: “We are delighted to enter into this partnership with [LNG Ltd] for the Magnolia LNG Project. We look forward to working with [LNG Ltd’s] project management team to bring the project to FID and ultimately commercial operations.”
LNG Ltd 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 five 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 MLNG project is based on the development of two 2 million tpa LNG trains. First production is anticipated in the first half 2018. An additional two 2 million tpa LNG trains at a marginal cost for a total nominal capacity of 8 million tpa could be supplemented in the future.
Adapted from press release by Ted Monroe
Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/24102013/stonepeak_signs_equity_agreement_with_lng_ltd/