Kimmeridge to halve stake in Louisiana (U.S.) LNG project after FID
Energy investment firm Kimmeridge Energy Management plans to reduce its stake in a Louisiana liquefied natural gas (LNG) export project to 51% down from 100% after it reaches a final investment decision (FID) next year, Managing Partner Ben Dell said.
In June, Kimmeridge acquired for an undisclosed amount Commonwealth LNG, which is developing a 9.5 metric MMtpy LNG plant in Cameron, Louisiana. The project has applied for but not received a needed export license from the Department of Energy (DOE).
"Our expectation is under financing we will drop down to around 51%" stake in Commonwealth LNG, Dell said late Thursday on the sidelines of the Gastech energy conference in Houston.
Dell said the plan is to increase the equity in the project by bringing in infrastructure-type investors who by putting in their equity will have the effect of diluting Kimmeridge's overall shareholding.
U.S. President Joe Biden's administration pause on LNG export-permit reviews could be over early next year, he said, projecting a FID on the project could follow in the fourth quarter of 2025.
"My personal view is the inside date we can FID is late May, the outside date is October depending on what the DOE does and what they require," Dell said.
Kimmeridge plans to invest $1 B of its own money into financing the project and has most of the debt and equity partners ready to go once the project gets permitted, Dell said.
Commonwealth LNG aims to market eight of the plant's 9.5-MMtpy production capacity and retain the remainder for its owners to trade, he said.
Some of the cash to pay for the plant investment will come from Kimmeridge's natural gas production business that Dell said is generating $400 MM–$500 MM in earnings before interest, taxes, depreciation and amortization (EBITDA).
"I would like to see us involved in more than one LNG facility and we will evaluate the shipping, regas and further downstream to see if we want to participate in that," Dell said.
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