Based on 3Q earnings, Venture Global reported that they have 67 mtpa of LNG capacity in operation or under construction and that number will reach 100 mtpa by 2030. Additionally, they have secured offtake agreements for 45 mtpa already. These agreements are mostly long-term supply and purchase agreements (SPAs) lasting a duration of 20 years. LNG demand is poised to grow over the next 2 decades, primarily in Asia, due to energy consumption growth in many developing economies, coal-to-gas switching and decarbonization, and also due to growth in AI data centre power consumption. My understanding is that they make money from liquefaction fees that are specified in these SPAs, priced at around US$5-7/mmbtu. Hence, this serves as a source of long-term stable revenues.
Of course, the company is currently taking on large amounts of debt to finance the construction of the various natural gas liquefaction terminals. Additionally, it is currently embroiled in legal issues with Shell and BP, who are some of the off-takers of its LNG cargoes. They won the case against Shell but lost the case against BP. Venture Global has been accused by these companies of not abiding by the terms of these SPAs when they sold their commissioning cargoes for one of their projects on the spot market for large profits during the period of high LNG prices brought about by the Russia-Ukraine war. I am unsure of what is the long-term impact of these legal battles, but I think it should not affect the long-term business case.
I am relatively optimistic about the future performance of $VG as it will soon grow to a size comparable to Cheniere and will also exceed it in LNG export capacity. The LNG market seems to be growing healthily. As long as they can find buyers for their capacity and execute on their projects, I would think that the stock price can easily hit 15-18 dollars within the next 1-2 years. I am curious if there are any risks that I may have missed out in my current analysis?