Cheniere Energy, Inc. announced on Sept. 16 that its subsidiaries, Corpus Christi Liquefaction, LLC and Cheniere Corpus Christi Liquefaction Stage III, LLC, have entered into long-term gas supply agreements with EOG Resources, Inc.
Under the GSAs, EOG has agreed to sell natural gas to Cheniere over a period of approximately 15 years beginning in early 2020, with the quantity starting at 140,000 MMBtu/d and increasing to 440,000 MMBtu/d. The LNG associated with 140,000 MMBtu/d of this gas supply, or approximately 0.85 million tonnes per annum (mtpa), will be owned and marketed by Cheniere and EOG will receive a price based on the Platts Japan Korea Marker (JKM) for this gas. The remaining 300,000 MMBtu/d will be sold by EOG to Cheniere at a price indexed to Henry Hub.
“We are pleased to partner with EOG, one of the largest independent natural gas producers in the United States, on our second Integrated Production Marketing (IPM) transaction which is expected to support Corpus Christi Stage III,” said Corey Grindal, Cheniere’s Senior Vice President, Gas Supply. “The IPM commercial structure leverages our world-scale infrastructure platform and capabilities in Corpus Christi, offering domestic natural gas producers efficient access to global LNG prices and long-term flow assurance, while providing Cheniere with reliable delivery of natural gas and commercial support for growth.”
“We look forward to working with Cheniere, the leading U.S. LNG provider, to expand into international natural gas markets where global demand is expected to significantly increase for years to come,” said D. Lance Terveen, Senior Vice President, Marketing of EOG. “Adding gas sales agreements linked to LNG prices supports EOG’s portfolio approach to marketing our growing production of low-cost natural gas. These agreements further diversify our access to customers across multiple end markets in order to maximize our natural gas price realizations.”
A portion of the transaction is subject to certain conditions precedent, including a positive final investment decision on Cheniere’s Corpus Christi Stage III project. The Corpus Christi Stage III project is being developed to include up to seven midscale liquefaction trains with a total expected aggregate nominal production capacity of approximately 9.5 mtpa. The Corpus Christi Stage III project received a positive Environmental Assessment from the Federal Energy Regulatory Commission in March 2019 and is anticipated to receive all remaining regulatory approvals by the end of 2019.
Recommended Reading
The One Where EOG’s Stock Tanked
2024-02-23 - A rare earnings miss pushed the wildcatter’s stock down as much as 6%, while larger and smaller peers’ share prices were mostly unchanged. One analyst asked if EOG is like Narcissus.
Kimmeridge Fast Forwards on SilverBow with Takeover Bid
2024-03-13 - Investment firm Kimmeridge Energy Management, which first asked for additional SilverBow Resources board seats, has followed up with a buyout offer. A deal would make a nearly 1 Bcfe/d Eagle Ford pureplay.
Uinta Basin: 50% More Oil for Twice the Proppant
2024-03-06 - The higher-intensity completions are costing an average of 35% fewer dollars spent per barrel of oil equivalent of output, Crescent Energy told investors and analysts on March 5.
Bobby Tudor on Capital Access and Oil, Gas Participation in the Energy Transition
2024-04-05 - Bobby Tudor, the founder and CEO of Artemis Energy Partners, says while public companies are generating cash, private equity firms in the upstream business are facing more difficulties raising new funds, in this Hart Energy Exclusive interview.
E&P Earnings Season Proves Up Stronger Efficiencies, Profits
2024-04-04 - The 2024 outlook for E&Ps largely surprises to the upside with conservative budgets and steady volumes.