Page 13 - NorthAmOil Week 22

NorthAmOil INVESTMENT NorthAmOil

LNGL sells Magnolia LNG to different buyer

LOUISIANA A deal struck by Australia-based LNG Ltd In this week’s statement, LNGL said it had
(LNGL) to sell its proposed Magnolia LNG pro- terminated that deal on May 25 owing to GEM’s
ject on the US Gulf Coast has fallen through less failure to close the transaction within the time-
than two weeks after being announced. How- frame required under their agreement. It
ever, a day after terminating the previous agree- entered into the new deal with Magnolia shortly
ment, LNGL sold the project to another buyer, thereafter.
Magnolia LNG Holdings. LNGL said that in addition to the cash pur-
This new transaction, for a price of $2mn, chase price, it would receive an unsecured,
was signed and closed on May 26. The deal was non-interest bearing promissory note issued by
announced by PricewaterhouseCoopers, which Magnolia. The value of the note is estimated to
is acting as administrator for LNGL as the com- be around AUD2.0mn ($1.3mn), subject to cer-
pany goes through the Australian equivalent of tain liabilities that Magnolia has assumed. The
bankruptcy proceedings. note will be payable if the Magnolia LNG project
Details of the owners or companies affiliated reaches financial close and a notice to proceed
with Magnolia have not been disclosed. has been issued for the initiation of construction,
The closing of the deal comes after two failed LNG added.
transactions involving LNGL. (See GLNG Week The two companies have also agreed to work
19) First, the company had been due to be taken together on a potential recapitalisation proposal
over by Singapore-based LNG9, but the buyer for LNGL.
withdrew in mid-April following the collapse of The Australian company noted that while
financing for the proposed takeover. Then LNGL its patented optimised single mixed refriger-
announced on May 12 that it had agreed to sell ant (OSMR) liquefaction process technology
the subsidiaries that own and operate Magnolia would be sold as part of the Magnolia trans-
LNG, including Pecan, LNG Management Ser- action, its proposed Bear Head LNG project in
vices and LNG Technology, to Global Energy Canada would retain a perpetual licence to use
Megatrend (GEM) for $2.25mn. that technology.™

PERFORMANCE

Occidental cuts dividend by 91%

US OCCIDENTAL Petroleum has slashed its divi-
dend by 91% to just $0.01 per share on May 29
in a bid to preserve cash as it struggles with the
impact of the oil price crash. Occidental’s divi-
dend is now at its lowest level since at least the
1970s and comes after the company had already
cut its dividend 86% to $0.11 per share in March.
Occidental’s ill-timed gamble to take over
Anadarko Petroleum last year has left the com-
pany saddled with around $40bn worth of debt,
which it was struggling to pay off even before oil
prices tumbled in March. Occidental reported
that it still had over $36bn of debt at the end of
that month.
While West Texas Intermediate (WTI) crude
prices have been holding steady above $30 per mandatory selling of the stock by dividend
barrel in recent days, and was trading at over $36 funds. It may also be signalling that it aims to
per barrel on June 3, this is still an uncomfortable restock the stipend at some point in the future,
level for many US producers. according to him.
The two dividend reductions since March “They need that extra money at $35 a barrel
will save Occidental about $2.7bn per year, but oil, so it’s the right move,” Mariani was reported
this comes amid warnings that the company has by Bloomberg as saying. “They’ve got to do what-
$14bn worth of debt maturing by 2024. It has ever they can to survive.”
until 2021 and 2022 to make most of its decisions Occidental also held its first annual meet-
on whether to repay or refinance this debt. ing since the Anadarko takeover on May 29.
A KeyBanc Capital Markets analyst, Leo Occidental’s CEO, Vicki Hollub, and the rest
Mariani, suggested that Occidental had probably of the board of directors won re-election at
opted to keep a token dividend payout to avoid the meeting.™

Week 22 04•June•2020 www. NEWSBASE .com P13