Energy Stocks Jump in Early Trading

Joel Anderson  |

A flurry of positive news drove energy stocks broadly higher in early trading Wednesday.  The biggest gainer was Cheniere Energy (LNG) on news of a major new liquid natural gas contract.  It was a variety of different news items, ranging from major new contracts to better-than-expected earnings reports, but it all contributed to an upward over-all trend in the energy sector despite declining crude prices.

New Deal in Gulf of Mexico means Big Move for Cheniere


Cheniere Energy was the day's biggest gainer, starting the day up over 70 percent in after market trading on news that they expect to sign a deal in the next few weeks with BG Group plc (BG) for the sale and purchase of liquid natural gas out of the Gulf of Mexico.  This is the first such deal for Cheniere.  The contract is for 20 years and for 3.5 million tons of liquid natural gas annually.  Cheniere's stock skyrocketed before market open, reaching a maximum gain of 77 percent before settling down to 68 percent by the close of the markets.  BG stated that this is the first such long term liquid natural gas purchase from a project in the Gulf of Mexico.  The deal, worth a reported $410 million a year, facilitates the financing of Cheniere's Sabine Pass project in Louisiana, the first such export facility built in the United States in over 50 years.  "If we start construction by next year then we could be exporting by 2015," Cheniere chief executive Charif Souki told Reuters. "The BG Group contract will help with financing."

Other Energy Companies Spike Up on Good News


Shares in Texas-based Valero Energy Group (VLO) were holding near 10 percent gains Wednesday morning amid unsourced rumors in the UK Daily Mail of a buyout by Royal Dutch Shell (RDS.A).  Dropping crude prices had made for a rough day on Tuesday for Valero, but the buyout rumors pushed the stock back over its high on Monday.  Independent oil and natural gas exploration company EXCO Resources (XCO) was also up Wednesday, reaching a 13 percent jump by midday.  EXCO has partnered with BG Group to explore for shale gas in the United States and is likely to benefit from increased energy costs in the future as well as BG's new deal with Cheniere.

First Solar Rebounds on Positive Earnings Report

Also showing strong gains was First Solar (FSLR).  The company, which specializes in manufacturing solar modules utilizing an advanced thin-film semi-conductor technology, saw its stock tank on Tuesday after the oust of CEO, Rob Gillette.  New interim CEO Michael Ahearn, though, announced today that their quarterly report showed a 85% in sales for Q3, prompting a nearly 9 percent jump in their stock early trading.  While the 11% increase in Q3 profit serious missed expectations, many analysts were predicting the worst for First Solar due to current economic conditions and the report proved sunnier than expected.  Said Ahearn "First Solar's performance in the quarter reflects our superior technology, strong execution capability, and integrated business model - all of which have enabled us to weather a difficult market environment relatively well.  Going forward, our goal is not just to survive the current environment, but to transcend it by creating and expanding markets worldwide that do not depend on today's subsidy programs. This requires that we re-focus our strategy and commit our resources to solving the pressing energy needs that exist in much of the world."


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