Huge new IPO to establish Venture Global among energy elite

(Bloomberg) — Venture Global LNG Inc. is set to join the top group of U.S. energy companies that includes Occidental Petroleum Corp. and PG&E Corp. with one of the world’s biggest IPOs this year.

A Gulf Coast natural gas exporter planning to file for an initial public offering this week could raise more than $3 billion, according to people familiar with the matter, though details are subject to change. Research analysts at JPMorgan Chase & Co. estimate Venture Global’s enterprise value at more than $100 billion, a figure that includes an undisclosed amount of debt.

The timing couldn’t be better for the launch of an industry that is in the process of opening a second liquefied natural gas facility in Louisiana and is awaiting government permits for two more new complexes. It is widely expected that Trump’s fossil fuel-friendly ethos will mean an end to the Biden administration’s moratorium on new export licenses that has disrupted the sector.

The advent of the modern U.S. LNG industry in 2016, enabled by drilling and fracking breakthroughs that unlocked vast reserves of shale gas, upended global energy markets by creating a huge alternative source for utilities and chemical manufacturers that had previously been in power, such as Russia. Dependent on a handful of producers. And Qatar. The geopolitical significance of that development has not been lost on successive US administrations.

“It’s a really good moment for Venture Global to make this change,” said Jean-Christian Heintz, a former energy-trading executive who now runs consultancy WideAngle LNG. He said the incoming Trump administration could be considered a protective environment for the US LNG sector.

When Venture Global’s Plaquemines LNG plant near New Orleans is fully operational, the company will overtake rivals and become the nation’s No. 2 supplier behind Cheniere Energy Inc., whose $47 billion market value makes it an oil giant. The company keeps pace with Occidental and PG&E. ,

Venture Global’s founders, former investment banker Mike Sabel and Washington, DC regulatory attorney Bob Pender, launched the company outside the energy capital of Houston at a time when the industry was still dominated mostly by supermajors, national energy companies or long-term organizations like Cheniere. .

Venture Global did not respond to multiple requests for comment.

When the Biden administration first announced a freeze on permits for new LNG export projects, Venture Global was among those most outraged. It plans to greenlight its proposed third project, CP2, which has already signed up long-term customers such as Chevron Corp and Exxon Mobil Corp. After all, export permission is an important milestone in securing project financing.

In the past year, Chief Executive Officer Sabel has attended events with former Japanese Prime Minister Fumio Kishida as well as Germany’s Olaf Scholz, and last spring an industry roundtable at Trump’s Mar-a-Lago club in Florida. Had participated in.

In its waning days, the Biden administration is now seeking to conclude a study of the economic and climate impacts of increased LNG exports, which was the main basis for the moratorium on permitting. Either finding could complicate Trump administration moves to resume licensing.

Venture Global is also locked in arbitration with companies that include customers of its first LNG plant, Calcasieu Pass in Louisiana, which was scheduled to begin production in 2022 but has not yet begun deliveries on contracts with long-term customers. , which includes Shell plc and BP plc.

Joseph Schuster, founder of IPOX Schuster LLC, a provider of initial offering benchmark indices, said the arbitration “presents a legal quandary the company certainly wants to avoid going into the IPO process.” “Any unresolved issues could make predictive valuation challenging.”

Matt Kennedy of IPO research firm Renaissance Capital said the ongoing arbitration would not be considered a barrier to going public, but could raise concerns among some potential investors.

“Investors will want to consider how much revenue these customers represent, the nature of the dispute, and how the company thinks it will impact the business going forward,” Kennedy wrote in an email. “It would be unusual to move forward with an IPO if they truly believed a significant portion of their business was going to be lost.”

–With assistance from Bailey Lipschultz, Gillian Tan and Stephen Stapczynski.

(Updated with commentary from an IPO expert in the 13th paragraph. The rankings in the sixth paragraph have been corrected from an earlier version of this story.)

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