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Magnolia LNG secures financing

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Hydrocarbon Engineering,

Liquefied Natural Gas Ltd (LNG Ltd) has confirmed that some of its wholly owned subsidiaries have entered into an amended and restated Magnolia LNG equity commitment agreement (ECA) with Stonepeak Partners LP and have updated the associated Magnolia LLC Agreement (LLC agreement).

The amended ECA and LLC agreements replace the existing Stonepeak agreements signed in October 2013 in their entirety.

LNG Ltd Managing Director and Chief Executive Officer, Greg Vesey, said: “Stonepeak is a long-term and valued partner in our project, and we are pleased to continue this relationship. This announcement signals a strong message to the LNG industry about our shared confidence in the virtues and advantages of the Magnolia LNG project as we continue our focus on finalising offtake agreements and moving toward a final investment decision (FID).”

Stonepeak Co-Founder and Senior Managing Director, Trent Vichie, said: “We are thrilled to announce our continued support for Magnolia, which we believe to be among the best positioned projects for the next wave of US LNG exports, and to support [LNG Ltd] management in the final steps to a successful Financial Close. Stonepeak is bullish on the long-term outlook for US sourced LNG, which we believe can provide cheaper and cleaner fuels globally to underserved or stranded consumers, and we hope that Stonepeak’s commitment to Magnolia can help bring additional low-cost LNG to market.” The ECA governs the relationship, cooperation, rights, and obligations between Stonepeak and LNG Ltd through Financial Close of Magnolia. The LLC Agreement sets out the respective rights and obligations of Stonepeak and LNG Ltd relating to Magnolia from Financial Close, including the governance, construction, operation, allocation of profits, distribution of post-debt service cash flows, and other related matters.

The amended agreement represents the definitive documentation under which investment funds managed by Stonepeak will acquire Mandatorily Redeemable Preferred Interests in the Magnolia LNG project. Proceeds will be used to fund the full expected US dollar equivalent equity requirement to construct and place into service the Magnolia LNG project located in Lake Charles, Louisiana, US. Stonepeak’s investment is scheduled to close following a positive final investment decision (FID) on Magnolia by LNG Ltd, subject to certain conditions precedent, with definitive debt financing agreements thereafter in front of financial close. LNG Ltd’s share of annual cash distributions from Magnolia will be after payment of debt service and the Preferred Interest fixed-return obligation held by Stonepeak.

LNG Ltd’s equity share of Magnolia’s distributable cash flow is primarily dependent on final total capital cost of the project (inclusive of EPC, Owner’s, and debt financing costs), as well as the average pricing of the offtake agreements executed for Magnolia’s 8 million tpy of capacity. The Stonepeak transaction is a Magnolia LNG project level finance transaction. It does not impact Bear Head LNG or LNG Ltd shareholders’ interest in LNG Ltd.

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