Cabot Oil & Gas Corporation (COG), Cheniere Energy, Inc. (LNG): What To Watch In This Space

To meet the rising international gas demand, Cheniere Energy, Inc. (NYSEAMEX:LNG) is currently expanding its Sabine Pass terminal to accommodate 2 more LNG trains, which would add 1.30 Bcf/d to its existing natural gas processing capacity. That is an impressive 65% capacity expansion, and the company expects the export terminal to be fully operational by 2015.

Analysts estimate its annual EPS to grow at 15% for the next five years.

Another beneficiary

But, Cheniere Energy, Inc. (NYSEAMEX:LNG) is not alone in the race for LNG exports. Italian oil and gas company Eni SpA (ADR) (NYSE:E) and Anadarko Petroleum Corporation (NYSE:APC) jointly discovered one of the largest natural gas reserves (in Mozambique) in 2010 with over 150 trillion cubic feet of estimated hydrocarbon reserves. As of now, Eni owns a 50% majority stake in the project, while Anadarko Petroleum Corporation (NYSE:APC) owns 36%.

Both the companies are jointly developing the world’s second largest LNG export terminal, with an estimated cost of $50 billion and completion target of 2017. Needless to say, both companies are poised for a massive upside.

Eni SpA (ADR) (NYSE:E) has been primarily known as an oil producer, but it has been gradually shifting towards natural gas due to its tremendous growth prospects. Currently, Eni generates 51% of its revenue from sales of natural gas, and the Mozambique project bodes well with its long term strategy.

As a result, analysts estimate its annual EPS to grow nearly 16% over the next year.

Conclusion

At the current prices, all the mentioned companies appear to be trading at high valuations, but that shouldn’t deter investors from initiating long positions. Their earnings multiples have hovered around similar levels throughout 2012, while shares of Cabot Oil & Gas Corporation (NYSE:COG), Eni SpA (ADR) (NYSE:E), and Cheniere Energy, Inc. (NYSEAMEX:LNG) have risen 87%, 15%, and 58%, respectively, over the last year. I believe that there’s still plenty of upside, and creating a portfolio of all three companies to hedge out the risks, would be a great strategy.

The article The EPA’s Optimistic Report Will Boost These Companies originally appeared on Fool.com and is written by Piyush Arora.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.