Activity in exploration and production is higher now than at any other time but the path forward is fraught with higher costs and labor shortages that suggest growth will favor existing operators rather than newer ones, markets research service Stifel said.
Demand for LNG, or liquefied natural gas, is rather high worldwide with more customer conversations than before, Stifel said in a note on the seventh annual bus tour it took with eight companies involved in, among others, LNG infrastructure works, equipment provision and pipeline development.
“One thing repeated consistently was that there will be LNG growth, but increasingly those volumes are likely to be focused on the expansion of existing facilities (brownfield) vs. new land-based facilities (greenfield),” Stifel added.
It said long-term growth will benefit companies such as Cheniere Energy Inc (NYSE:), Sempra Energy (NYSE:) and Venture Global versus the likes of Tellurian (NYSE:) and NextDecade (NASDAQ:).
“Chart Industries Inc (NYSE:) could crush it this year,” Stifel said. “Every single segment of the company’s business is growing rapidly this year and it increasingly sounds as though they are going to have additional large LNG project wins this year,” Stifel said.
And while more diversified, Baker Hughes Co (NASDAQ:), the dominant player in compression and turbines, also stands to benefit from high LNG project activity levels, it added.“New Fortress Energy regulatory risks to the company’s fast LNG facilities are unlikely to be meaningful. Likewise, the Puerto Rico downstream business should be a major driver in the $2 billion 2023 EBITDA guidance.”