Senior Trump administration officials attended an event on Thursday celebrating the $18bn expansion of an LNG export terminal by Venture Global, the upstart producer lauded as a harbinger of renewed US energy dominance.
But just as energy secretary Chris Wright praised chief executive Mike Sabel as a “great, bold founding CEO” in his speech at the Plaquemines terminal on Louisiana’s gulf coast, investors were dumping Venture Global stock.
Venture Global shares lost 36 per cent of their value by close of trading.
The company released surprising results showing slowing sales and export volume, lower than expected profits, diminished forward guidance and a surprise $1.3bn increase in terminal construction costs — all at a time of favourable underlying market fundamentals.
The sell-off marks a stunning reversal of fortune for a company that just two months ago was preparing a blockbuster initial public offering that would have seen its valuation surpass that of oil major BP. But a disastrous flotation, business disputes with major clients and disappointing inaugural results have burnt investors and raised doubts about its ability to deliver.
The company’s market capitalisation of $23bn is just under a third of the $60bn valuation achieved in a downsized IPO on January 23 — and five times lower than the $110bn initially sought by management. Shares broke below their offer price on the first day of trading and have never recovered.
“For its size, this really ranks at the bottom of performance for any energy IPO in our database,” said Josef Schuster, founder of Ipox Schuster, a company that tracks IPO performance.
He said the poor flotation raised “red flags” and the subsequent share price decline could increase short selling activity and make it more difficult for the company to raise money in secondary offerings.
Venture Global, which is one of the largest US suppliers of LNG, faces a class-action lawsuit linked to the botched IPO, alleging it included false and or materially misleading statements in its registration statement. The company said it believes the claims have no merit.
Venture Global is also embroiled in a $5bn arbitration battle with customers, including Shell, BP and Repsol. They allege the Virginia-based company failed to deliver shipments under long-term supply contracts and instead sold them on high-priced spot markets when prices jumped following Russia’s full-scale invasion of Ukraine.
Venture Global says selling its LNG cargos on spot markets was not a breach of its long-term contracts because its facility was not fully completed at the time. “We have always and will continue to honour our contracts,” said the company.
Despite the challenges, the company’s co-founders — Sabel, a former investment banker, and Robert Pender, a lawyer — are pressing ahead with ambitious growth plans.
The company enjoys a close relationship with the White House, one that could help secure regulatory approvals to build terminals. In April, Sabel attended a dinner at Mar-a-Lago for oil and gas executives, where Donald Trump allegedly made a request for $1bn in campaign donations in return for ripping up environmental policies. The company contributed $1mn to Trump’s inauguration campaign.
“I cannot overstate how important what you’re doing is and how aligned it is with the agenda of President Donald Trump,” Wright said at the Thursday event.
But analysts question whether the Virginia-based company can deliver on its strategy to build five terminals with capacity to export more than 100mn metric tonnes of LNG a year, an amount greater than all US exports of the super-chilled fuel last year.
“Between the disappointing IPO, strained customer relationships, and a large, negative revision to 2025 guidance, Venture Global will probably find it challenging to source the $18 billion in funding needed for the Plaquemines LNG expansion,” said Andrew Gillick, managing director at research firm Enverus.
One of the challenges facing Venture Global is persuading customers to sign enough long-term supply contracts, typically for 10 to 20 years, to raise the tens of billions of dollars needed for new terminals — particularly in light of the dispute with Shell, BP, Repsol and several other European energy companies, which is not due to be concluded until the autumn.
“There is a premium on trust and any players not fulfilling agreements are eroding the credibility and health of the entire LNG industry,” Wael Sawan, Shell’s chief executive, told the Financial Times.
Aside from its own challenges, Venture Global faces a tougher economic and geopolitical environment for LNG. Rystad Energy forecasts the market will be oversupplied in the mid-2030s and JPMorgan said it expected increased capacity, driven by Qatar and North America, would cause prices to fall in the long term.
Any peace deal between Moscow and Kyiv could enable cheap Russian pipeline gas to resume flowing to Europe, displacing US LNG, say analysts.
“In the medium term there is some risk around currently strong LNG prices going down with the reintroduction of that Russian gas,” said Spiro Dounis, an analyst at Citigroup. “And with Venture Global, while you do have a portfolio of long-term contracts, they are more spot-exposed than their peers.”
Despite its recent setbacks, Sabel told investors Venture Global remained confident about its future: “We have continued to execute and prove our critics wrong.”
