Liquefied Natural Gas Ltd (LNG.ASX)

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1 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 EQUITY RESEARCH Energy 17 March 2014 Liquefied Natural Gas Ltd (LNG.ASX) Magnolia LNG sitting comfortably in top 10 US export projects INVESTMENT HIGHLIGHTS: Milestones continue to fast track Magnolia to FID: Since announcing the Magnolia LNG export project in early 2013 management continue to fast track the project through the achievement of a number of key milestones that have delivered a healthy re-rating in the market value of LNG with the share price up 180% since our initiation in September Magnolia comfortably in the top 10 US export projects: Magnolia has quickly moved into the top 10 projects in terms of a timeline to achieve export of LNG and over the next 12mths can be positioned in the top 5 through final FERC approvals and FID. Crimea crisis could accelerate non-fta approvals for US LNG export: US senators have called for the US to use its vast energy resources and supply of natural gas as a weapon to undercut the influence of Russian president given Russia s dominant supply of energy to the Ukraine and Europe through the statecontrolled Gazprom. Magnolia s economics can improve through bonus payments for LNG production should it receive non-fta license approvals or EU/NATO markets are treated as FTA countries. Term Sheets signed for 7mtpa tolling capacity across 4 LNG buyers: With DOE approval for a FTA export license up to 8mtpa, LNG could surprise on the upside by completing FID on 8mt capacity given 7mt capacity is now under term sheet for tolling agreements across 4 LNG buyers. At 8mtpa our unrisked DCF valuation increases to $2.54/sh assuming LNG retains ~50% carried interest vs $1.64/sh for the 4mt base case. Forward 12mth price target set at $1.20/sh. Post our initiation note in September 2013 we roll forward our PT based on the achievement of key milestones to date and risk-weight forward milestones for Magnolia through to Q1CY15. Our un-risked equity valuation for LNG is $600m, equivalent to $1.69/sh on a fully diluted basis. Material re-rating catalysts continue with FID completion late 2014: Investors are provided with multiple re-rating catalysts (or project de-risking events) through the balance of 2014 including: FERC environmental filing status; bankable tolling agreements for trains 1 & 2; definitive debt funding agreement; final EPC contract; debt finance term sheet & completion of FID. Magnolia to replicate valuation success of Cheniere: Cheniere Energy s share price performance through for FID completion at Sabine Pass was ~600%. Over a 5yr period it has risen ~2000%, with the stock now trading on 26x 2016 EV/EBITDA using consensus earnings of US$766m and EV of US$17.5b. Applying a conservative 15x multiple to Magnolia s base case 2019 EBITDA estimate of US$180m for trains 1 & 2 (50%) equates to US$2.85b or an upside market valuation case of ~US$8/sh. Rating BUY Previous BUY Price Target (A$) $1.20 Previous (A$) $0.70 Share Price (A$) $ week low - high (A$) Valuation (A$/share) - Un -risked $ $0.58 $1.69 Methodology DCF Risk High Capital Structure Shares on Issue (m) Options/restricted on issue (m) 1.8 Market Cap (A$m) Market Cap- Fully Diluted (A$m) Net Debt/(Cash) (A$m) EV (A$m) mth Av Daily Volume ('000) 1,128 Board and Management Richard Beresford Maurice Brand Madam Yao Guihua Leanne Bond Zhang Goawu Chairman Managing Director Executive Director Non-Executive Director Non-Executive Director Major shareholders Directors 6.0% HQC 14.9% Copulos Group 7.0% Top % Catalysts FERC Filing Status Q2CY14 Binding tolling agreements (2 trains) Q2CY14 Final EPC contract & capex Q4CY14 Project FID Q4CY14 FERC Notice to Proceed Q2CY15 First LNG export Q2CY18 Share Price Graph Share Price $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 Volume (000) 10,000 8,000 6,000 4,000 2,000 0 RECOMMENDATION: We maintain our BUY recommendation upgrade our 12mth PT to $1.20/share. Analyst Martin Carolan martin.carolan@fostock.com.au Specific disclosure: Foster Stockbroking and/or associated parties have received fees in the past 12 months for services provided to LNG in respect of the August 2013, December 2013 and March 2014equity capital raising.

2 MILESTONES CONTINUE TO FAST TRACK MAGNOLIA & PROVIDE MARKET RE-RATING Since announcing the Magnolia LNG export project in early 2013 LNG management has continued to fast track the project through the achievement of a number of key milestones, with a Final Investment Decision (FID) scheduled for November Key milestones achieved include: Binding Equity Agreement with Stonepeak Infrastructure Partners for US$660m to fund 100% of the equity for construction. Four Non-Binding Tolling Agreement Term Sheets with potential LNG buyers which represent a total of 7mt of tolling capacity vs. the 8mt total project capacity. The four parties include: Gunvor Group (2mt); Gas Natural Fenosa (2mt); LNG Holdings (2mt); and AES Corp (1mt). Management has indicated discussions with multiple parties are in progress for the final 1mt of capacity to lock in the full 8mt of capacity and keep the pressure on the groups above to commit to binding agreements. Appointment of SKEC Group (Korea) as the preferred EPC contractor and provision of an indicative EPC cost estimate of US$1.57 billion for the stage 1 4mtpa project. This estimate is less than the US$1.8 billion budgeted by LNG and we understand still contains 10-15% contingency that could come out of the final number. SKEC have built a staff of 200 experts in Houston to expand their EPC practice into the US LNG market. We note that SKEC were the preferred EPC contractor for the Fisherman s Landing project in Australia highlighting they have no concerns on the technical risks associated with LNG s OSMR being unproven process technology. Binding Precedent Agreement with Kinder Morgan and award of pipeline capacity for gas requirements for the 8mtpa capacity. Tolling parties will then be assigned capacity rights to deliver their purchased gas to the Magnolia site for liquefaction. Appointment of BNP Paribas as Financial Advisor and debt arranger for the US$1.7 billion in project construction debt requirements. BNP are recognised as experts in the LNG sector for debt capital markets and M&A advisory services. BNP also have banking relationships with Gunvor and GNF, two of Magnolia s proposed LNG buyers progressing binding tolling agreements. FERC Pre-filing completed with all 13 draft resource reports now under review by the relevant US government agencies. The resource reports cover all environmental and engineering aspects of the Magnolia project. FERC is expected to provide formal Filing status for magnolia in April 2014 which sets the timeline for the next 12mths when a final environment impact statement is delivered by FERC with an approval being the green light to proceed with construction. In our view, each of the milestones outlined above have de-risked the project considerably since our initiation report in September 2013 and have delivered a healthy re-rating of the market value of LNG with the share price up 180% in this period. 17 March 2014 Level 21, 25 Bligh Street, Sydney

3 CRIMEA CRISIS HIGHLIGHTS POTENTIAL FOR ACCELERATION IN NON-FTA APPROVALS FOR US LNG EXPORT In February 2014 the US Department of Energy (DOE) increased the number of non-fta export licenses to 5 for a total of 65mtpa of potential LNG that can be exported to countries with which the US does not have a free trade agreement. Figure 2 outlines the 5 projects approved. The DOE has been responding to the US House of Representatives Committee on Energy and Commerce s paper urging the acceleration of non-fta export license approvals. We note all 5 approvals have been made to brownfield sites that are existing import terminals. We also highlight there is a queue for the DOE to asses license applications based on date order of application. It is important to reiterate the Magnolia project is being developed with a view to export to FTA countries only with all 4 proposed tolling parties progressing to binding agreements to export on this basis. Any change in US legislation to increase the number of countries under the FTA license would benefit LNG. In recent weeks with the Crimea crisis taking centre stage a number of US senators have called for the US to use its vast energy resources and supply of natural gas as a weapon to undercut the influence of Russia s dominant supply of energy to the Ukraine and Europe through the state-controlled Gazprom. Europe is said to import 40% of its energy fuels from Russia. Figure 1: European Customers for Russian Gas Source: New York Times The US State Department s Bureau of Energy Resources created in 2011 by Hillary Clinton has the purpose of channelling the US domestic gas boom into a geopolitical tool to advance US interests globally. Should there be a strategic shift in US policy to include EU and NATO countries under the FTA license as approved LNG export countries the number of markets that open up to the proposed US projects will grow significantly to those capable of production in the near term. In 2013 the global trade for LNG was 240mt with the FTA market accounting for circa 50mt. 17 March 2014 Level 21, 25 Bligh Street, Sydney

4 We highlight that each of Magnolia LNG s term sheets for Tolling Agreements include a bonus payment per mmbtu of LNG production should it receive non-fta license approvals. MAGNOLIA LNG MOVES INTO THE TOP 10 US EXPORT PROJECTS While there are now over 20 LNG export projects in the US with circa 230mt of proposed export capacity our review indicates Magnolia LNG has quickly moved into the top 10 projects in terms of a timeline to achieve export of LNG and over the next 12mths can be positioned in the top 5 through FERC approvals and FID. We note that Magnolia s base case for the stage 1 4mtpa export project is not reliant upon non-fta approval and therefore its queue position for a decision is not relevant to approvals and financing within the company s target timeframe of LNG export in Figure 2 below provides an overview of each of the projects with only 5 approved by the Department of Energy (DOE) for export to non-fta countries and only one approved by the Federal Energy Regulatory Commission (FERC) for construction, the Sabine Pass project located in Louisiana and developed by Cheniere Energy (LNG.NYSE) is due for first export in All other projects in the top 10 are targeting 2018, including Magnolia. We estimate that Magnolia could achieve top 5 status to produce LNG given it is well advanced with FID for completion in March 2014 Level 21, 25 Bligh Street, Sydney

5 US LNG Export Projects Project (Company) Location Sponsor Capacity mtpa Offtake mtpa Trains FTA Approval Non-FTA Approval Non-FTA Approval mtpa Non-FTA Queue Position Non-FTA Status Brownfield First LNG Proposed FERC Status Sabine Pass Louisiana Cheniere Energy Y Y Approved, Sep-10 Y 2015 Approved, Apr-12 Dec-11 Freeport LNG Texas Freeport Y Y Approved, Nov-13 Y 2017/18 Filing Aug-12 Lake Charles Louisiana Southern Union (BG) Y Y Approved,Aug-13 Y 2018 Pre-filing Mar-12 Cove Point Maryland Dominion Resources Y Y Approved, Sep-13 Y 2017/18 Filing Apr-13 Cameron LNG, LLC Louisiana Sempra Energy Y Y 13 - Approved, Feb-14 Y 2017/18 Filing Dec-12 Jordan Cove Oregon Veresen 6-2 Y N - 1 Application, Mar-12 N 2017/18 Filing May-13 Oregon LNG Oregon LNG Development Co 9-3 Y N - 2 Application, Jun-12 N 2018 Filing Jun-13 Corpus Christi Texas Cheniere Energy Y N - 3 Application, Oct-12 N 2018 Filing Jun-13 Lavaca Bay FLNG Texas Excelerate Energy Y N - 4 Application, Aug-12 N 2018 Filing Feb-14 Magnolia LNG Louisiana Liquefied Natural Gas Ltd 8-2 Y N - 20 Application, Oct-13 N 2018 Pre-filing Mar-13 Southern LNG Georgia Southern LNG/Kinder Morgan Y N - 7 Application, Aug-12 Y tbc Pre-filing Dec-12 Gulf LNG Mississippi GE Energy & Kinder Morgan N N - 8 Application, Aug-12 N tbc Pre-filing Dec-12 Golden Pass Texas Exxon Mobil / Qatar Petroleum Y N - 10 Application,Oct-12 Y tbc Pre-filing Dec-12 CE FLNG Louisiana CE FLNG FLNG Y N - 9 Application,Sep-12 N tbc Pre-filing Apr-13 Gulf Coast LNG Texas M S Smith Y N - 6 Application, Jan-12 N tbc n/a - Carib Energy TBC Crowley Maritime Y N - 5 Application, Oct-11 N tbc n/a - Main Pass Energy Hub Louisiana Freeport-McMoran Energy 24 - FLNG Y N - 13 Application, Dec-13 N tbc n/a - Pangea LNG Texas Pangea LNG Holdings Y N - 11 Application, Dec-12 N tbc n/a - Waller LNG Louisiana Waller LNG Services Y N - 22 Application, Nov-13 N tbc n/a - Gasfin LNG Louisiana Gasfin Development Y N - 23 Application, Dec-13 N tbc n/a - Venture Global LNG Texas Venture Global Y N - 16 Application, May-13 N tbc n/a - Eos & Barca LNG Texas Eos & Barca Y N 17/18 Application, Aug-13 N tbc n/a - Total Source: US Dept of Energy; Company Presentations; Foster Stockbroking FERC 'filing' Date LIQUEFIED NATURAL GAS LTD Figure 2: Summary of US LNG Export Projects Source: FSB Research 17 March 2014 Level 21, 25 Bligh Street, Sydney

6 UPCOMING CATALYSTS TO DE-RISK MAGNOLIA THROUGH TO FID IN 2014 LNG is targeting a Final Investment Decision (FID) for the Magnolia LNG project in Q4CY14. In order to achieve this timetable we outline the key milestones still to be achieved. Binding Tolling Agreements for the base case 4mtpa stage 1 project with management targeting two binding agreements with Gunvor and Gas Natural Fernosa by June Binding EPC Wrap and final capital cost with SKEC in October Binding Term Sheet for the US$1.7 billion debt required in November NO MATERIAL FUNDING REQUIRED THROUGH TO FIRST LNG EXPORT We note company guidance back in July 2013 of US$30m was outlined for all development costs for Magnolia LNG through to July 2015 when construction is expected to start and the Stonepeak equity finance commences. With management indicating that a total of circa $11m being spent to date and a current cash balance of circa $13m, we estimate a further US$10-15 million is required in 2HCY14 to take the project through to commencement of construction. Should each of the key milestones outlined above be achieved we see there being very little risk in raising the balance of further development capital required to get through to the drawdown of the US$660m Stonepeak facility that satisfies 100% of the equity funding required for construction. Of the US$660m, LNG will receive a US$66m success fee along with a US$25m license fee for the OSMR technology. Options being considered for final development funding include an equity issue in the head stock or a small sell-down of equity in the Magnolia LNG project to the right strategic partner. CAN LNG REPLICATE THE VALUATION SUCCESS OF CHENIERE ENERGY INC.? Further to our analysis provided in Figure 2 above there are only three listed companies that provide direct equity exposure to the US LNG sector: Cheniere Energy Inc (LNG.US) who are developing the Sabine Pass and Corpus Christi projects, Sempra Energy (SRE.US) who are developing the Cameron LNG project and Liquefied Natural Gas (LNG.AU) with Magnolia. In addition, Sempra Energy is an integrated energy company, so that leaves Cheniere Energy as the only pure play US LNG export stock to use as a comparable stock when analysing the potential for LNG s market re-rating. While we acknowledge the Sabine Pass project is 3x the scale of Magnolia with a total of 27mtpa proposed production across 6 trains with non-fta approval for 16.9mtpa, Magnolia s 8mtpa tolling model is a replica of Sabine Pass however it is not reliant on non- FTA approval. The current market capitalisation of Cheniere Energy is approaching US$12 billion. The Corpus Christi project is also owned by Cheniere and with potential for 13.5mtpa export capacity, however it is still awaiting final FERC approval later in Cheniere s market capitalisation has increased 20x in the last 5yrs. The Sabine Pass project is being developed over 3 stages, with the stage 1 2 train 9mtpa project estimated at US$6 billion despite the project utilising existing infrastructure from 17 March 2014 Level 21, 25 Bligh Street, Sydney

7 Share Price (USD) LIQUEFIED NATURAL GAS LTD the receiving terminal including storage tanks and marine facilities. Trains 3 and 4 are scheduled for 2016/17 to take the project to 18mtpa. Figure 3 below provides a 5 year share price chart for Cheniere outlining an outstanding 20x share price growth as the company has moved the Sabine Pass project from FID in 2010/12 through to construction with first LNG export scheduled for early With the share price of Cheniere Energy at all time highs, our contact with US investors who have benefited from the rise in its market value indicate that key milestones that rerated the stock and de-risked the project can be replicated in the share price performance of LNG over the next 12mths on the path to an approval for construction. In our view, we think it is only a matter of time before a number of US funds pick up on the Magnolia story and come onto the register in a meaningful way and not miss the rapid re-rating effect the following milestones had on Cheniere. Key milestones for Sabine Pass: - DOE non-fta license approval in Definitive tolling agreements in 2011/12. - Equity and Debt financing for construction in FERC approval to proceed with construction in Commencement of construction of trains 1 & 2 in Completion of debt and equity financing for construction of trains 3 & 4 in Key milestones for Corpus Christi: definitive tolling agreements & EPC contract 2013 In our observations of the Cheniere Energy share price performance in Figure 3 below we note the uplift through the key milestones for the completion of FID was almost 6x and since construction commenced late 2012 it has been 2x. In terms of a market valuation based on consensus earnings, Cheniere Energy currently trades on 26x 2016 EV/EBITDA, with consensus earnings of US$766m and EV of US$17.5b. If we were to apply a conservative 15x multiple to Magnolia s 2019 EBITDA estimate of US$380m for trains 1 & 2 only this equates to US$5.7b. Based on LNG s target 50% equity of the Magnolia project this equates to a prospective value of ~US$8/sh. Figure 3: Cheniere Energy Inc. 5yr Share Price Chart Jan-10 Dec-12 Mar-14 Share Price (USD) $ 2.49 $ $ Re-rate 575% 207% Construction phase for Sabine Pass ~200% uplift Completion of FID activities Sabine Pass ~600% uplift 10 0 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Source: FSB Research 17 March 2014 Level 21, 25 Bligh Street, Sydney

8 VALUATION & PRICE TARGET Un-risked Valuation - $600m, $1.69/share 12 month Price target $1.20/share Our un-risked equity valuation for LNG is $600m, equivalent to $1.69/sh on a fully diluted basis of 355m shares on issue (pro-forma for the new shares to be issued following the 10m shares issued in March 2014). We have rolled forward our 12mth price target which is set at $1.20/sh and is based on the achievement of the key milestones outlined in figure 3 below through to Q1CY15. Figure 4: Risk weighted valuation for Magnolia Risk-Weight Activity Timeline Valuation 5% Project site secured Q1CY13 $0.08 5% Approval from DOE to export to FTA countries Q2CY13 $ % Execute definitive project equity agreement Q3CY13 $ % Receive FERC filing Q1CY14 $ % Convert Tolling Agreement Term Sheets to Binding (train 1 & 2) Q4CY13 $ % Conclude EPC contract Q2CY14 $ % Conclude Debt financing & FID Q4CY14 $ % Receive FERC notice to proceed Q1CY15 $ % Project construction Q2CY15 $ % Target project in service date Q2CY18 Source: FSB Research As a cross check to our valuation, the implied valuation of 50% of the Magnolia project for the stage 1 4mtpa project is US$660m based on the equity agreement with Stonepeak that will be made at the commencement of construction. On a per share basis this is US$1.86/sh. Figure 5: Equity Valuation Summary Equity valuation $Am $Am $/sh Magnolia (4mtpa base case) $582.6 $1.64 Fishermans Landing $15.0 $0.04 Cash $13.0 $0.04 Corporate Equity Valuation $600.6 $1.69 Source: FSB Research We stress our valuation for Magnolia is based on our base-case scenario of 2 trains or 4mtpa and assume a 50% carried interest to LNG. Under an 8Mtpa case we estimate an increase in our NPV 10 for Magnolia to $903m or $2.54/sh. RECOMMENDATION We maintain our BUY recommendation upgrade our 12mth PT to $1.20/share. 17 March 2014 Level 21, 25 Bligh Street, Sydney

9 APPENDIX A: MAGNOLIA BASE CASE FINANCIAL MODEL (FSB) Based on a construction timetable commencing in FY15 and first production in FY18. We estimate the project will generate annuity EBITDA of ~$US370m for 20 years. Figure 6 below provides an overview of our financial model. The project s strong EBITDA margin will deliver immediate after-tax FCF to LNG shareholders of US$80m in year 1 of operations and as high as US$120m per annum long term. We estimate LNG s equity share (52%) of MLNG generates an NPV 10 of US$448m (A$582m), inclusive of the US$66m payment to LNG at FID. It is important to note that LNG is not required to contribute any equity at construction for the project, hence the valuation per share of $1.64 (unrisked) remains highly leveraged vs. the current share price of $0.51/sh. Figure 6: Magnolia 2 train Financial Model (FSBe) Revenue Model 2013/ / / / / / / / / / / /31 Status Dev Dev Const Const Const P&L Train 1 US$ million Train 2 US$ million Train 3 US$ million Train 4 US$ million Total revenue US$ million EBITDA ** US$ million D&A US$ million Interset US$ million PBT US$ million Corporate Tax US$ million NPAT US$ million Free Cash Flow EBITDA US$ million Less: Interest US$ million Less: Capex US$ million Less: Tax US$ million Add: Debt draw doon US$ million Less: Debt repayment US$ million FCF US$ million LNG After tax CF US$ million LNG NPV US$m LNG NPV A$m Assumptions $A/$US 0.8 Discuont rate 10% ** Variable and Fixed O&M payments to offset operating costs Source: FSB research While the base case of 4mtpa is what we have valued the project, and is the current plan for FID, we are of the view that the project could be expanded in due course to a 4 train 8Mtpa operation. Drivers for this upscale would include additional off-take partners and approval by the DOE for an additional 4Mtpa to FTA countries or a revised 8Mtpa approval for non-fta countries. Under an 8Mtpa case we estimate an annual project EBITDA of ~$750m leading to an increase in Magnolia s NPV 10 to A$903m or $2.54/sh (unrisked). 17 March 2014 Level 21, 25 Bligh Street, Sydney

10 APPENDIX B: MAGNOLIA FINANCIAL ASSUMPTIONS (FSB) LIQUEFIED NATURAL GAS LTD Based on Stonepeak achieving their investment target we derive LNG receiving a free carry interest of 52%. Figure 7 below outlines the project economics for MLNG with our base case scenario consisting of a 2 train 4Mtpa operation. Based on Stonepeak achieving their investment return threshold we have derived their project ownership of MLNG to be 48% with LNG receiving a free carry interest of 52%. Should the assumptions we have made in regards to project capital, interest rate on debt, revenues and costs differ at FID then the ownership structure will be adjusted accordingly to satisfy Stonepeak s IRR benchmark. It is worth highlighting, that our analysis indicates there is upside potential of LNG s free carry equity interest to be >52%. Figure 7: Magnolia project financial assumptions General Metrics Value Description Annual Capacity per train mtpa 1.7 Mtpa Annual Capacity per train 88.0 Bcf Number of Trains 2 Number of trains for modelling CPI 3% CPI rate Federal tax rate 38% Federal tax rate LNG Project Ownership 52% % of project owned by LNGL Discount rate 10% Discount rate used in NPV calculations Finance assumptions Value Description Interest Rate 8% Interest rate on loan Debt Level 70% LVR Repayment term 10 Repayment term of loan Dep_rate 13% Declining balance Overall we forecast a capital cost for the project of $2.26bn which includes a 25% contingency on the EPC component. Magnolia Proposed Tolling Fee Train 1 Train 2 Capacity Payments US$m per Train per month Monthly Capacity Fee US$ per MMBtu of LNG Non-FTA Market mtpa 0 0 Non-FTA Bonus US$ per MMBtu n/a n/a LNG Development Capex Train 1 Train 2 FID Costs US$ million Capital Costs (EPC) US$ million 1, Finance Fees - Capitalised US$ million Construction Interest - capitalised US$ million Total capitalised cost US$ million 1, Capital Cost 4mtpa operation US$ million 2,266.0 Source: FSB research 17 March 2014 Level 21, 25 Bligh Street, Sydney

11 FOSTER STOCKBROKING DIRECTORY Name Department Phone Stuart Foster Equities Dealing stuart.foster@fostock.com.au Kevin Massey Equities Dealing kevin.massey@fostock.com.au Martin Carolan Equities Dealing martin.carolan@fostock.com.au Tolga Dokumcu Trade Execution & Dealing tolga.dokumcu@fostock.com.au George Mourtzouhos Trade Execution & Dealing george.mourtzouhos@fostock.com.au Mark Hinsley Equity Research Sales mark.hinsley@fostock.com.au Mark Fichera Equities Research mark.fichera@fostock.com.au Haris Khaliqi Equities Research haris.khaliqi@fostock.com.au FOSTER STOCKBROKING Pty Limited A.B.N FSR Licence No Level 21, 25 Bligh Street, SYDNEY, NSW 2000 Australia Tel: Dealing: Fax: contact@fostock.com.au PARTICIPANT OF ASX GROUP Foster Stockbroking recommendation ratings: Buy = return >10%; Hold = return between 10% and 10%; Sell = return <-10%. Spec Buy = return > 20% for stock with very high risk. All other ratings are for stocks with low-to-high risk. Returns quoted are annual. Important Notice: Disclaimer & Disclosure of Interests. Foster Stockbroking Pty Limited has prepared this report. This document contains general securities advice only. In preparing the report, Foster Stockbroking did not take into account the specific investment objectives, financial situation or particular needs of any specific recipient. The report is published only for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Foster Stockbroking is not aware that a recipient intends to rely on this report and is not aware of the manner in which it will be used by the recipient. Investors must obtain personal financial advice from their investment advisor to determine whether the information contained in this report is appropriate to the investor s financial circumstances. Recipients should not regard the report as a substitute for the exercise of their own judgment. The views expressed in this report are that of the analyst named on the cover page, and no part of compensation of the analyst is directly related to inclusion of specific recommendations or views in this report. The analyst receives compensation partly based on Foster Stockbroking revenues, including any investment banking and proprietary trading revenues, as well as performance measures such as accuracy and efficacy of both recommendations and research reports. Foster Stockbroking believes that the information contained in this document is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made at the time of its compilation in an honest and fair manner that is not compromised. However, no representation or warranty is made as to the accuracy, completeness or reliability of any estimates, opinions, conclusions or recommendations (which may change without notice) or other information contained in this document and, to the maximum extent permitted by law, Foster Stockbroking disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this document. Foster Stockbroking is under no obligation to update or keep current the information contained herein and has no obligation to tell you when opinions or information in this report change. Foster Stockbroking, and its directors, officers and employees or clients may have or had interests in the securities of the instruments referred to herein, and may make purchases or sales in them as principal or agent at any time and may affect transactions which may not be consistent with the opinion set out in this report. Foster Stockbroking and its Associates state that they may earn brokerage, fees or other benefits from securities referred to in this report. Furthermore, Foster Stockbroking may have or have had a relationship with or may provide or has provided investment banking, capital markets and/or other financial services to the relevant Company. Specific disclosure: The analyst, Foster Stockbroking and/or associated parties have beneficial ownership or other interests in securities issued by LNG at the time of this report. Diligent care has been taken by the analyst to maintain an honest and fair objectivity in writing the report and making the recommendation. Specific disclosure: Foster Stockbroking was appointed as Lead Manager to the Placements in August 2013, December 2013 and March 2014 for LNG and received fees for this service. 17 March 2014 Level 21, 25 Bligh Street, Sydney