Research Report. Proactive Investors. Liquefied Natural Gas Limited, undervalued tracking Cheniere Energy s path and valuation uplift

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1 Research Report Proactive Investors Run by Investors for Investors 11 February, 2014 ASX Code: LNG U.S. OTC ADR - LNGLY Speculative Buy 18 month Price Target: $2.25 Liquefied Natural Gas Limited, undervalued tracking Cheniere Energy s path and valuation uplift Sector Capital Structure Energy Share Price (A$) ( Shares(m Fully Paid Ordinary Unquoted Options (m) 0.9 Market Cap (A$m) Share Price Year H-L (A$) Approx Cash (A$m) 13.8 *incl $10.85m placement Richard J Beresford Fletcher M Brand Grace Yao Leeanne Bond Zhang Gaowu Directors & Management Major Shareholders Non Exec Chairman MD and Joint CEO ED and Joint CEO Non-Executive Director Non-Executive Director Directors 6.9% HQC 17.3% Copulos Group 8.3% Top 20 Shareholders 55.5% Andrew McCrea/Richard Badauskas Analysts Share Price Performance Liquefied Natural Gas Ltd (ASX: LNG and U.S. Exchange: (OTC ADR Ticker: LNGLY) ( LNGL or the Company ) is an international developer of mid-scale Liquefied Natural Gas LNG projects and aims to be amongst the first five producers and exporters of U.S. LNG. The Company is fast tracking the development of its 100% owned flagship Magnolia LNG Project that is located in the epicentre of the burgeoning energy sector on the U.S. side of the Gulf of Mexico. Texas and Louisiana are in the midst of an LNG development boom that is spearheaded by the redevelopment of LNG import facilities at Sabine Pass with export capacity for million tonnes per year mtpa of LNG. The growth is driven by new drilling and recovery technologies that have lifted U.S. gas reserves to 350 Trillion Cubic Feet (TCF). The prospect of a secure and stable source of competitively priced gas emanating from the U.S. has ignited growth in the purchase of long term LNG contracts from global energy entities. Cheniere Energy took about 12 months to negotiate 20 mtpa in long term contracts from these entities, and is attracting plenty of support to continue development of up to 40.5 mtpa of LNG output. U.S. LNG is expected to be very competitive with current Asian LNG pricing of ~US$14.00 MMBtu, South America with ~US$15.00 MMBtu, and Europe which is dictated by captive Gazprom pricing of US$11.30-US$14.00MMBtu for pipeline gas. LNGL is riding this international demand and expects to complete long term sales contracts for 4 mtpa of LNG within 2-5 months, and is discussing terms for remaining Stage Two production of 4 mtpa of LNG. The Company had previously developed the Gladstone LNG project (phase 1 of 1.5 mtpa) through to the start of construction before its gas supplier, Arrow Energy Limited, was taken over by a Joint Venture between Shell and PetroChina. The Company has patented the OSMR technology that is designed to cut LNG process plant CAPEX by 50%, and OPEX by 30% against traditional competitor plant. The Company has attracted Eddie Sugar who runs EAS Advisors as financial advisor. He assisted Andrew Forrest with the early funding needs to develop Fortescue Metals Group (ASX: FMG) and has introduced Stonepeak Infrastructure Partners (ex- Blackrock) to the project. Stonepeak placed a value of US$1,320 million on the Magnolia LNG Project and has committed to invest US$660 million for a ~ 50% interest that is subject to terms. They will also assist with the balance of funding needs. Proactive Investors expects the new over-the-counter (OTC) trading facility in the U.S. will attract strong interest from international investors, seeking the next Cheniere Energy type investment opportunity. Proactive Investors believes that LNGL is at the beginning of a surge in share market re-rating; tracking a path by Cheniere Energy that saw its share price increase from US$2.68 to $43.94 in four years. Proactive Investors anticipates the Stonepeak funding terms should be satisfied by mid-2015 and that the 50% interest retained by the Company in Magnolia LNG will therefore value the Company at A$779 million or $2.25 per share. By end of 2016, our valuation increases to $6.91 a share for Liquefied Natural Gas. Page 1 Copyright 2014 Proactive Investors - Please read disclaimer for terms.

2 The development of Liquefied Natural Gas Ltd is forecast to follow in the steps of Cheniere Energy (NYSE: LNG) INVESTMENT CASE FOCUS ON MAGNOLIA LNG PROJECT The market continues to significantly undervalue Liquefied Natural Gas Ltd and this is possibly due to legacy perceptions associated with the Gladstone LNG Project. This mirrors the development of Cheniere Energy (NYSE: LNG) which shares the same stock code with the Company. Cheniere Energy had a false start when its efforts to import LNG into the United States were crushed by the development of new fracking technologies that created massive unconventional shale gas reserves across the nation. Cheniere Energy has gone through an extremely bullish re-rating as it assumes a leadership role in the processing and export of U.S. based liquefied gas. Liquefied Natural Gas Ltd has joined its larger peer with a smaller scale opportunity as it fast tracks the development of the Magnolia LNG Project. CAPITALISATION FOR SABINE PASS AND CORPUS CHRISTI LNG PROJECTS HAVE INCREASED BY 1,658% - BASE CASE US$1.2 BILLION TO CURRENT US$19.9 BILLION The Cheniere entities have reported a total capitalisation growth of 1,658% from /10 6/10 9/ /11 6/11 9/ /12 6/12 9/ /13 6/13 9/13 13 $1.2 $1.3 $3.2 $3.8 $3.8 $3.7 $2.7 $4.2 $5.9 $10.0 $9.8 $11.1 $15.8 $16.7 $17.1 $19.9 IMAGE 1 TOTAL US$ BILLION GROWTH IN CAPITALISATION FOR CHENIERE ENERGY, CHENIERE ENERGY PARTNERS AND CHENIERE ENERGY PARTNERS LP HOLDINGS Proactive Investors project a similar growth in capitalisation as the Magnolia LNG Project is funded and developed PROACTIVE INVESTORS PROJECTS CAPITALISATION GROWTH OF 2,293% FOR INTERST IN MAGNOLIA LNG BASE CASE $0.30 PER SHARE TO $6.88 PER SHARE $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 LIQUEFIED NATURAL GAS LTD FORECAST SHARE PRICE GROWTH MAGNOLIA LNG PROJECT Qtr 03/14 06/14 09/14 12/14 03/15 06/15 09/15 12/15 03/16 06/16 09/16 12/16 A$/US$ $0.88 $0.87 $0.87 $0.86 $0.85 $0.85 $0.84 $0.84 $0.83 $0.83 $0.83 $0.82 US$Val $220M $440M $660M $880M $1.1B $660M $875M $1.1B $1.3B $1.5B $1.7B $1.9B A$Val $251M $506M $759M $1.0B $1.3B $779M $1.0B $1.3B $1.6B $1.8B $2.1B $2.4B S Price $0.73 $1.46 $2.19 $2.95 $3.75 $2.25 $3.01 $3.75 $4.57 $5.32 $6.07 $6.88 IMAGE 2 FORECAST SHARE PRICE GROWTH (UNDILUTED) FROM MARCH QUARTER 2014 TO DECEMBER QUARTER 2016 BASED ON 100% OF MAGNOLIA LNG PROJECT TO 06/2015 AND 50 % TO 12/2016 Page 2 Copyright 2014 Proactive Investors -

3 Proactive Investors estimates that the valuation of the Magnolia LNG Project will escalate at the rate of US$220 million per quarter until mid-2015 when a Final Investment Decision will be made Our forecast valuation range for the Magnolia LNG Project for calendar 2014 to calendar mid is based on an agreed valuation developed with Stonepeak Infrastructure Partners of US$1,320 million for a 100% interest. Stonepeak has agreed to purchase 50% of Magnolia by mid-2015 that is subject to terms that we discuss later in this report. We have apportioned the total agreed value over the next six quarters at a rate of US$220 million per quarter. This represents a reasonable assumption for the appreciation in the value of the asset as it is fast tracked through the approval process, EPC contract, and other development work that will generate the Final Investment Decision FID and funding. We mark back the value of the retained interest in the June quarter of 2015 to reflect the establishment of a 50/50 relationship, and note that the bulk of the sale funds will be invested directly into project development at Magnolia. We apply a different valuation model for the period from mid-2015 to the end of calendar 2016 which is based on the market capitalisation that applies to the Cheniere entities. These entities are at the mid-point in the development 40.5 mtpa of LNG output at Sabine Pass, and Corpus Christi, and currently carry a total capitalisation of US$19.9 billion. This equates to US$0.49 billion per mtpa of proposed LNG output. Magnolia will be at the mid-point of development at the end of calendar 2016 and we believe that both projects should then be valued on the same basis. We then value Magnolia LNG at US$0.49 billion x 8 mtpa = US$3.9 billion or US$1.95 billion for a 50% interest. Proactive Investors projects a ballpark valuation of ~$0.73 per share on commencement of the relationship with Stonepeak Partners We have apportioned the Company s 50% share of the valuation over the period from mid to the end of 2016 at the rate of US$215 million per quarter. We note that the current share price for Liquefied Natural Gas Ltd is $0.29 per share and believe that a truer market valuation should be ~$0.73 per share. This is based on our analysis of the deal with Stonepeak and is in the realm of the valuation that applied when the Company proposed the development of Gladstone LNG in 2009/10. All of our projections and forecasts are based on a positive FID and regulatory approval. CATALYSTS THAT DROVE THE CHENIERE ENTITIES CAPITALISATION FROM US$1.2 TO $19.9 BILLION OVER 48 MONTHS The same catalysts that drove the valuation of the Cheniere entities will drive the valuation of the Magnolia LNG Project and is driven by a global demand for cheaper sources of LNG June 2010 plans announced to build 18 mtpa LNG Plant at Sabine Pass. September 2010 DOE grants authority to Sabine Pass for export of 16 mtpa / 2.2 Bcf/d to FTA Nations. May 2011 DOE grants authority to Sabine Pass for export of 16 mtpa to non-fta nations. December 2011 contracts secured for 7 mtpa of LNG and EPC signed for 2 trains at 9 mtpa of LNG. February 2012 long term sales contracts total 16 mtpa of LNG. September 2012 US$6.5 billion funding in place and construction on first two trains commenced. December 2012 EPC signed for two additional trains at Sabine Pass for total of 18 mtpa of LNG. March 2013 application to export 2 mtpa of LNG via Total to FTA nations. April 2013 FERC application initiated at Corpus Christi for 9 mtpa of LNG output. May 2013 construction commences on two more trains at Sabine Pass. December 2013 additional equity funding of $0.72 billion raised via IPO. SAME CATALYSTS WILL DRIVE MAGNOLIA LNG VALUATION OVER NEXT 36 MONTHS Proactive Investors believes that Liquefied Natural Gas Ltd has already reached milestones that would be viewed more bullishly by investors in North America. The US Department of Energy (DOE) approval has already been given for export of 4 mtpa to FTA nations and advanced contract talks to sell significant volumes of LNG into FTA approved nations should Page 3 Copyright 2014 Proactive Investors

4 The Magnolia LNG Project is strategically located within a port that has handled LNG since 1959 and is surrounded by high quality infrastructure conclude by mid-year This will be sufficient to underwrite development of the first two LNG trains. The major swing point for our estimates and forecast will flow from (1) DOE approval to export 8 mtpa of LNG to FTA nations, (2) equity funding from Stonepeak Infrastructure Partners and (3) funding approval to construct the first two LNG trains. All of these catalysts are expected to complete by mid MAGNOLIA LNG PROJECT ON FASTRACK - THE DEVELOPMENT PATHWAY IS WELL ADVANCED Magnolia LNG, LLC is a wholly owned subsidiary of Liquefied Natural Gas Ltd and is developing a mid-scale facility capable of processing up to 8 million tonnes per annum of liquid natural gas. The Magnolia LNG Project will utilise the Company s highly efficient and patented OSMR technology suite to process natural gas into a liquid form. PROJECT IS STRTEGICALLY LOCATED that includes a contract to draw natural gas from the Kinder Morgan Pipeline to run all four LNG trains at Magnolia at full capacity.. and results in very significant savings in CAPEX The Magnolia LNG Project will be located on the Calcasieu Canal South Shore in the Port of Lake Charles, Louisiana USA. The site covers 116 acres and has ingress and egress for LNG ships for export, marine barges for LNG refuelling stations, and LNG trucks for local road distribution. The site is opposite an existing LNG Import Terminal that is also under development as a LNG export facility, close to major fabrication facilities, and an industrial hub that handled the world s first marine export of LNG in Natural gas feedstock will be drawn from the existing underutilised Kinder Morgan Louisiana Pipeline that traverses the site and links into a network of major pipelines. The pipeline has a capacity of 2.7 billion cubic feet per day Bcf/d and will have the capacity to supply demand of 0.35 Bcf/d per train, for a total of 1.4 Bcf/d when all four trains are operating at full capacity. An additional 3 gas pipelines are also located within 3 miles of plant site. The Company has executed a legally binding Pipeline Capacity Agreement or Precedent Agreement (which has certain conditions precedent) with Kinder Morgan Louisiana Pipeline LLC (KMLP) to secure firm gas transportation rights for the full 8 mtpa capacity of the LNG plant. KMLP has also commenced the process with FERC to install compression and connection facilities to the pipeline. Magnolia LNG has confirmed that the FERC approvals process remains on track. The pipeline will allow access to Henry Hub gas pricing which is the cheapest pipeline gas in the lower 48 states. Proactive Investors notes that the Cheniere entities spent US$500 million on pipeline development of approximately 95 miles to connect Sabine Pass to the same pipeline system. The proximity of the pipeline connection provides the Magnolia Project with a major saving in CAPEX connection costs. Page 4 Copyright 2014 Proactive Investors

5 IMAGE 3 KINDER MORGAN LOUISANA PIPELINE CONNECTS TO MAJOR GAS RESOURCES ACROSS THE LOWER 48 STATES AND PROVIDES ACCESS FOR LOW COST HENRY HUB GAS The Magnolia LNG Project is accessible by ocean going vessels, local barge traffic and is situated atop a major natural gas pipeline and next to a local road Rapid development of key milestones driven by global demand for natural gas and an expedited approval process. approval by DOE to export 4 mtpa of LNG to FTA nations already in place. and application lodged to increase exports to 8 mtpa of LNG to both FTA and non FTA nations pre-filing completed with FERC with anticipated approval expected before mid IMAGE 4 FINAL PLANT LAY-OUT FOR MAGNOLIA LNG PROJECT ON CALCASIEU INDUSTRIAL CANAL, PORT ARTHUR, LOUISIANA. RAPID DEVELOPMENT OF KEY MILESTONES The Company has fast tracked the development of the Magnolia LNG Project, and over the last twelve months reached the following milestones: January Negotiated a term sheet for lease of the Magnolia LNG Project site with the Port of Lake Charles. February Acquired authorization from the U.S. Department of Energy to export up to 4 million tonnes per annum mtpa of LNG to U.S. Free Trade Agreement countries FTA. March Federal Energy Regulatory Commission FERC approved the Prefiling review process to build own and operate an 8 mtpa LNG Plant. March Exclusive Option Agreement signed to secure Project site for up to 70 years. July Tolling Term sheet signed with Gunvor to process and sell 2 mtpa LNG. July Project Equity Term Sheet signed with Stonepeak. August Tolling Heads of Agreement signed with Gas Natural Fenosa Group to process and sell up to 2 mtpa of LNG. October Definitive US$660 million Equity Commitment Agreement executed with Stonepeak. October Application submitted to export 8 mtpa of LNG to non FTA countries and application to export an additional 4 mtpa to FTA countries. November Tolling Term Sheet signed with LNG Holdings to process and sell 2 mtpa of LNG. November Completed Pre-Filing with FERC. December BNP PARIBAS appointed as Project Finance Advisor. January Access Agreement for natural gas to produce 8 mtpa of LNG secured from Kinder Morgan Louisiana Pipeline LLC. January Established a Company and Project office in Houston, Texas. February Signed a Memorandum of Understanding with the SKEC Group as the Engineering, Procurement and Construction (EPC) contractor. February 2014 Company opens an office in Lake Charles, Louisiana, USA. Page 5 Copyright 2014 Proactive Investors

6 Magnolia LNG currently holds long term authorization from the U.S. Department of Energy, Office of Fossil Energy DOE to export up to 4 million tonnes of liquefied natural gas annually to Free Trade Agreement countries. This is expected to increase to 8 million tonnes per annum of LNG to both Free Trade and Non Free Trade countries. The U.S. Government is strongly supportive of LNG exports that include recent approval of 4 projects that will export to Non Free Trade Countries. LNG believes that securing long term contracts for export of LNG will assist with securing export approval to non FTA countries. EPC contract under negotiation with experienced contractors that developed a similar and innovative EPC contract for the Gladstone LNG Project The recently completed Pre-Filing with the Federal Energy Regulatory Commission FERC covers a comprehensive analysis of the environmental, operational and safety implications of the Project. This includes issues related to air quality, safety and related approvals discharge of dredged and fill material, compliance with water quality standards and coastal use that are governed under various Federal and state instrumentalities. The approvals process is managed by a local consultant, and has the full support of the local community. This timeline targets FERC Notice to Proceed for early 2015 and Final Investment Decision for mid ENGINEERING CONSTRUCTION & PROCUREMENT CONTRACT EPC UNDER NEGOTIATION FOR STAGE ONE AT MAGNOLIA LNG PROJECT FOR 4 MTPA OF LNG OUTPUT LNG has drawn on its detailed development plans for the Gladstone LNG Project to fast track development of the Magnolia LNG Project. Savings are estimated at $30 million. The scope of the EPC includes completion of a fully operational LNG Plant that includes 2 LNG trains with a design capacity of 2 million tonnes per annum per train. The guaranteed capacity of each train is 1.7 million tonnes per annum. The project will include two LNG storage tanks with a storage capacity of 160,000 cubic metres per tank, and capable of loading LNG carriers with a capacity of up to 180,000 cubic metres. The facility will also be able to load small LNG marine barges and LNG tanker trucks for more localised distribution. CAPEX at Magnolia could be as low as US$425 per tonne of LNG output, and compares very favourably with Corpus Christi LNG Project with CAPEX of US$780 per tonne of LNG output.. The project will deploy the Front End Engineering Design FEED that was designed for the Fisherman s Landing LNG Project in Gladstone, Queensland. This will speed up the permit approvals process. Lloyds confirms that the global fleet of LNG tankers is currently around 360 vessels, with the vast majority capable of loading 170,000 cubic metres out of Qatar, or 140,000 cubic metres out of Australia, and will be capable of taking loads from Magnolia. Update for the 4 Feb 2014 announcement regarding the appointment of the SKEC Group under an MOU to be the EPC contractor. A fixed price EPC contract is under negotiation that draws heavily on the innovative work and contactor relationships that were developed for the Gladstone LNG Project. The Company has already received an indicative EPC cost estimate by SKEC of US$1.57 billion that is under the previously budgeted US$1.8 billion. A final plant design with costing will be progressed through 2014 with SKEC until it meets terms for an agreed and bankable EPC. This will include capacity and efficiency standards for plant performance along with guarantees for schedule completion and liquidated damages for any non-compliance. A construction schedule of 36 to 39 months is under negotiation. COMPARISON OF CAPEX FOR CORPUS CHRISTI LNG AND MAGNOLIA LNG, LOCATED ON GULF OF MEXICO CORPUS CHRISTI LNG MAGNOLIA LNG MAGNOLIA LNG CAPEX US$7.1Billion US$2.2Billion US$3.4Billion TRAINS mtpa 2X4.5mtpa = 9mtpa 2X2mtpa = 4mtpa 4x2mtpa = 8mtpa CAPEX US$780 PER TONNE US$550 PER TONNE US$425 PER TONNE IMAGE 5 MAGNOLIA LNG DELIVERS VERY SIGNIFICANT CAPEX SAVINGS.and leads to a low debt ratio. Corpus Christi LNG is under development by Cheniere Energy and CAPEX reflects costs associated with construction of loading facility, storage tanks, LNG process trains and associated infrastructure. This is directly comparable with CAPEX associated with Magnolia LNG. Indicative capital expenditure estimate is currently US$2.2 billion for the 4mtpa Project, and we estimate US$3.5 billion for the upgraded 8mtpa Project. The resulting capital cost is ~US$550 per annualised LNG tonne of production, and drops to ~US$425 per annualised tonne on expanded production. This produces the lowest export LNG Page 6 Copyright 2014 Proactive Investors

7 capital cost in the United States, and is driven by application of Company owned OSMR technology and modular plant design. MAGNOLIA LNG PROJECT PRODUCES EXCELLENT FINANCIAL RETURNS Magnolia will carry a lower debt load than Sabine Pass which already hosts very significant LNG import infrastructure MAGNOLIA LNG PRODUCES LOW DEBT TO EBITDA RATIO JUNE YEAR US/A$ $0.86 $0.81 $0.80 $0.80 $0.80 LNG mtpa Construction Construction TOTAL DEBT US$1.6Billion US$2.2Billion US$2.8Billion EBITDA US$380Million US$570Millon US$760Million DEBT/EBITDA IMAGE 6 MAGNOLIA LNG DEBT TO EBITDA RATIO DROPS TO 3.7 AT FULL CAPACITY We compare debt ratios for Sabine Pass LNG with Magnolia LNG, which are all located along the Gulf of Mexico, and all draw natural gas from the same pipeline infrastructure. SABINE PASS LNG IS FUNDED ON A HIGHER DEBT TO EBITDA RATIO SABINE PASS LNG TRAINS 1-4 TRAINS 1-6 TOTAL mtpa LNG 18 mtpa fully contracted 27 mtpa (7 mtpa uncommitted) EPC CONTRACT US$7.8Billion US$3.8Billion TOTAL BEBT US$8.4Billion US$12.5Billion EBITDA US$1.95Billion US$3.04Billion DEBT/EBITDA INTEREST EXPENSE US$520Million US$830Million FREE CASH FLOW US$1.43Billion US$2.21Billion IMAGE 7 DEBT TO EBITDA RATIO AT SABINE PASS EXCLUDES CAPEX FOR EXISTING LNG IMPORT FACILITY OSMR technology plans to cut plant fabrication time by 25%......cuts CAPEX by 50% cuts OPEX by 30%. cuts emissions by 30%... and reduces natural gas demand to drive plant processing of LNG from 8% to 6% Sabine Pass is owned and operated by Cheniere Energy via two Master Limited Partnerships known as Cheniere Energy Partners (NYSE: CQP) and Cheniere Holdings (NYSE: CQH). We do not compare CAPEX for Sabine Pass with Magnolia LNG as Sabine Pass already includes a LNG import facility that was constructed previously and included a berth for two vessels, tugs, pipelines, and gas storage tanks. We note that the Magnolia LNG Project will be built from scratch and still manages to produce a quicker debt pay out than Sabine Pass. OSMR PROCESS DRIVES DOWN CAPEX, OPEX & EMISSIONS The Optimized Single Mixed Refrigerant OSMR process was developed by Liquefied Natural Gas Ltd. OSMR. It is based on a single mixed refrigerant cycle that is significantly enhanced by the addition of conventional combined heat and power technology and conventional industrial ammonia refrigeration. Plant capacity is scalable with single train capacities that range from 0.5 mtpa mtpa, with multi-train capabilities that can exceed 10 mtpa of LNG. Trains can be easily added as resources and LNG demand grows, and require significantly less land than a traditional LNG plant. Page 7 Copyright 2014 Proactive Investors

8 OSMR technology increases plant availability to greater than 96% when compared to traditional LNG processes that average 90% - 92% IMAGE 8 SCHEMATIC LAYOUT OF OSMR PROCESS FOR PRCESSING NATURAL GAS INTO LNG Construction costs are further reduced by using standard equipment and modular construction. Total plant costs can range as low as $500 to $600 per tonne of annualised LNG production. This includes storage and ship loading, and is dependent on capacity and site conditions, and compares very favourably with competing technologies that fall into a range of $1,000 to $1,200 per tonne of annualised LNG production. Total fuel gas consumption for all power and auxiliary uses on the LNG train is around 6.0% of feed gas, and is lower than competing technologies that consume greater than 9%. This produces a CAPEX that is around 50% less than the cost of competing technologies. OPEX is also significantly reduced by a boost in efficiency that can exceed 30% and produce 30% less emissions. Plant simplicity also lowers maintenance costs and staffing levels. The OSMR process utilises well proven technology that provides plant availability that exceeds 96%, as compared to 90 to 92% for traditional processes and includes: OSMR technology has received extensive peer review and an EPC contract was completed for development of the Gladstone LNG Plant in Queensland Aero-derivative gas turbines coupled with efficient compressors provide better fuel efficiency, reliability, smaller footprint and lesser weight. Gas turbine waste heat to produce steam power. Combined Heat and Power Technology has been deployed in the power industry for decades. Ammonia is a commonly utilised industrial refrigerant that provides superior refrigerant properties and smaller plant size. Gas turbine inlet cooling that employs ammonia. Direct cooling of gas turbine inlet air is utilised in many power plants, and has both technical and economic advantages over traditional use of chilled water. Pre-cooling of methane refrigerant using ammonia. This stage has been used in a West Australian LNG plant cold box. The cooling of methane refrigerant from ambient temperature down to 0 C is not technically challenging, and provides a boost in liquid natural gas production of up to 20%. DIRECT COST COMPARISON WITH COMPETING TECHNOLOGIES The dominant processing route for global production of LNG has been the propane pre-cooled mixed refrigerant process known as C3MR. A variant on this technology is known as APCI C3MR and will be deployed by Freeport at their Quintana Island Terminal in Texas. Each train will be capable of producing 4.1 million tonnes of LNG per annum and be powered from a gas turbine with 70 Megawatt of installed capacity. Page 8 Copyright 2014 Proactive Investors

9 Global patents have been secured for the OSMR technology portfolio, and the patent reach continues to develop and expand Development of Magnolia LNG de-risked with agreement for equity funding support from Stonepeak Stonepeak values 50% interest in Magnolia at US$660 million / $2.25 per Liquefied Natural Gas Ltd share Liquefied Natural Gas will collect a success fee of up to US$66 million on completion of Stonepeak equity funding and collect technology licence fees of US$50 million Plant fuel usage is estimated at 9 to 11% of gas feed. CAPEX is estimated at $4.1 to $4.9 billion, or $1,000 to $1,200 per tonne of annualised LNG production. ConocoPhillips has developed the Optimised Cascade Process that is the first gas liquefaction process to utilise aero-derivative gas turbines in a train capable of producing 3.9 million tonnes of LNG per annum. This requires installed capacity of 30 Megawatts for power, and six 32 Megawatt gas turbines for refrigeration. Plant fuel usage is decreased to 8 to 9% of gas feed. CAPEX is estimated at $3.9 to $4.7 billion, or $1,000 to $1,200 per tonne of annualised LNG production. Cheniere Energy is utilising the Optimised Cascade Process at the Sabine Pass and Corpus Christi LNG Plants. The OSMR process has a smaller train capable of producing 2 million tonnes of LNG per year. This requires an installed capacity of 8 Megawatts that is driven by a steam turbine that collects waste heat from the LNG train. Refrigeration is provided by two 32 Megawatt aeroderivative gas turbines and two 8 Megawatt steam turbines that collect waste heat. Plant fuel usage is the lowest within the peer group at 6% of gas feed. Smaller train size allows for easy modularization that reduces the development and construction timeline by up to 25%, and allows for better economic project development. PEER REVIEW AND RELATIONSHIPS WITH CONTRACTORS The OSMR process has been developed with the assistance of LNG experts and subjected to extensive peer review that included Foster Wheeler with an OSMR Study and Report on the proposed Gladstone LNG Project (June 2009), CHIV with an evaluation of the OSMR LNG Process (October 2008), Arrow-WP Interim Review of Fisherman s Landing LNG Plant (December 2009), I. Aoki Evaluation Report of OSMR Gas Processing and Liquefaction Technology, SKEC Evaluation of the OSMR Process for Gladstone (June 2009), and a Technical Review Group Final Report (August 2009). Liquefied Natural Gas Ltd has also retained personnel who have extensive experience in the LNG industry. The first proposed use of the technology was the Gladstone LNG Project at Fisherman s Landing, Queensland, Australia. FEED and cost estimates were completed by SKEC and Laing O Rourke Australia. SKEC is a world class Korean EPC contractor with a strong history in oil, gas and petrochemical projects, and Laing O Rourke is an Australian contractor that recently completed the $780 million Darling Downs Power Station that is the largest combined cycle power station in Australia. Liquefied Natural Gas Ltd has deliberately sought out highly skilled entities without LNG experience so that they can apply a fresh approach to the LNG industry. CB&I who have a long history in numerous LNG projects were also retained as Project Management Consultants to oversee all aspects of project execution for the Gladstone LNG project before it was put on hold due to the lack of gas supply. The Company draws heavily on the work completed for the Gladstone LNG Project and expects to complete and execute a bankable EPC Contract for Magnolia LNG by the end of November PATENTS OSMR Process patents have been granted in Australia, Brunei, China, Eurasia, Hong Kong, Israel, New Zealand, OAPI, Singapore, South Africa and Ukraine. Boil-Off Gas Treatment Process patents have been granted in Australia, Brunei, China, Eurasia, Hong Kong, Israel, New Zealand, OAPI, Singapore, South Africa and Ukraine. Submissions for all patents have also been made in a number of additional jurisdictions. EQUITY FUNDING SECURED The financial and technical robustness of the Magnolia LNG Project has allowed Liquefied Natural Gas Ltd to significantly de-risk the project with an agreement that has attracted a major funding partner. Page 9 Copyright 2014 Proactive Investors

10 Stonepeak managers are experienced ex-blackrock senior personnel who have raised nearly $2 billion for Stonepeak JOINT VENTURE ESTABLISHED WITH STONEPEAK INFRASTRUCTURE PARTNERS LP Stonepeak Infrastructure Partners LP has completed a legally binding equity agreement with Liquefied Natural Gas Limited LNG to secure 100% of the construction funding to complete two LNG trains for Magnolia LNG LLC. This commitment is contingent on completion of a Financial Investment Decision or FID (and other conditions precedent) that triggers a cash investment of US$660 million into Magnolia LNG for a 50% equity stake, and an undertaking to assist with raising approximately US$1.54 billion via debt funding. Stonepeak and Liquefied Natural Gas Ltd completed a valuation of US$1.32 billion on the Magnolia LNG project that was based on a pre-determined Internal Rate of Return. The agreement is subject to securing long term contracts, EPC contract and all formal statutory requirements. Completion of the FID is forecast for mid-2015, and will trigger an equity investment of US$660 million by Stonepeak. This equates to a valuation of A$776.2 million for the 50% interest retained by Liquefied Natural Gas Limited, or $2.25 per share (at A$1 = US$0.85) within months. The Net Present Value of the 50% interest retained by Liquefied Natural Gas Ltd (using a 6% discount rate nominal post tax?? seems low) produces a valuation of US$572.5 million / A$ million (at exchange rate A$0.88), or $1.88 per share, and underlines the extreme undervaluation that is currently applied in the market place. Relationship with BNP PARIBAS maintained from early project role at Gladstone LNG Magnolia LNG will then operate as a 50/50 Joint Venture between the two entities. This governs funding, construction, operations management and distribution of future profits. In the meantime Stonepeak has appointed a manager to the Board of Magnolia LNG LLC to monitor development of the project. Liquefied Natural Gas Ltd will also receive a success fee of approximately US$66 million (3% of the total cost of the project currently estimated at US$2.2 billion), along with a licence fee of US$25 million for use of their patented OSMR technology. The licence fee will be paid in two equal parts at commencement of construction and on commissioning of LNG Trains One and Two. Additional precedent conditions to obtain equity funding include: Execution of Tolling Agreements to process a minimum of 3.4 million tonnes of LNG per annum. Execution of a lump sum turnkey Engineering, Procurement and Construction contract which includes a fixed completion cost along with production and efficiency performance guarantees. OSMR technology platform has potential to develop a significant licence revenue stream..both globally..and within the United States Execution of a minimum lease term of 30 years with Lake Charles Harbour and Terminal District. Issuance of Notice to Proceed with construction of LNG plant from the Federal Energy Regulatory Commission. STONEPEAK FUNDRAISING APPROACHES $2 BILLION Stonepeak Infrastructure Partners is a former unit of Blackstone Group LP (NYSE: BX capitalised at US$18.5 billion) that was established in 2011 to fund infrastructure investment. Stonepeak is capturing a core element of institutional investor allocations that are directed into infrastructure that are driven by low interest rates, weaker jobs growth and slow economic growth in the United States. The founding partners at Stonepeak include Michael Dorrell and Trent Vichie who have a combined 30 years of infrastructure investing experience with Macquarie Bank and then Blackstone Group. Their first major funding via the Stonepeak Infrastructure Fund I sought US$1.0 billion, and was oversubscribed to the tune of US$1.6 billion. Blue Chip investors included the Teachers Insurance and Annuity Association College Retirement Equity Fund (TIAA-CREF) which has $487 billion under management, Washington State Investment Board with $52 billion, and the Oregon Investment Council, Tigard which runs the Oregon Public Employees Retirement Fund with $63.2 billion, and the Washington State Investment Board with $66.8 billion. Page 10 Copyright 2014 Proactive Investors

11 Stonepeak has selected a small number of great and low risk U.S. based infrastructure investments that include the Magnolia LNG project. These will become the sole focus for the investment group into the foreseeable future. BNP PARIBAS SELECTED AS PROJECT FINANCIAL ADVISOR Stonepeak managers are experienced ex-blackrock senior personnel who have raised nearly $2 billion for Stonepeak Magnolia LLC will work with Stonepeak, EAS Advisors (Magnolia s New York based general financial Advisor) and with newly appointed BNP PARIBAS as Project Financial Advisor to secure the proposed US$1.54 billion project debt financing. BNP PARIBAS was the Project Financial Advisor for the suspended Fisherman s Landing Project in Gladstone and has impressive financing capabilities along with a 7 year working relationship with Liquefied Natural Gas Ltd on issues related to funding LNG projects. Their role will include detailed project risk and bankability review to quickly address any potential debt financing issues, and review all material project agreements so that they comply with project lender requirements. They will also complete an analysis of funding structures, various types of financing and complete a detailed Project Information Memorandum for presentation to potential project lenders. The final step will include delivery of the total project debt funding package at the financial close. Relationship Gladstone LNG with on BNP hold PARIBAS until a secure maintained long term from natural early gas project contract role is at Gladstone secured to LNG produce 1.9 mtpa of LNG for export OSMR TECHNOLOGY A SECOND REVENUE STREAM The Magnolia Project will generate up to US$50 million in licences fees from construction of four LNG trains. This is made up four payments of US$12.5 million / A$13.75 million, and equates to a total cash flow of ~$0.16 per share spread out over 3 years. Global growth for LNG demand is currently estimated at an average of 13.5 mtpa and is forecast to grow by a total of 210 mtpa by Other speculative opportunities may include the construction of small LNG plants along U.S. gas pipelines or within basins with stranded gas. Oil Drillers in the Bakken of North Dakota currently flare off their gas, as there is no infrastructure to utilise the resource. This consumes around 5% of the energy output from each well and at projected rates of production is worth around 18 million barrels of oil equivalents per year, or US$1.7 billion. GLADSTONE LNG PROJECT ON HOLD OSMR technology platform has potential to develop a significant licence revenue stream..both globally..and within the United States IMAGE 8 GLADSTONE LNG PROJECT, FISHERMAN S LANDING, PORT OF GLADSTONE QUEENSLAND Page 11 Copyright 2014 Proactive Investors

12 U.S. natural gas reserves have reached 350 Trillion Cubic Feet. the entire growth of these reserves has been on private land and indicates further significant upside growth from Federal and private land Gladstone LNG Pty Ltd is a wholly owned subsidiary of Liquefied Natural Gas Limited and is responsible for the planning, construction and operation of the Gladstone LNG Project at Fisherman s Landing, Port of Gladstone, Queensland. The Company holds all statutory approvals for a 3 million tonne per annum mtpa LNG plant, and will eventually seek approval to boost LNG production capacity to 3.8 mtpa from a plant designed for an operational life of 30 years. The first stage includes a 22 kilometre pipeline, LNG train with production capacity of 1.9 mtpa, 200,000 cubic metre storage tank, jetty and ship loading facilities that are capable of loading up to 153,000 cubic metres into one LNG tanker. The second stage will include a second LNG train rated at 1.9 mtpa will double production capacity to 3.8 mtpa. No additional storage tank capacity or other facilities will be required to handle the increased LNG output. The Project is currently on hold until the Company can secure a long term gas supply contract as feedstock to produce 1.9 mtpa of LNG. This may occur through a Letter of Intent signed with Petro China Australia or under Gas Sales Agreements or Tolling Agreements with third parties. The Company holds a secured lease over the plant site from the Gladstone Ports Corporation that is valid until 30 June A draft fixed price Engineering, Procurement and Construction Contract is also on hold pending resolution of a gas supply contract. BP forecasts that the U.S. will supply 20% of the global gas market by 2035 Long term price for Henry Hub gas is forecast at US$5.00 US MMBtu Page 12 Copyright 2014 Proactive Investors

13 U.S. NATURAL GAS MARKET TECHNOLOGICAL ADVANCES DRIVE MASSIVE RESOURCE GROWTH Global trade in LNG reached 250 MTPA in 2012, and is expected to reach 500 MTPA in2030 Recent LNG pricing in Asia is at US$14.00 MMBtu, South America US$15.00 MMBtu and Europe with US$11.00 MMBtu US$14.00 MMBtu IMAGE 9 U.S. GAS RESERVES AT END OF 2011 U.S. LNG to help break Gazprom stranglehold and pricing in Europe The last decade has seen a sharp upgrade of U.S. reserves of oil and gas that was driven by the onshore application of technologically advanced fracking and horizontal drilling. The United States contains massive shale systems that host vast resources of hydrocarbons that are now being unlocked. U.S. Energy & Information Administration estimates U.S. natural gas reserves at 350 Trillion Cubic Feet at the end of 2011, and forecast that production of natural gas will reach Bcf/d in A longer term production forecast of 95 Bcf/d in 2040 will make the U.S. the largest global producer of natural gas. Other forecasts are more bullish, and we lean toward the bullish. 63 international LNG projects in the planning stage or under construction, but many hit with massive cost overruns, and in doubt BP predicts that by 2017 U.S. oil imports will drop by 75% and the country becomes a net exporter of natural gas. The U.S.is forecast to supply 20% of the global gas market by UNITED STATES TO EXPORT LARGE VOLUMES OF LNG AT STABLE PRICES U.S. LNG exporters will be able to provide many benefits to international buyers seeking to geographically diversify supply sources that include: A long term politically and economically stable source of supply. Access to Henry Hub pricing of natural gas that produces lower and possibly more stable average LNG prices. Majority of proposed sales are with FTA nations where DOE approval is granted without modification or delay Economic opportunities for long term buyers to participate in downstream development of gas resources and LNG processing. A study commissioned by the American Petroleum Institute estimated that LNG exports of up to 16 Bcf/d of natural gas will drive U.S. Gulf Coast natural gas prices into a range of US$5 - $6 per MMBtu through to The New York Mercantile Exchange futures contract for Henry Hub June 2015 natural gas is currently at US$4.00 Mcf, and the long dated June 2020 contract is at US$4.37 Mcf. This puts U.S. Henry Hub gas prices at about one third the price of the energy equivalence of oil, when compared with West Texas Crude which is ~US$97.00bbl, and is further discounted against Brent which is ~US$107.00bbl. Current and futures pricing provide a Page 13 Copyright 2014 Proactive Investors

14 very healthy margin that approaches US$9.00 Mcf that allows for coverage of pipeline costs, and processing and shipping costs of LNG into foreign markets. U.S. Henry Hub gas price is currently trading at one third the energy equivalence of West Texas Intermediate Crude. The 2025 Energy Information Administration EIA projections for West Texas Intermediate are at US$106.99, Brent at US$ and Henry Hub at US$5.23 Mcf, indicating that nimble LNG producers should be able to generate reasonable profits into the next decade. The U.S. Department of Energy is currently processing applications from 36 projects that have applied to export LNG. The applications to export to nations with Free Trade Agreement status were at Bcf/d and duplicative applications to non-free Trade FTA nations were at Bcf/d. The DOE has approved 31 applications for export to FTA nations for a total of Bcf/d. The non FTA nations constitute a very large percentage of the global demand for LNG and the DOE has already approved applications for sales of 8.07 Bcf/d. this has sparked a boom in applications to export low priced natural gas in the form of LNG.. IMAGE 10 HENRY HUB GAS PRICE V. WEST TEXAS INTERMEDIATE OIL PRICE (SOURCE: BLOOMBERG) The United States now has the production depth and attractive pricing to play a major role in the global LNG market that includes both long term contracts and spot sales that currently constitute around one quarter of overall LNG trade of around 65 mtpa or 8.5 Bcf/d of gas. DOE forecasts U.S. gas production to increase by 37 Bcf/d by 2040 and provide very significant volumes of gas for export U.S. gas production is currently around 68 Bcf/d with unconventional gas at 26 Bcf/d, and with all production slated for local consumption or sold into Mexico via existing pipeline infrastructure. EIA forecasts growth of local natural gas production of 1.3% per annum through to 2040 and local demand growth of 0.6%. The DOE forecasts a 56% increase in natural gas production by 2040 that will add around 37 Bcf/d to the current daily production rate. Natural gas production is currently constrained by an oversupplied local market. Drillers have switched to production of oil, and in 2013 reported annualised growth of 15% for an output that hit 8 million barrels per day. This represents the biggest absolute growth in oil production of any country reported over the last two decades. Current U.S. gas resources represent over 100 years of demand, of which over one third can be economically produced at a Henry Hub price of US$4.00 Mcf. We expect to see a very significant lift in production of natural gas, as export controls are lifted and prices reach into a range of US$5 -US$6 Mcf. Page 14 Copyright 2014 Proactive Investors

15 GLOBAL MARKETS AND PRICING OF LNG CONTRACTS Global trade in LNG reached 250 mtpa in 2012, and is expected to reach 500 MTPA in2030 Recent LNG pricing in Asia is at US$14.00 MMBtu, South America US$15.00 MMBtu and Europe with US$11.00 MMBtu US$14.00 MMBtu Global trade for LNG reached ~250 million metric tonnes in 2012, and is forecast to reach ~500 million metric tonnes in This consumed 32.9 Bcf/d of natural gas in 2012 and is expected to grow to approximately 68 Bcf/d in 2030, and constitutes around one tenth of total global consumption of natural gas. Global consumption of LNG is expected to grow faster than consumption of natural gas which is projected to reach around 500 Bcf/d by Cheniere is targeting and has identified ~100 Bcf/d of potential global gas demand that is associated with static plants that currently consume oil. These facilities could switch to lower priced natural gas via long term supply contracts from U.S. resources. Asia currently constitutes 70% of global LNG demand with Japan being the biggest consumer with a 38% market share. This is followed by South Korea and fast growing China which commenced importing LNG in 2006, and purchased 10 million tonnes in Recent long term LNG contracts in Asia have been signed at 85% of the crude oil price on a Btu basis, and assuming an oil price of US$95/bbl, implies a price of US$14.00 MMBtu delivered. Shipping costs into Asia may consume up to US$3.00 MMBtu which implies an average FOB value of LNG in the U.S. Gulf Coast of US$11.00 MMBtu for LNG. The Caribbean, Central and South American markets are even more attractive to Magnolia LNG as shipping costs could be as low as US$0.50 MMbtu, and recent spot prices have reached US$15.00 MMBtu. Shipping costs into Europe should average US$1.00 MMBtu. U.S. LNG to help break Gazprom stranglehold and pricing in Europe European pricing for natural gas is captive to massive price manipulation from Gazprom. The Lithuanians are in major contract dispute with Gazprom which controls most of the pipelines and much of the natural gas that is supplied to Europe. Gazprom charges US$14.00 MMBtu for natural gas piped into the Baltics, and US$11.00 MMBtu Mcf for piping the same gas into Germany. The Lithuanians are contracting for a floating re-liquefaction vessel that should be completed at the end of Magnolia LNG is negotiating terms for a Tolling Agreement with LNG Holdings for the third LNG train which will supply some of the LNG to the Lithuanian facility. LNG PLANTS PROPOSED OR UNDER CONSTRUCTION 63 international LNG projects in the planning stage or under construction, but many hit with massive cost overruns, and in doubt Majority of proposed sales are with FTA nations where DOE approval is granted without modification or delay At least 63 international LNG export projects are planned or are under construction. Firm liquefaction additions within the Atlantic Basin and Asia Pacific at the end of 2013 were estimated to consume ~39 Bcf/d of natural gas, and are expected to reach ~53 Bcf/d in Many of the proposed facilities have suffered from massive cost overruns and are in doubt. This provides Liquefied Natural Gas Ltd with a unique opportunity to develop and showcase the Magnolia LNG Project as a low CAPEX and OPEX operation, and capture a significant piece of the resultant market. This is especially relevant to smaller gas resources that cannot support high development and operational costs utilising a traditional processing route. MAGNOLIA LNG PROJECT PROGRESS ON LNG SALES Magnolia LNG has already reported that it has issued three draft Tolling Agreements for export of 6 mtpa of LNG. The finalization of these agreements will underwrite the development of the first three LNG trains, and will be crucial to the development of the project. Proactive Investors notes that the bulk of proposed sales are with FTA approved nations, and DOE approval for these types of contracts is granted without modification or delay. GUNVOR TERM SHEET FOR 2 MTPA WILL SECURE FIRST LNG TRAIN Magnolia LNG has signed a Term Sheet with Brightshore Overseas Ltd for firm LNG production capacity of 1.7 million tonnes per annum along with 0.3 million tonnes per annum of interruptible capacity. This secures the total capacity of the first LNG train. Brightshore will (at its own expense) be responsible for the delivery of natural gas to the LNG plant, along with Page 15 Copyright 2014 Proactive Investors

16 marketing and provision of LNG ships to accept delivery of liquefied gas. Brightshore / Gunvor are in the final stages of Gunvor Term Sheet for 2 negotiating a Tolling MTPA of LNG and is Agreement for 2 MTPA of expected to become a LNG that is expected to legally binding Tolling become legally binding Agreement in the current in the first quarter of calendar quarter 2014 GNF Term Sheet for 2 MTPA of LNG and is expected to become a legally binding Tolling Agreement GNF are in the in the final first half stages of of calendar negotiating 2014 a Tolling Agreement for 2 MTPA of LNG that is expected to become legally binding in the first half of 2014 LNG has signed a Term Sheet for 2 MTPA of LNG and is expected to become a legally binding Tolling Agreement in the first LNG half signs of a Term Sheet for 2 MTPA of LNG that is expected to become a legally binding Tolling Agreement in the first Liquefied half of 2014 Natural Gas established as an energy link between stranded natural Output from gas and fourth energy train markets under negotiation OSMR.demand technology exceeds is intended capacity and as a opens disruptive the technology door to further that is meant to development drive down costs for the production of liquefied natural gas A draft and Definitive Tolling Agreement has now been submitted for a 20 year term with an option that will allow Brightshore to extend for a further 5 years. This will entail payment of: Fixed monthly capacity fee that totals approximately US$3.7 billion over the 20 year term. Fixed monthly payments to cover Operating and Maintenance Fees that are indexed to U.S. inflation. Variable monthly payments to cover Operating and Maintenance Fees that are based on actual LNG production and are indexed to U.S. inflation. Brightshore will receive preferential rights as a foundation customer and has also agreed to pay a monthly bonus fee if the DOE grants approval for export to non-fta nations. Brightshore is a subsidiary of Gunvor, which is one of the world s largest independent commodities trading houses with reported turnover of US$93 billion in Gunvor has executed a Heads of Agreement with LNG Group Panama as the aggregator and supplier of the first LNG import terminal to be constructed in Panama that is set for completion in A legally binding Tolling Agreement is expected in early GNF GROUP TERM SHEET FOR 2MTPA WILL SECURE SECOND LNG TRAIN Magnolia LNG has signed a Term Sheet with Gas Natural SDG, S.A. for LNG production capacity of 1.7 million tonnes per annum along with 0.3 million tonnes per annum of interruptible capacity. This is aimed at securing the total capacity of the second LNG train. Gas Natural SDG, S.A. will (at its own expense) be responsible for the delivery of natural gas to the LNG plant, along with marketing and provision of LNG ships to accept delivery of liquefied gas. A draft and Definitive Tolling Agreement has been submitted that has similar terms to the Brightshore Tolling Agreement, with formal execution expected in the first half of calendar Gas Natural SDG, S.A. is part of the Gas Natural Fenosa Group GNF and is a leading multinational group in the energy sector with over 20 million customers in more than 25 countries. GNF owns a fleet of LNG tankers, and is a major operator in the Atlantic basin and Mediterranean. GNF has a stake in three regasification plants, two liquefaction plants and a regasification terminal development project in Italy. GNF is also a foundation LNG buyer of the Sabine Pass LNG Project under development by Cheniere. LNG HOLDINGS TERM SHEET FOR 2MTPA WILL SECURE THIRD LNG TRAIN LNG Holdings has signed a Term Sheet that has the same term length and terms to the one executed with Gunvor. LNG Holdings is a subsidiary of West Face Capital which is a US$2.8 billion investment fund that is based in Toronto, Canada. A legally binding Tolling Agreement is expected to be completed in the first half of calendar LNG Holdings aims to deliver LNG to proposed offshore floating facilities at Port Dolphin, Florida, and Ambrose Long Island. Additional FTA destinations include Chile, South Korea and Singapore and non-fta nations utilising Höegh floating re-gasification vessels that will be located in Lithuania, Indonesia, Port Meridian U.K. and elsewhere. Korean shipyards can supply a floating re-liquefaction vessel with capacity of one billion cubic feet for about US$270 million or convert an existing carrier at about $160 million. This is very competitive with traditional onshore terminals with a similar capacity that are priced at around US$700 million, and is creating a larger market for the supply of smaller volumes of LNG into many markets. POTENTIAL NEW TOLLING PARTIES EXCEED PLANT OUTPUT OF FOURTH TRAIN The Company is reporting that discussions are underway to secure a Term Sheet for the remaining output of 2 mtpa that will be generated by the fourth train. These discussions Page 16 Copyright 2014 Proactive Investors

17 exceed the total capacity of the proposed plant. Liquefied Natural Gas Ltd is the energy link between stranded gas reserves and energy markets The only pure U.S. listed developer of LNG is Cheniere which is developing 40.5 mtpa of LNG output at Sabine Pass and Corpus Christi and carries a capitalisation of US$0.49 billion per mtpa of proposed LNG output COMPANY OVERVIEW Liquefied Natural Gas Ltd (ASX: LNG; US OTC ADR: LNGLY) listed on the ASX in 2004, as the developer of an energy link between previously discovered non-commercial natural gas reserves and energy markets. The Company aims to build highly efficient and modestly sized LNG plants that utilise a portfolio of patented technologies that were developed in house to significantly reduce capital and operating costs for the liquefaction and sale of natural gas. This technology portfolio currently covers the production of liquefied gas and is known as OSMR and has the potential to significantly disrupt higher cost technologies that are owned and managed by global energy behemoths who dominate the worldwide production of LNG. Liquefied Natural Gas Ltd retains a team of industry professionals with a proven international track record within the energy sector and include outside contractors such as SK Engineering and Construction, Laing O Rourke and HQC. The Company aims to build a long term business with multiple cash flows generated from project development, licensing, plant management and sale of LNG via long term contract. Shareholders include: China Huanqui Contracting and Engineering Corporation HQC with a 17.13% stake in the Company. HQC is wholly owned by China National Petroleum Corporation, a global Top Five Oil and Gas Company. Copulos Group is a private Australian investment company with interests in fast food, healthcare, property development and mining. OTC Trading for North American investors The Company has just launched a Level One American Depositary Receipt program that will trade its ordinary shares on a 40 to 1 basis. Trading will take place on the U.S. OTC market under the symbol LNGLY. ESTIMATE OF VALUE AND PEER COMPARISON The leading U.S. pure developer of LNG for export is Cheniere Energy (NYSE: LNG capitalised at US$9.6 billion) and has all of its facilities based in Texas. Cheniere is developing 6 LNG trains at Sabine Pass with a total output of 27 mtpa of LNG, and 3 LNG trains at Corpus Christi with a total output of 13.5 mtpa of LNG, along with associated infrastructure that include pipeline interests. Production from the first two trains at Sabine Pass is scheduled to commence in 2015, and Corpus Christi is scheduled for Cheniere Energy Partners LP (NYSE: CQP capitalised at US$9.6 billion) is the owner and operator of the Sabine Pass LNG facility, and has Cheniere Energy as its majority shareholder. A third entity known as Cheniere Energy Partners LP Holdings (NYSE: CQH) recently listed on the NYSE with an issue of 36 million shares at US$20 to raise US$720 million and retains a 55.9% interest in Cheniere Energy Partners LP, from which it will distribute dividends. Cheniere Energy reports assets of US$8.1 billion, liabilities of US$5.8 billion for total equity of US$2.3 billion..applying the same valuation metric to Magnolia LNG produces a valuation of US$3.9 billion Cheniere Energy Partners LP reports assets of US$7.6 billion, liabilities of US$5.9 billion for total equity of US$1.7 billion. Cheniere Energy Partners LP Holdings only asset is its interest in CQP and undertaking to pass through dividend payments, which is currently valued by the market at US$682 million. So the market is valuing the three entities with a potential future LNG output capacity of 40.5 mtpa at US$19.9 billion, or US$0.49 billion per each mtpa of LNG output. It is important to point out that at this stage Cheniere has LNG contracts in place for approximately 20 mtpa of LNG output consuming 2.2 Bcf/d of gas covering 4-5 of the 9 trains that have been proposed for development, and has non FTA export approval to export the same total. This is competing directly with Freeport LNG which is located in Freeport Texas and has non FTA export approval for 2.8 Bcf/d of gas. Freeport is modifying its existing LNG import and regasification plant to output 13.2 mtpa of LNG or 1.9 Bcf/d of gas. Page 17 Copyright 2014 Proactive Investors

18 Applying this formula to Magnolia LNG we estimate that 8 mtpa of LNG output should carry a valuation of US$3.9 billion, once Magnolia LNG has crossed development milestones for DOE export approval to non FTA countries, has contracts and funding in place, and commences construction of Trains One and Two. Direct competitors to Magnolia include the Lake Charles LNG Project in Louisiana owned by Energy Transfer Partners. Lake Charles is an existing LNG import facility that has received DOE approval to export up to 2.0 Bcf/d of gas to non FTA countries via 3 trains that will be built to process 15 mtpa of LNG. The entire competitor approvals are associated with facilities that were built and configured to import LNG, and can to a significant degree offset part of their CAPEX to upgrade to export status. MAGNOLIA LNG FACILITY LOCATED AT THE EPICENTRE OF U.S. GAS DISTRIBUTION Proactive Investors concludes that application of the OSMR technology provides a clear financial advantage over LNG import conversion plants located along the Gulf of Mexico. and will allow Liquefied Natural Gas Ltd to be amongst the first five U.S. LNG exporters IMAGE 11 MAP OF U.S. GAS TRANSMISSION PIPELINE SYSTEM CONCLUSION Proactive Investors concludes that the Magnolia LNG Project and application of the OSMR technology provides a clear financial advantage over the Sabine Pass and Corpus Christi LNG Projects. We believe that this advantage also extends over the LNG conversions and build-out undertaken by Freeport, Sempra and Energy Transfer Partners that are underway along the Gulf Coast. We cannot verify capital expenses on these three projects, but observe that they all intend to deploy the same traditional technologies and that CAPEX and OPEX should be broadly similar. We believe that this technological and financial advantage will allow the Magnolia LNG Project to secure favourable long term sales contracts that place Magnolia into the first five U.S. LNG exporters. CORPORATE FUNDING MAGNOLIA LNG Liquefied Natural Gas Ltd holds cash of $13.8 million that includes $10.8 million raised from a recent placement of 35 million shares issued at $0.31 per share. These funds are sufficient to advance the Magnolia LNG Project during 2014 The FID event in early 2015 triggers an investment of US$660 million into Magnolia LNG, and sale of a 50% interest in the project to Stonepeak Infrastructure Partners. The Company will receive a success fee of ~US$66 million, and first licence payment of US$12.5 million at the time of the FID. This is equivalent to A$89.2 million or $0.26 per share. FUNDING OPTIONS FOR MAGNOLIA LNG Funding for Magnolia LNG may follow a similar route to that taken by Cheniere Energy for development of its Sabine Pass LNG facility via Cheniere Energy Partners Limited Page 18 Copyright 2014 Proactive Investors