Chanos Calls Gas Exporter Cheniere `Excessively Expensive Bet'

  • Chanos tells CNBC that Cheniere's cost forecasts are too low
  • Investor Icahn meanwhile calls Cheniere ``great company''

Hedge fund manager Jim Chanos described Cheniere Energy Inc. as an “excessively expensive bet” with cost forecasts that are too low, differing with billionaire Carl Icahn who just a week ago called the natural gas exporter “a great company.”

Cheniere’s customer contracts “are fine,” Chanos said in a television interview with CNBC on Wednesday. “It’s about the cost,” he said, adding that Cheniere’s spending forecasts for terminals in Texas and Louisiana are too low. Cheniere’s shares slid 5.2 percent to $35.43 at 2:18 p.m. in New York.

In February, Cheniere became the first to export U.S. shale gas as it began operations at the Sabine Pass gas export terminal in Louisiana. It gained federal approval yesterday to place the complex’s first gas liquefaction plant in commercial service and has plans to build six more that will altogether generate an estimated $4.3 billion a year in fixed revenues under 20-year contracts. The company’s stock has meanwhile slid by over 50 percent in the past year, dragged down by the collapse in oil prices.

Cheniere didn’t immediately respond to a request for comment on Chanos’ interview.

In his own interview with CNBC about a week ago, billionaire Icahn -- Cheniere’s largest shareholder -- called the gas exporter a “great company” backed by “damn good” contracts.

“We’re going to make LNG and we’re going to sell it over to Europe where they need the LNG and it could compete with oil and this is what we bargained for,” he said at the time. “You’re buying a company that is almost like a toll bridge, literally like a toll bridge, a great-paying toll bridge that you couldn’t buy anywhere else.”

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