Why Venture Global Rallied Today

Key Points

• Venture Global beat analyst expectations for revenue and EBITDA.

• The company also announced an important arbitration win in a suit brought by one of its customers.

• With the stock down nearly 50% from its January IPO, it may be worth a look in an otherwise expensive market.

• 10 stocks we like better than Venture Global ›

Shares of Venture Global (NYSE: VG) rallied 9.8% on Wednesday as of 1:55 p.m. ET. The liquefied natural gas export company, which is building several export terminals on the U.S. Gulf Coast, reported its second-quarter earnings last night.

Results were solid and above expectations. But on top of that, the company also announced it had won an important arbitration case brought by a large customer, removing a risk that was potentially overhanging the stock.

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Venture delivers in Q2, and in court

In the second quarter, Venture Global saw revenue of $3.1 billion, up 180% year over year, along with adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $1.39 billion, up 217%. Both figures came in ahead of analyst expectations.

Management announced the company was ramping production of its Plaquemines terminal quicker than expected, and now expects total cargoes for the year to be at the high end of the previously given 367-389 range, which encompasses both Plaquemines as well as the first Calcasieu Pass project, which entered official commercial operations in April. However, management kept its full-year EBITDA targets unchanged.

Venture Global also announced it won its arbitration case against one of its customers, Shell (NYSE: SHEL). Shell brought a case two years ago, after Venture Global opted to sell cargos on the spot market from Calcasieu Pass when LNG prices were much higher following the Russian invasion of Ukraine, rather than to Shell and other customers with which Venture had signed a long-term supply agreements at lower prices.

It appears Venture's argument, that it had only sold those cargoes during the pre-commercialization phase and was thus not obligated to sell those cargoes until official commercialization, won over arbitrators. Thus, the potential overhang of financial penalties was removed, it seems.

Image source: Getty Images.

Venture Global is still half its IPO price

While the near-tripling of revenues was good to see, investors can look forward to more growth in the years ahead. In late July, the company announced it had made the final decision to begin phase 1 of the second Calcasieu Pass (CP2) project, following the company securing over $15 billion in financing, all while having its credit upgraded by S&P Global.

This growth will be very capital-intensive. However, with natural gas seemingly in high demand from foreign customers, both for security reasons and to power AI data centers, Venture Global should eventually be a very high-cash-flowing business. Even after today's rally, the stock is well below its January IPO price of $25. So, enterprising investors may want to dig into this story in the second half.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends S&P Global. The Motley Fool has a disclosure policy.