Energy Transfer on 'positive catalyst watch' at Citi on Lake Charles LNG decision

CHUNYIP WONG/E+ via Getty Images

Energy Transfer (NYSE:ET) was placed on a 30-day "positive catalyst watch" at Citi on Wednesday, after it appealed for an extension of its Lake Charles LNG project, and the Department of Energy is expected to issue a response by the third week of June.

Energy Transfer (ET) "made a strong argument in its appeal," Citi analyst Spiro Dounis said, outlining $350M already spent on the project, expectations of signing an engineering, procurement and construction contract by July, plans to incorporate a carbon capture and storage component, and a number of commercial obstacles that warranted an extension.

"We don't believe Lake Charles is priced into ET's unit price, which skews the potential DoE extension positive," Dounis wrote in maintaining his Buy rating and $16 price target on the stock.

The analyst also noted Lake Charles LNG is substantially contracted, and Energy Transfer (ET) likely will seek joint venture partners to help fund the project, which would provide another much needed outlet for U.S. natural gas production.

More analysis on Energy Transfer: