With the Tellurian on the verge of extinction, here are 2 alternative ways to take advantage of the LNG boom

Global demand for liquefied natural gas (LNG) could increase by more than 50% by 2040, according to an estimate by Shell. Fueling this rosy outlook is the expectation that China will switch its power plants from coal to gas and that LNG will fuel the engines of economic growth in South Asian countries.

tellurian (SAY 0.20%) had hoped to take advantage of the global LNG boom by building the proposed Driftwood LNG facility. That had made her popular LNG stock. However, with Tellurian agreeing to sell himself TO Woodside Energy in a $1.2 billion cash dealinvestors i shall look elsewhere to take advantage of the LNG boom. Here are two alternatives to consider.

US LNG leader

Tellurian had hoped to build a leadership pure play United States LNG Export Company. Its proposed Driftwood LNG terminal could eventually export 27.6 million tonnes per annum (MTPA) once fully developed in 2028. The company estimated the facility could produce annual cash flow of more than $3 billion once he reached that point. Meanwhile, Tellurian owns enough land to build a capable second site producing another 30 MTPA of LNG per year.

In a way, Tellurian sought to repeat itself Energy harnesses (LNG -1.28%). It became the first company to export LNG from the lower 48 states when its Sabine Pass terminal began commercial operations in 2016. Today, Cheniere operates two sites, Sabine Pass and Corpus Christi, with a combined capacity of 45 MTPA. The company has invested more than $38 billion to build the country’s largest LNG producer and the second largest globally.

Cheniere Energy is on track to produce $3.1 billion to $3.5 billion billions of free cash flow distributable this year, something tellurian it wouldn’t be they delivered for many years, if ever. The company use the money to invest in growth its LNG export capacity, repays debt and returns cash to shareholders through buybacks and dividends. It recently authorized another $4 billion in share buybacks through 2027 and increased its dividend payout by another 15%. It is also building more LNG export trains at Corpus Christi and working on future expansion projects at both locations to continue growing its production capacity and cash flow.

Gas supply to LNG facilities

LNG export terminals need a constant supply of natural gas. Because of this, it relies on pipeline companies to bring gas to their facilities. Few companies are in a better position to supply more gas to LNG export terminals along the US Gulf Coast than Kinder Morgan (KMI -0.05%). It currently carries little less than half of all gas fed into US LNG export terminals.

The company’s extensive pipeline network, particularly in Texas and Louisiana, places it in a strong position to take advantage of opportunities to supply more gas to LNG export facilities. The company at present has contracts to move 7 billion cubic feet per day (bcfd) of gas to the LNG terminals. It SEES which increase to 10 bcfd by the end of next year as more capacity comes online. In the meantime, watch 13 bcfd of additional opportunities for gas supply to LNG export facilities.

LNG exports are just one of Kinder Morgan’s many growth drivers. The company supplies and more gas to support the country’s growing energy demand and exports to Mexico. In addition, it is investment TO support increasing low-carbon energy such as renewable natural gas and renewable fuels.

Kinder Morgan currently generates approximately $5 billion in annual free cash flow. It pays out about half of its cash in dividends. It uses the rest to invest in high-yield expansion projects, buy back shares and maintain financial flexibility to make positive acquisitions when opportunities arise. The company currently has $5.2 billion of growth capital projects in stock, which provides visibility into its ability to grow its cash flow through 2028. This number should grow as it captures additional expansion opportunities related to LNG.

Take advantage of the LNG boom right now

Tellurian gave investors the dream of potentially cashing in on the global LNG boom one day when it finished building the proposed Driftwood facility. Unfortunately, he couldn’t turn that dream into reality.

However, while Tellurian could not deliver on its LNG promise, Cheniere Energy and Kinder Morgan are already cashing in on the boom. They generate billions of dollars in cash flow from their LNG-related operations, which should continue to grow in the future. This gives them more cash to return to shareholders through buybacks and growing dividends. They are excellent alternatives for those looking to take advantage of future growth in LNG demand.