Inside today’s Daily Journal…

The production of liquefied natural gas (“LNG”) in the Middle East has been decimated by the war in Iran… creating a huge opportunity for those LNG producers outside the region and one U.S. global exporter in particular.

Over the weekend, U.S. President Donald Trump threatened to “obliterate” Iran’s power plants – with Iran threatening massive retaliation if that happened. This morning, Trump walked back the threats… for now. But Iran’s strikes over the past weeks and the threats of a wider escalation of this conflict have caused many energy companies in the region to cease or slow production.

Iran’s retaliatory strikes against production facilities in Qatar have caused the second-leading supplier globally to completely shut down production. QatarEnergy’s CEO estimates it will take three to five years to repair the damage to its Ras Laffan facility – its largest production and export hub. Producers in Abu Dhabi, the UAE, and other nations have greatly scaled back their production and delivery as well.

While this massive disruption to the energy supply in a key region of the world will have a devastating impact on the global economy for months (and years) to come, there is one winner. And it’s a company we have been writing about for more than a year, and whose stock we recommended to Complete Investor subscribers in February 2025. Shares are up 134% year to date, and we feel there is more upside to go.

The company is Venture Global (VG), based in Arlington, Virginia.

When Michael Sabel and Robert Pender founded Venture Global in 2013, their vision for the company was based on a simple, yet bold proposal: to build LNG projects “faster, cheaper, and better than anyone else.” And they have done exactly that.

The traditional industry approach to building LNG terminals is based on the “stick-built” method, which involves manufacturing customized structures on site. This requires relocating and housing hundreds of skilled construction workers and engineers, and building, from the ground up, one or several large-scale liquefaction trains – the workhorses of an LNG terminal used to supercool and compress natural gas into LNG. Given the high degree of customization, this method inevitably experiences operational setbacks and project delays.

Instead of following this practice, Venture Global pioneered an approach that uses smaller liquefaction trains – named trains because the process of liquefying natural gas involves a series of sequential steps, similar to the connected carriages of a railroad train – pre-built in offsite facilities and shipped directly to the project site. The result is more of a “plug and play” approach to LNG terminal building, where the hard work of building the most critical element of the project – the liquefaction train – is already completed beforehand, and offsite. Thus, the only work left to do is set up the supporting infrastructure (power generation, pipeline connections, etc.) and put all the pieces together.

The company calls this the “design one, build many” approach – this makes Venture Global’s construction process highly scalable and repeatable, instead of starting each new project from the ground up with a new customized design.

Before Venture Global arrived as a natural-gas producer, Cheniere Energy (LNG) was the industry leader in operational efficiency. The chart below shows the progress of the total cumulative capacity of these two companies from the same starting point, beginning with the final investment decision (“FID”) – the official go-ahead – date of their first projects. Note that Venture achieved completion of its first project a full year ahead of Cheniere’s first project, and that Venture ended up with 38% more capacity than Cheniere over the full time period:

Venture’s more rapid construction progress is only half of the story. The real differentiator between Venture and peers like Cheniere is how fast it can ramp up production and start generating significant cash flows.

We can see the advantage of Venture’s approach in its rapid growth in operating income – a measure of a company’s core profitability, defined as earnings before interest, taxes, and one-time expenses, but including depreciation and amortization charges.

Over the full two-year period, Venture produced $8.4 billion in operating income, or 6x that of Cheniere, despite only reaching half the total LNG production capacity as Cheniere’s.

In the end, Venture generated 35% more income, despite having 30% less capacity than Cheniere over the comparison period, and only running its facilities for three quarters instead of four… Framed differently, Venture generated an operating margin of $184 million per ton of LNG exports versus Cheniere’s $83 million.

Thus, based on the overall operating profits of the business and the capacity of its projects to date, it seems clear to us that Venture’s business model is at least as good as Cheniere’s on a per-unit basis, if not significantly better. And that’s good news for Venture investors, because Cheniere is the gold standard of operational excellence in the LNG industry.

Looking ahead, we see a path for Venture Global to displace Cheniere as America’s number-one LNG exporter.

Venture Global currently plans to have five LNG projects operating within the next decade. The company plans to use the same modular-construction approach for each of these projects, based on the same liquefaction train designs used in its first two LNG terminals. If it can achieve this, then cash flows from previous projects coming online should provide a substantial portion of the funding needed for each subsequent project.

In total, all five projects offer the potential to bring Venture Global’s LNG capacity up to 143.8 MTPA – enough to power more than 1 million homes – with the capacity and projected timelines of each project summarized in the table below:

But there’s an additional source of upside capacity for almost all of the projects listed above, in the form of what’s called bolt-on expansions – where Venture Global plans to add additional liquefaction trains alongside the existing trains at its already-completed projects. Here again, this is another key advantage of Venture’s modular-construction approach, which provides the operational flexibility to easily insert the same prefabricated liquefaction trains within its existing project infrastructure.

Venture planned the initial designs of its facilities with the aim of adding bolt-on capacity without a major disruption to the existing operations of its already-installed liquefaction trains. These expansion projects should also be highly cost-efficient, because the new liquefaction trains will draw the same sources of power generation, pipelines, and other infrastructure already installed at each project.

The company anticipates adding potential bolt-on capacity of 4.5 MTPA at Calcasieu Pass, 8.9 MTPA at Plaquemines, 14 MTPA at CP2, and 7.8 MTPA at Delta… leaving only CP3 without bolt-on capacity potential, given the already-large size of the terminal. The table below shows the total LNG capacity across all five current and planned projects, including these additional bolt-on expansions, reaching a whopping 179 MTPA – or nearly 4x the size of Cheniere’s total capacity today.

If Venture Global successfully develops all of these projects based on its current projected timelines, over the next decade it could become not just America’s largest LNG exporter, but the world’s largest. For a frame of reference, today’s global leader – Qatar Energy (QFLS) – had 77 MTPA of capacity, with plans to grow to 140 MTPA by the early 2030s.

Of course, those growth plans hit a major stumbling block now that its operations have been shut down as a result of Iran’s retaliatory strikes against its infrastructure. This is more than just a temporary disruption. The attacks have resulted in the destruction of several liquefaction trains at Qatar’s Ras Laffan facility, responsible for 17% of the facility’s total capacity. QatarEnergy’s CEO estimates it will take three to five years to repair the damage.

Venture Global will be among the key players filling in the gap in lost production from the Middle East, providing years of additional demand for its future projects.

But looking beyond the sheer size of its ambitious future plans, there’s one particular feature of its business model that could position the company to become one of the single biggest winners from the current global shortage in LNG.

Given the high capital requirements of LNG projects, most companies will partner with external investors to finance these projects. And when a company like Venture Global searches for investors to fund an LNG project, the investors will typically require long-term sales and purchase agreements (“SPA”) in place before making an FID commitment. The typical SPA pricing structure involves a flat tolling fee of around $2 to $3 per mcf, plus something like 115% to 130% of benchmark U.S. natural gas prices. Thus, with the Henry Hub benchmark natural gas prices trading at around $3.00 per mcf today, U.S. LNG prices are trading at around $6 per mcf.

These SPAs essentially lock in guaranteed sales volumes and a fixed-pricing mechanism between LNG sellers and buyers, and they’re designed to guarantee the future cash flows of the project. And while selling LNG under these long-term agreements reduces the risk for an LNG project, it’s also typically less profitable than selling into the spot market. That’s because overseas LNG prices routinely trade for a premium over U.S. prices. Right now, for example, European LNG import prices are trading at $18 per mcf, or a 300% premium to U.S. prices. And during periods of severe global LNG shortages, like during 2022-2023, these premiums can skyrocket to nearly 1,000%:

The reason for the persistent price premium for overseas versus American LNG is simple: the shale revolution has gifted America with an abundant source of virtually endless cheap gas. And since most U.S. LNG sales are based on U.S. benchmark gas prices (plus a fixed tolling fee), the price for U.S. LNG tends to remain tethered to lower-priced domestic gas prices.

But there is no shale revolution in Europe, Asia, or anywhere else in the world. As a result, the global gas market is subject to periodic shortages due to things like unseasonably cold weather, Russia cutting off gas flows to Europe – to the major disruption taking place in the Middle East right now. And anytime global gas supplies run short, it inevitably sparks a bidding war for the only marginal source of supply: LNG.

The problem for U.S. LNG producers is that most of the upside from higher global gas prices goes to their customers. That’s because of the SPA contracts mentioned above, which tie the price of the LNG they sell to U.S. domestic gas prices. U.S. gas prices may rise modestly during a global gas shortage, but nothing like the 5x to 10x increases in overseas markets.

But here’s the secret to Venture Global’s business model that will offer a source of uncapped upside to higher overseas prices: the bolt-on expansion projects described above. Recall that these expansion projects all come with significantly lower capital investments versus a typical LNG plant. As a result, Venture Global plans to self-fund all of these expansion projects. And since these projects won’t require third-party investors, it means they won’t need SPA agreements – allowing Venture to sell 100% of the LNG produced from these projects to the highest bidders on the global gas market.

Thus, Venture’s 35.2 MTPA of bolt-on LNG capacity will effectively give the company a huge, perpetual call option on any future LNG shortages – meaning these volumes will have uncapped upside to global LNG prices, rather than being capped based on U.S. prices via SPA contracts. And the value of that call option alone could be worth tens of billions of dollars.

During the commissioning phase of Venture’s first Calcasieu Pass project, it was able to sell all of its LNG into the skyrocketing spot market from 2022-2023. In just two years, the company cleared $8.4 billion from a relatively small 12.4 MTPA of capacity. So the upside for Venture is having nearly 3x as much capacity, going into a market that faces the prospect of a huge and growing supply deficit (shown in the chart below) from the early 2030s all the way out to 2050:

Venture Global is expected to generate $7 billion in EBITDA (earnings before interest, taxes, depreciation and amortization) this year, up 20% year-on-year (“YOY”). With the shares trading at just over $16, Venture Global’s current market enterprise value is $77 billion, putting its valuation at 11x EBITDA. For comparison, Cheniere, America’s top LNG exporter, is expected to generate a similar amount of EBITDA, $7.4 billion, but trades at a $90 billion enterprise value (12.2x). So Venture Global offers a lower valuation and a much more compelling future growth outlook, with significant upside to a prolonged period of higher overseas gas prices.

We believe Venture has all the ingredients to become one of the leading global LNG giants, and maintain that position for decades to come.

To see our original recommendation of Venture Global and future updates and buy/sell alerts – plus access to more than 40 other recommendations – click here to become a Complete Investor subscriber.

Tell me what you think: [email protected]

Good investing,

Porter Stansberry
Stevenson, Maryland

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1. Fertilizer prices are at their highest level since September 2022. A third of seaborne fertilizer traffic has been halted by the closure of the Strait of Hormuz – sending prices up 44%, as measured by the Green Markets Fertilizer Price Index. The immediate impact is on spring planting: decisions being made today lock in higher food prices in the future – likely hitting the grocery-store checkout line in three months.

2. Hyperscalers plow cash into AI. The “Big Five” tech firms (Amazon, Alphabet, Meta, Microsoft, and Oracle) are funneling a staggering 94% of operating cash flow into artificial intelligence (“AI”) infrastructure. Amazon is projected to hit negative free cash flow this year, while Alphabet’s is expected to plummet 90%. For the first time, these titans hold more debt than cash, raising $121 billion in bonds in 2025 alone. The industry is betting everything on the hope that AI research will eventually compress years of development into months before the money runs out.

2. The CLARITY Act moves closer to reality. The Senate’s months-long standoff over stablecoin yield may have ended Friday after Senators Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) announced an “agreement in principle” with the White House. The deal reportedly addresses Wall Street’s concern that stablecoin rewards programs could trigger deposit flight from traditional banks, and clears a path forward for the sweeping crypto market structure bill that would divide regulatory authority between the Commodity Futures Trading Commission and the Securities And Exchange Commission. Obstacles remain – ethics provisions, illicit finance language, and a 60-vote Senate floor threshold still need resolution – but this is the first real momentum the bill has seen since leading crypto exchange Coinbase Global (COIN) withdrew its support in January, derailing a planned hearing.

Shares of U.S. liquefied natural gas (“LNG”) exporter Venture Global (VG) have increased 135% year to date.

Mike M. writes:

Porter Comment: Thanks for your excellent question.

I’ve suggested that people who are retired or near retirement (less than five years out) and / or investors who can’t easily weather a 20%+ drawdown in their investment accounts should adjust the Permanent Portfolio allocation by raising cash. (I began offering that modification about three weeks ago.)

To raise the cash, I suggested selling the “fixed income bucket” of Porter’s Permanent Portfolio, which, as you probably know, is made up of property and casualty (P&C) insurance companies. This would leave investors with 25% in high-quality, low-volatility “Lindy” stocks, 25% in gold and Bitcoin, and 50% in cash.

This allocation is designed to protect you, primarily, from inflation.

I suspect the greatest financial damage from this war will occur in the bond market, which looks to be at risk from a wicked combination of both rising defaults (I believe there’s a credit default cycle underway) and much higher than expected rates of inflation.

I will not be surprised to see 10-year yields above 10%.

This is a radically out-of-consensus view.

And, as I’ve said, if 10-year yields breach 5%, I think it’s an “everyone out of the pool” moment in the markets.

If I’m right about the confluence of rising inflation and rising defaults, we could see a 50%+ drawdown in the stock market.

So why haven’t I told everyone to do as you have already done? Why not go 50% to cash and 50% to gold/Bitcoin?

Because I have two balls. And neither of them is crystal.

Over time, stocks will prove to be wonderful tools for asset protection and appreciation. High-quality, capital efficient businesses will survive the credit cycle and protect owners from inflation. The “toll” stocks charge for this protection and growth is volatility. And, if you’re retired, weathering that volatility can be very challenging.

But selling poses risks too. You risk missing a huge rally in stocks if my outlook is wrong. You risk suffering serious tax consequences for selling too, even if I’m right.

Thus, for now, I have not altered the Permanent Portfolio’s recommended allocations. It’s a portfolio that’s designed to weather volatility. It is internally hedged: the bonds hedge the stocks. The gold and the Bitcoin hedge the bonds. And the cash is there (25%) to dampen the volatility. I have no doubt that absent a complete debacle in the financial markets, Porter’s Permanent Portfolio will perform well over any five-year period.

And, despite the headlines, I am far from certain that my doomsday forecast of rising defaults and rising inflation will come to pass — though it does look more and more certain.

Thus, for now, my advice is simple: if you’re retired, or if you’re near retirement, and / or if you can’t weather a 20%+ drawdown, then I recommend raising cash by selling fixed income (including P&C stocks).

If the 10-year yield moves over 5%, I will significantly alter our recommended allocation. We will sell stocks and bonds and move to a 50/50 allocation in cash and gold/Bitcoin. But, again, that hasn’t happened yet.

One final note, many subscribers are bewildered that gold has sold off. I warned several weeks ago that was likely, as gold is correlated to credit creation. In a credit default cycle, gold sells off as creditors must raise cash. But you may recall from the 2008 credit default cycle, gold will also bottom long before the equity market does.

I continue to believe that Bitcoin, because it is correlated to market liquidity, will bottom before gold and before stocks.

Regards,

Porter

P.S. I also know that the first casualty of any war is the truth. People who try to trade the headlines of this conflict will find themselves constantly whipsawed.

Bob N. writes:

Porter Comment: Bob —

I will spend the rest of my life trying to explain this… and it won’t help.

But here goes anyways…

It’s important to have an estimate of the current intrinsic value for all of the stocks on our recommended list. Thus, we’ve built a very robust analytical engine that’s fed by the company’s most recent publicly available earnings results. Why is this valuable? Because it serves to ground our expectations and, importantly, to show where and how we are out of consensus. Our buy-up-to price is based on a discount to this algorithmic estimate of intrinsic value. While we haven’t shared our exact formula, our approach includes both quality and growth factors.

ExxonMobil (XOM) is in the midst of the most radical transformation of its operating results since the discovery of the East Texas field in 1930. Over the past 18 months, it has radically increased the operating efficiency of its Permian Basin operations, as we’ve detailed in our reports. This will greatly increase both the value and the magnitude of its proven reserves. In addition, there is currently a kinetic war taking place in the heart of the world’s largest energy infrastructure (the Persian Gulf).

These two factors lead us to believe that the company’s past results (which inform our estimate of its current intrinsic value) may not be a meaningful indicator of its future results. I don’t know the math off the top of my head, but Exxon will see massive operational leverage for every $1 increase to the price of crude oil. Thus, it’s perfectly rational for us to advise investors to buy Exxon, even though it’s currently trading at a price that’s far in excess of its current intrinsic value. We obviously expect its intrinsic value to increase as its earnings grow because of the factors I’ve mentioned.

In regards to our positioning of Wingstop as a Forever Stock, I couldn’t agree with you more. I have argued against that recommendation since it was first written up. And I would personally never buy it. But we have a team approach to our recommended list. I think we need a new category: stocks that Porter hates but that younger, brilliant analysts love.

Bill W. writes:

Porter Comment: Bill —

Question #1: Tariffs are taxes. Taxes increase the cost of production. Increasing the cost of production will not increase wealth, productivity, or our competitiveness. Sorry. Will not help. If you believe that some product or service is vital to our national security, then you should advocate for the most free market for that product possible. That’s the only way to ensure our industry remains the best in the world. If you don’t understand this, there’s nothing I can do for you. Just know that your opinion is at odds with hundreds of years of well-documented economics. There is no better understood or well proven economic phenomena than comparative advantage. Taxing trade is, by far, the worst possible way of raising revenue for the government.

Question #2: What makes you think there aren’t massive investments being made in robotics every day? Look at Amazon, for example.

Regards,

Porter

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.