Energy

Golar LNG Soars on Schlumberger Memorandum

Chris Lange

Published: January 22, 2016 11:35 am

Last Updated: January 13, 2020 2:42 pm

Golar LNG Ltd. (NASDAQ: GLNG) led the bulls in Friday’s trading on news of an agreement with Schlumberger Ltd. (NYSE: SLB). The company announced that it has signed a memorandum of understanding with Schlumberger to co-operate on the global development of greenfield, brownfield and stranded gas reserves. The main aim of the venture is to accelerate the time it takes to bring proven gas reserves into production.

According to the memorandum, Golar and Schlumberger have agreed to jointly market gas monetization solutions to owners, investors and governments. Golar will contribute the floating liquefied natural gas (LNG) assets and technology while Schlumberger, via its special project management division, will provide upstream development knowledge, resources and capital. The intention of this integrated offer is to gain access to a wide range of uneconomic gas reserves by delivering low-cost LNG production solutions.

Ultimately, this agreement that will provide resource holders with a completely integrated package both reducing risk and securing financing for gas projects.

Both parties have initiated their activities and already have made solid progress expecting to announce the first project within the next two months.

So far in 2016, Golar has underperformed the markets, with the stock down 24% year to date, and down nearly 60% in the past year. As for Schlumberger, its shares have been relatively in line with the markets in 2016 but down over 20% in the past 52 weeks.

Shares of Golar were trading up nearly 37% at $16.36 on Friday, with a consensus analyst price target of $48.59 and a 52-week trading range of $9.42 to $51.89.

Schlumberger was trading up 3% at $63.30, within a 52-week range of $59.60 to $95.13. The consensus price target is $85.75.