By Avi Salzman
Venture Global, one of the year's most disappointing initial public offerings, got a boost this week that is turning the stock around.
The fast-growing exporter of liquefied natural gas won an arbitration case in the International Chamber of Commerce against Shell that removes a big risk for shareholders.
Venture Global, though, still has to prove to doubters that its business model will work.
Shares jumped 11% on Wednesday, the day after the ruling. At Thursday's price of $13.50, the stock is still down 46% from its January IPO price of $25.
But Tuesday's decision gives Venture Global momentum after a long stretch of market uncertainty.
Shell, along with other buyers of liquefied natural gas, or LNG, had filed arbitration cases because they said Venture Global wasn't abiding by long-term contracts they had signed to buy LNG from a Venture Global plant in Louisiana.
Venture Global was selling LNG from the plant on the spot market, earning high returns at a time when Europe needed more LNG after Russia's invasion of Ukraine.
Shell and the other buyers said they should have been getting those LNG cargoes, but Venture Global said it was allowed to sell the cargoes on the open market because the plant was still in a "commissioning" phase. The companies involved sought damages between $6.7 billion and $7.4 billion.
Venture Global said the ruling not only confirms that it honors its contracts, but that its model has helped expand the LNG market.
"Venture Global's unique ability to incrementally export commissioning cargoes during the construction of our facilities has brought LNG to the market years faster than ever before and strengthened global energy security," the company said in a statement.
Shell said it is "disappointed" but respects the decision. "Trust in long-term contracts is the bedrock of the LNG industry and essential for continued investment and sustainable growth," the company said in a statement.
Analysts see Venture Global's victory as a significant step forward.
"This removes a major overhang on the stock," wrote UBS analyst Manav Gupta, who thinks the ruling could bode well for other similar arbitration rulings that Venture Global still faces.
That said, it's clear that Venture Global's business model still makes some investors nervous.
The company is growing faster than its largest publicly traded rival Cheniere Energy, increasing the number of cargoes it exported by 147% in the latest quarter.
While Venture Global has signed several 20-year deals, it also sells cargoes on spot markets where it will have to deal with the ups and downs of LNG pricing.
Cheniere sells the vast majority of its output through long-term deals that are less dependent on the short-term moves in the market. Its stock is up 6% this year.
Several analysts expect the LNG market to become oversupplied in the next year or two, which could hurt spot pricing.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
August 13, 2025 12:45 ET (16:45 GMT)
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