Morningstar

Venture Global: Data Center Entry Sends Shares Lower

Investors should still be cautious about this venture, but commercial momentum would quickly shift our view.

Collage illustration for Energy Sector with a gas pump.
Securities in This Article
Venture Global Inc Ordinary Shares - Class A
(VG)

Key Morningstar Metrics for Venture Global LNG

  • Fair Value Estimate
    : $14.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : Very High

Venture Global LNG VG announced its entry into the power generation market. Shares fell 6% at the time of writing.

Why it matters: At first glance, the pivot seems head-scratching and reads like a move into a buzzy new market, as LNG oversupply concerns will return to the forefront once the war in Iran ends.

  • However, this is not a wrongheaded move. LNG facilities run on their own natural gas turbines. All of Venture’s facilities are in Louisiana, the state neighboring Texas, which recently paused new large-load data centers ahead of the US midterm elections.
  • Venture is signaling to developers that it can offer stable power, firm interstate pipeline capacity, and land in an accommodating regulatory environment. A track record of executing on multibillion-dollar projects on or ahead of schedule helps too.

The bottom line: We are maintaining our $14 fair value estimate for now. If we assume similar terms that Williams has achieved and one 720-megawatt power addition is made per year from 2027 through 2035, our fair value estimate would increase to $17.

  • Our no-moat, Standard Capital Allocation, and Very High Uncertainty ratings remain unchanged. We still see shares in 3-star territory.
  • We will likely get more detail on commercial progress and the path forward when the firm reports in early November.

Big picture: We see Venture’s efforts as rooted in reality, given the clear adjacencies of existing infrastructure and capabilities. Data center developers will pay a premium for reliable power, and Venture is a credible provider with partnerships with Baker Hughes and GE Vernova.

  • Investors should still be cautious about this venture, but commercial momentum would quickly shift our view. With the windfall generated from commodity prices, Venture has the cash available to execute.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

Sponsor Center