Venture Global (VG) stock is crashing over 18% in pre-market trading on Friday, after the natural gas company lost an arbitration case to energy giant BP PLC (BP). The dispute revolved around Venture Global’s agreement to deliver liquefied natural gas (LNG) to BP under a long-term contract, which the U.S. supplier allegedly failed to fulfill.
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Venture Global Inc. is a U.S.-based LNG exporter focused on developing and operating large-scale LNG facilities, including the Calcasieu Pass and Plaquemines projects.
BP Wins Big in LNG Arbitration
According to a regulatory filing, the International Chamber of Commerce’s Court of Arbitration ruled that Venture Global failed to meet its obligations by not declaring commercial operations at its Calcasieu Pass plant on time and not acting as a “reasonable and prudent operator.”
For context, the contract was supposed to begin in late 2022, but Venture Global failed to supply the agreed amount of LNG even after that date. This led BP to take the issue to arbitration, which is a legal process to resolve disputes outside of court.
Venture Global Could Face Billions in Damages
Venture Global faces potential multibillion-dollar damages after losing an arbitration case to BP, which is claiming more than $1 billion plus interest and legal costs.
Meanwhile, Venture Global said it was disappointed by the arbitration decision, arguing that it contradicts earlier findings in a similar case involving Shell. Notably, the company has won a similar arbitration case with Shell (SHEL) in August.
Meanwhile, the ruling has rattled investor confidence and put fresh pressure on VG stock. Analysts at Schneider Capital Group noted that the market is factoring in the risk of additional adverse rulings, with unresolved claims possibly exceeding $5 billion. Meanwhile, RBC’s five-star-rated analyst Elvira Scotto said the unexpected ruling was “somewhat of a surprise” and could raise investor concerns about Venture Global’s pending arbitration matters.
Is VG a Good Stock to Buy?
According to TipRanks consensus, VG stock has received a Moderate Buy rating based on six Buys and four Holds assigned in the last three months. The Venture Global share price forecast is $16.70, which implies an upside of 32.75% at the current trading level.
