Transportation Sector Review: Union Pacific Corporation Sees Moderate Volume Growth

Golar LNG Limited (NASDAQ:GLNG) announced details of an expansion to its fleet. The Board of Golar has in the recent months considered several options for expanding the company’s activities. This has included growth through acquisitions as well as organic growth. Particular emphasis has been given to valuations, operating efficiencies and timing of such an expansion. The Board sees significant strength in the present development in the LNG shipping market. Global LNG trade is estimated to increase by in the region of 8%-10 % per year over the next few years with further upside if US LNG exports materialise.

The total cost of the two vessels is slightly above $400M. As with Golar’s existing newbuilding orders, the vessels will be delivered with tri-fuel diesel electric engines. The new engines will be more fuel efficient and will also have lower emission levels of pollutants and CO2. The Board has in the recent months been in discussions with several yards with respect to increasing the size of the company’s new building program. The fact that ship newbuilding prices in general are under some pressure and also that the new tri-fuel engines are significantly cheaper to operate than the previous generation steam turbine ships makes newbuildings attractive. The company believes that it is important to get new capacity delivered as early as possible in order to position Golar for the anticipated large LNG volume increases expected to come from Australia and possibly the US in 2015 – 2016.

The shares closed at $46.68, up $2.45, or 5.54%, on the day. Its market capitalization is $3.74 billion.

Union Pacific Corporation (NYSE:UNP): Sees “moderate” volume growth potential in 2012 for domestic grain, grain products, industrial chemicals. Sees “slow to negative” volume growth potential in international intermodal, paper, biofuels. Comments from slides that will be presented at the Stifel Nicolaus Transportation Conference.

The shares closed at $113.17, down $0.01, or 0.01%, on the day. Its market capitalization is $54.33 billion.

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