Shares in the ASX's 'story stock' of 2014, Liquefied Natural Gas Limited (ASX: LNG), (LNGL) have fallen 20% in early afternoon trade as the prospect of falling oil prices take their toll on producers, big and small.
LNGL, still up more than 700% in 2014, has fallen 29% over the past two market days on the back of OPEC's decision not to cut oil production. BHP Billiton Limited (ASX: BHP), Oil Search Limited (ASX: OSH) and Woodside Petroleum Limited (ASX: WPL) are down 3.4%, 5.4% and 6.3%, respectively.
Since OPEC met last week, oil prices have sunk around 10% amid fears of significant oversupply.
OPEC, believed to control 40% of the world's oil production, has been slow to react to the boom in US shale which is being tipped to make the US a net exporter of oil by 2019.
LNGL is indirectly exposed to the USA's oil boom since it plans to construct two LNG liquefaction and export tolling facilities in North America. One is in Louisiana USA, and another in Nova Scotia, Canada.
These projects are still years away from production and the company will need to raise billions of dollars to finance them. The recent volatility of the oil price is the likely catalyst behind today's selloff.
Should you buy, hold, or sell LNGL?
LNGL is a high-risk/high-reward play on rising energy prices throughout the world. At today's share price of $2.42, investors and traders alike could see value in holding the stock through the current market volatility. However falling oil prices do cast doubt over the timing of projects, so Foolish investors may be wise to wait on the sidelines until the company sheds more light on its progress at both facilities.
