Why the Liquefied Natural Gas Ltd share price rocketed 20% higher today

The Liquefied Natural Gas Ltd (ASX:LNG) share price is up 20% today following the announcement of a major new agreement.

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The Liquefied Natural Gas Ltd (ASX: LNG) share price has been a standout performer in early trade.

At the time of writing the liquefied natural gas developer's shares are up a massive 20% to 67 cents.

Why has it jumped?

This morning the company announced that it has entered into an amended and restated Magnolia LNG equity commitment agreement with Stonepeak Partners and has updated the associated Magnolia LLC Agreement.

The amended agreements replace the existing Stonepeak agreements signed in October 2013 in their entirety.

The new agreement means that the company's Magnolia LNG business has secured a $1.5 billion commitment from Stonepeak, which is expected to fund the project's full equity requirement.

Pleasingly, it includes a fixed coupon with pay-in-kind provisions during construction that lowers the project's cost of capital from the previous agreement.

Should you invest?

I believe that having the funding in place to move forward is a big step forward and great news for the company and its shareholders.

The US-based Magnolia LNG project has enormous potential in my opinion and is perfectly positioned to profit from the next wave of US LNG exports.

If long-term LNG prices are favourable then Liquefied Natural Gas could be a great option for investors in the resources sector.

The good news for shareholders in this regard is that Stonepeak is bullish on the long-term outlook for US sourced LNG. Believing that Magnolia can provide cheaper and cleaner fuels globally to underserved or stranded consumers.

Overall, I feel Liquefied Natural Gas could be worth taking a closer look at today and may even prove to be a better investment than Santos Ltd (ASX: STO).

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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