Matthias Pickl
Senior Investment Advisor
Saudi Aramco
Dr. Matthias J. Pickl is a Senior Investment Advisor at Saudi Aramco and an Adjunct Professor of Finance and Economics at King Fahd University of Petroleum and Minerals (KFUPM). With more than 20 years of experience across the energy sector and academia, he is widely recognized for his trusted investment expertise, peer-reviewed research, and customized university courses. Dr. Pickl bridges the worlds of the energy business and academic concepts, contributing to successful and sustainable investments for both companies and countries, while actively shaping the next generation of global leadership.
Participates in
TECHNICAL PROGRAMME | Energy Infrastructure
Navigating the Future: Innovations & Market Dynamics in LNG, FLNG, & CNG
Forum 07 | Technical Programme Hall 2
27
April
13:30
15:00
UTC+3
The global liquefied natural gas (LNG) market has undergone a rapid transformation in recent years, evolving from a relatively niche segment of the energy industry into a globally integrated and financially sophisticated marketplace. As the LNG value chain expands to address the dual pressures of energy security and decarbonization, investment evaluation and decision-making surrounding LNG infrastructure, gas trading portfolios, and upstream assets have become increasingly more complex. At the core of these decisions lies the need for a robust understanding of LNG asset valuation - encompassing both fundamental cash flow generating principles and the strategic, option-driven perspective.
This paper explores the dual concepts of intrinsic and extrinsic value in the context of LNG asset valuation. Intrinsic value refers to the economic worth of an asset based on its risk-adjusted future cash flows, typically assessed through traditional financial models such as discounted cash flow (DCF). It is grounded in fundamental drivers such as capital and operational costs, revenues, and ultimately free cash flow. Extrinsic value, by contrast, captures the strategic flexibility and embedded option value unique to LNG assets – such as the ability to reroute cargoes across global markets, exploit regional price arbitrage opportunities, or optimize temporal spreads through storage and regasification timing.
Given the capital intensity, long-term investment horizons, and regulatory exposure inherent in LNG infrastructure, a holistic view that integrates both intrinsic and extrinsic components of value is of crucial importance for stakeholders across the energy value chain. This includes operators, financiers, investors and sellers in the LNG merger and acquisition landscape. As the energy transition continues, LNG assets are increasingly attracting interest from broad spectrum of players - from traditional oil and gas majors to private equity funds - each assessing value through the lens of their own strategic objectives.
To bridge theory and practice, this paper presents both a conceptual valuation framework and a real-world case study analysis of ADNOC’s recent bid for Santos, highlighting how intrinsic and extrinsic value drivers contribute to the valuation of LNG assets. This approach illustrates how modern LNG valuation must go beyond static financial metrics to capture the full spectrum of economic and strategic potential embedded in LNG assets.
This paper explores the dual concepts of intrinsic and extrinsic value in the context of LNG asset valuation. Intrinsic value refers to the economic worth of an asset based on its risk-adjusted future cash flows, typically assessed through traditional financial models such as discounted cash flow (DCF). It is grounded in fundamental drivers such as capital and operational costs, revenues, and ultimately free cash flow. Extrinsic value, by contrast, captures the strategic flexibility and embedded option value unique to LNG assets – such as the ability to reroute cargoes across global markets, exploit regional price arbitrage opportunities, or optimize temporal spreads through storage and regasification timing.
Given the capital intensity, long-term investment horizons, and regulatory exposure inherent in LNG infrastructure, a holistic view that integrates both intrinsic and extrinsic components of value is of crucial importance for stakeholders across the energy value chain. This includes operators, financiers, investors and sellers in the LNG merger and acquisition landscape. As the energy transition continues, LNG assets are increasingly attracting interest from broad spectrum of players - from traditional oil and gas majors to private equity funds - each assessing value through the lens of their own strategic objectives.
To bridge theory and practice, this paper presents both a conceptual valuation framework and a real-world case study analysis of ADNOC’s recent bid for Santos, highlighting how intrinsic and extrinsic value drivers contribute to the valuation of LNG assets. This approach illustrates how modern LNG valuation must go beyond static financial metrics to capture the full spectrum of economic and strategic potential embedded in LNG assets.
