Analysts following Cheniere Energy Inc. expressed surprise at the timing of Charif Souki’s departure from the company he built, but not at the outcome of the inevitable confrontation with Carl Icahn, the company’s largest investor, given the conflicting outlooks of the two industrial titans.

Yesterday, analysts spoke with Hart Energy about Souki’s ouster, and today more analyst are weighing in.

“I frankly was not anticipating this,” Sunil Sibal, senior analyst at Seaport Global Securities told Hart Energy. “I felt there might have been a little bit of tension between Icahn’s team and Charif, considering that they were trying to bring in very different kinds of approaches. Carl Icahn is more about returning cash to the shareholders. Charif, on the other hand, is a big visionary who did not have returning cash to the shareholders as his first priority.”

William Frohnhoefer, managing director of BTIG LLC, also saw a showdown coming, with Icahn’s board members pushing for a tighter focus on balance sheet management and cash return to shareholders. He did not expect such an abrupt change.

“I was more assuming that there was going to be a debate with an eventual meeting of the minds and compromise on both sides,” he told Hart Energy. “Apparently there was a lot less room for compromise than I thought in the attitudes of the two parties.”

Souki’s free-wheeling approach to spending put him on a collision course with Icahn, but it was the struggles of the commodity markets that brought the conflict to a head. Cheniere’s stock price, down 42% this year, echoes the woes of many in the industry.

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“I think the weakness in the shares today is probably based more on two things: the fear of Fed action coming up soon, and also the poor performance of oil in the world market today,” Frohnhoefer said. “The feedback that we’ve gotten so far from shareholders has been quite positive in the sense that they want to see a CEO who a) is not selling shares, which really kind of rubbed them the wrong way; and b) someone who they think will be more focused on either returning cash or paying down debt or doing other battening-the-hatches kinds of work in the current pretty rough energy environment.”

In just the second half of this year, as Cheniere’s stock continued to fade, Souki sold stock worth around $37 million. He was not alone among Cheniere officers to sell. Greg W. Rayford, senior vice president and general counsel, sold about $3.7 million of stock. Other significant sales, particularly in August, were made by R. Keith Teague, executive vice president; Katie Pipkin, senior vice president; Jean Abiteboul, senior vice president; Meg Gentle, executive vice president; and Michael Wortley, senior vice president and CFO.

Under Souki, Cheniere was the antithesis of a company that played it safe. It was moving forward on a plan to build a $550 million stabilizer at its Corpus Christi complex to be able to export processed condensate. That drift from the core business of liquefaction and operating LNG export facilities riled some shareholders, but Souki’s plan was always to pursue future opportunities.

“Unlike building a pipeline or building a storage facility in this country, building an LNG facility is a five-year plan,” he told attendees at a meeting of the Houston Producers’ Forum last month. “It takes a lot of capital and it takes a lot of time in order to move this. In this business, in this industry—in this country and the rest of the world—you don’t get five years of visibility on a very accurate basis. We’re in an industry where we’re making investments that are supposed to last 20 years, but the business changes every five years. You have to be very nimble, very quick and keep your optionality as much as you can. We’re all familiar with this. We all know what we need to do in order to get there. It’s not easy to get it done.”

Cheniere’s board apparently decided that he was not the one to do it.

“What the company needs is somebody who can execute on Charif’s grand plan with the assets that are already under construction—basically their Sabine Pass terminal as well as the Corpus Christi terminal,” said Sibal. “To the extent that they will bring somebody on board to execute that, I would view it as positive, frankly.”

Joseph Markman can be reached at jmarkman@hartenergy.com.

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