Tellurian reported a full-year net loss of $49.8 million (minus 9 cents/share), compared to a net loss of $114.7 million (28 cents) in 2021. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. I follow countless companies and select for you the most attractive investments. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. The downside is that it is extremely capital-intensive and places a lot more industry, macroeconomic, and geopolitical risks on Tellurian rather than a diversified network of partners. Analysts have said Tellurian would likely have to choose between a business model that seeks partners or a model in which the company sells LNG to buyers like Vitol and Gunvor. This would severely limit Tellurian's upside. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. |, Related topics: swan event, that Driftwood one day actually gets built. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. B.Riley analyst Liam Burke is positive on the stock. Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. [2023 Natural Gas Price Outlook: How will the energy industry continue to evolve in 2023? DEEP VALUE RETURNS: The only Marketplace with real performance. Tellurian is a very volatile stock and not one for the faint-hearted. We are all working together to compound returns. Two-thirds debt to one-third equity. Tellurian dangles a carrot to investors, $400 million of EBITDA in 2023. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. June 3 (Reuters) - U.S. liquefied natural gas (LNG) developer Tellurian Inc (TELL.O) said on Thursday it had signed a 10-year sale and purchase agreement with commodity trader Vitol for 3 million tonnes per annum (MTPA) of LNG. Believing that transparent markets empower businesses, economies, and communities, Natural Gas Intelligence (NGI) provides natural gas price transparency and key news, insights and data for the North American energy markets. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Shares of the company have outperformed the industry in the past six months. I provide a hand-holding service. Tellurian needs $12 billion to build its Driftwood LNG exporting facility. Is this happening to you frequently? Presently, Tellurian's market cap is around $1 billion. All Rights Reserved. A story that's going to be a win-win for all parties. Is this happening to you frequently? Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. My Marketplace highlights a portfolio of undervalued investment opportunities - stocks with rapid growth potential, driven by top quality management, while these stocks are cheaply valued. (Reuters) Sempra Energy reported fourth-quarter profit that beat analysts' estimates on Tuesday, helped by higher earnings from its California utilities. Souki calls Driftwood the holy grail of the business model (~3:42). Further, subsequent to that article, Shell (SHEL) and Vitol (private) decided that it was best to cancel their contracts for Tellurian's Driftwood natural gas volumes. My Marketplace highlights a portfolio of undervalued investment opportunities - stocks with rapid growth potential, driven by top quality management, while these stocks are cheaply valued. Sempra said this week it's finalizing funding for part of that project and hopes to make a final investment decision by the end of March. Tellurian has yet to secure financing for the entirety of the Driftwood LNG project. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). | The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. 2023, Nasdaq, Inc. All Rights Reserved. 2023 Natural Gas Intelligence. I do all the work of picking the most attractive stocks. Going forward, a lot will depend on the FID. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. The company currently carries a Zack Rank #3 (Hold). ISSN 1532-1231 Those assets produced 16.9 Bcf of natural gas last year, up from 13.9 Bcf in 2019. Bitcoin, Like the Internet Itself, Could Change Everything. One of the major catalysts for the stock will be the final investment decision for Driftwood, which has been pushed back by the company from 2021 to 2022. Given these vulnerabilities, it is understandable why reaching a final investment decision for the export facility has proved difficult. Finally, even if Driftwood was to be built at some point in the future, investors' prospects will be capped, as Tellurian's equity would need to be diluted approximately 7x. The U.S. Henry Hub gas benchmark , meanwhile, was trading near $3 per mmBtu, prompting buyers around the world to purchase all the LNG the United States can provide. High upside energy, commodity, tech, and dividend stocks. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. ISSN 2577-9877 Haynesville Shale Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. Tellurian Inc. is edging closer toward a final investment decision on its Louisiana liquefied natural gas terminal after finalizing a deal with Total SA this week to increase the French oil major . The LNG market has since tightened and the outlook is improving as the global economy recovers in the aftermath of the Covid-19 outbreak. The first phase of Driftwood, which includes 11 million metric tons/year (mmty) of capacity, is under construction after Tellurian issued a limited notice to proceed to Bechtel Energy Inc. last year. I have no business relationship with any company whose stock is mentioned in this article. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. U.S. LNG exporters . I provide a hand-holding service. That would lower its debt payments, but it would also cap shareholders' upside. Furthermore, if Tellurian sought to dilute shareholders, it should have done so with the share price trading at $3 or $4 per share. Chairman Souki addresses the matter on a YT video. LNG Tellurian, however, has not yet made that decision, making Driftwood one of more than a dozen North American LNG projects that have repeatedly pushed back decisions to start construction due primarily to an insufficient number of customers signing the long-term deals needed to finance the multi-billion-dollar facilities. 1.800.427.5747 Please. Not at less than $2 per share. You can seethe complete list of todays Zacks #1 Rank stocks here. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. If you have an ad-blocker enabled you may be blocked from proceeding. Copyright 2023 Market Realist. By using this Site or clicking on "OK", you consent to the use of cookies. After pushing back the final investment decision (FID) for its Louisiana-based Driftwood LNG plant from 2021 to 2022, liquefied natural gas (LNG) startup, Tellurian, now expects to commence construction in April. I have no business relationship with any company whose stock is mentioned in this article. Type a symbol or company name. Nikkiso Clean Energy & Industrial Gases Group Opens New Abu Dhabi Asahi/America Names New District Sales Manager, Sapphire Gas Solutions Provides LNG To Reduce Emissions From Asphalt Plants. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Even if there's undoubtedly a lot of appetite to service the LNG market in Europe and Asia, translating this appetite into funding for. The agreements had built on TotalEnergies' original $207 million . Click here to request a trial. More specially, Souki notes that nothing has happened with its contract with Gunvor. Our Standards: The Thomson Reuters Trust Principles. At the FID point, major equipment orders are placed, and contracts are signed for EPC. If you have an ad-blocker enabled you may be blocked from proceeding. I argue that this meaningfully improves the bull case. Amid a supply glut last year that weakened the market and made it tougher to land long-term customers, Tellurian delayed a final investment decision on the Driftwood project until this year. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! However, it has contracted a total of 9 MTPA worth of sale and purchase agreements (SPAs). jamison.cocklin@naturalgasintel.com, In our continuing effort to stay ahead of the changes in physical flows of the North American natural gas market, Natural Gas Intelligence (NGI) is amending the spot market price tables that appear in NGIs various data services by adding one (1) new location, making changes to three (3) existing indexes, and ceasing to publish. To read this article on Zacks.com click here. Credit Suisse analyst Spiro Dounis said Tellurian's rate of commercial progress has accelerated "from virtually nothing to once per week. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. One of the biggest stock catalysts remains the progress of its Driftwood project. Why? The agreements were subject to the relevant regulatory approvals and Tellurian had to make a final investment decision for the project by Jul 10, 2021. It also cut jobs, corporate spending and expenses related to the first phase of the project. 1.800.427.5747 The focus of the Tellurian ( TELL) investment case is on management's ability to sign long-term LNG contracts which underpin project financing; after which the company can take final. So is there any hope left for Tellurian? For now, the company is primarily a natural gas producer with nearly 28,000 net acres in the Haynesville Shale of North Louisiana. Tellurian Inc., which continues to work toward a final investment decision on its Driftwood liquefied natural gas (LNG) terminal proposed for Louisiana, plans to acquire additional assets in the Haynesville Shale this year. Sign in to get the best natural gas news and data. Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? Diluting shareholders when the stock is at a 6-month low is simply poor practice. Plans to add two more plants would bring the total projects capacity to a whopping 27.6 MTPA for a total cost of US$30 billion. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. I wrote this article myself, and it expresses my own opinions. The concept is largely unproven in the U.S. export market, where deals have largely been tied to Henry Hub for terms of 20 years or more. You have 3 free articles remaining. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. Tellurian CEO Octvio Simes said the company "continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want.". Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. DEEP VALUE RETURNS: The only Marketplace with real performance. Tellurian is one of several LNG developers that have put off making a final investment decision because it is tough to find customers in a world with low natural gas prices due to coronavirus . This is not a significant dilution and amounts to less than 4%. Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. Follow the topics you want and receive the daily emails. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. This is the core of the bull and bear case. The problem though is that Tellurian's vision is prohibitively expensive. To build Driftwood, a large, fully integrated LNG facility. read more. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. The definitive agreements are consistent with the terms contemplated by the Heads of Agreement announced on April 3, 2019, and are subject to certain closing conditions, including the final investment decision (FID) to construct Driftwood. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. NGI All News Access. Tellurian is actively pursuing additional upstream acreage. Driftwood is categorically not getting built by 2026. If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. However, the company missed the. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. Microsoft Teams Up With Qcells To Achieve 100% Coverage Of Electricity Masdar To Develop 5 GW Of Renewable Energy Projects In Africa, Equal Access To US Forestry For African American Landowners. Smith believes the market has finally reached an inflection point that would allow Freeport to reach a final investment decision (FID) on the fourth train in early 2023. . 2023 Natural Gas Intelligence. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. Liquefied natural gas (LNG) developer Tellurian Inc. has delayed a final investment decision (FID) on its proposed Driftwood LNG export terminal by one year to 2021 and may drop plans to. 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