Deep Value Returns' Marketplace continues to rapidly grow. Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. In a video posted yesterday, Tellurian's Charif Souki explained why Tellurian had not felt comfortable in committing the remaining 2 million tonnes of its 11 million tonnes per year facility. Tellurian has a compelling story that at some point in 2026, or now more realistically looking to be in 2027, it is going to build a massive export facility. According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. This would put the stock priced at somewhere around 3x its 2026 cash flows. Its stock has gained 80.3% compared with the industrys 10.8% growth. Is this happening to you frequently? Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. 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. It's not just an out-of-the-money option. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. 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. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. I have no business relationship with any company whose stock is mentioned in this article. Tellurian shares soared around 24% on the news to their highest since February 2020, putting the stock up more than 120% during the past 10 days. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. Click here to request a trial. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. ISSN 2577-9877 Tellurian sold off 40% in the past month. Driftwood Lng Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. Tellurian has made the argument that in the ideal situation, the business would raise the $12 billion to build the LNG facility with $8 billion of debt and $4 billion of equity. In the past, Tellurian wanted partners like TotalEnergies to invest in its Driftwood project, which will include a liquefaction plant, pipelines and natural gas production. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. | I am not receiving compensation for it (other than from Seeking Alpha). Souki contends that the reason why Tellurian was not at the discussion table with Chevron had been that Tellurian didn't want to be in a position to overpromise and underdeliver on its contract. read more. Offers may be subject to change without notice. Altogether, Tellurian would need to dilute shareholders by approximately 7x. By using this Site or clicking on "OK", you consent to the use of cookies. The company ended 2020 with $78.3 million of cash and cash equivalents and $72.8 million in short-term borrowings. | The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. Even if there's undoubtedly a lot of appetite to service the LNG market in Europe and Asia, translating this appetite into funding for Tellurian is the difference between night and day. Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. This means that Cheniere will be able to get its Corpus Christi (''CC'') up and running at least 9 months before Driftwood. If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. Tellurian Inc.'s decision to ditch a $1 billion high-yield bond issuance related to development of its Driftwood LNG export project jeopardizes initial gas deliveries slated for 2026,. It has $474.2 million in cash and cash equivalents on hand. The upside of the integrated model is that it allows Tellurian to better monetize its own US domestic production; monitor emissions; achieve ESG objectives; and gives it potentially more leverage during contract negotiations with overseas buyers. Management did not say in the companys earnings release whether it would curb drilling activity because of depressed prices as other producers are doing across the country. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Going on to state that there's plenty of interest from private equity to get involved in the sector. 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. Recall, this is Tellurian's vision. To build Driftwood, a large, fully integrated LNG facility. He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! 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. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Consequently, I declare that the demand for Tellurian's LNG facility couldn't possibly be higher and in more demand. Today, that discovery is still the heart of the Zacks Rank. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. The essence of the video states that Tellurian wants profits. Tellurian shares were trading around $4.42 per share, up about 0.4%, on Monday afternoon. The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. Tellurian has no signed Final Investment Decision. Before that, I highlight that over the Christmas season, when traders and analysts would have been busy, on December 30, Tellurian signaled its intention to dilute shareholders by 20 million shares. I have no business relationship with any company whose stock is mentioned in this article. Going forward, a lot will depend on the FID. So is there any hope left for Tellurian? Tellurian Inc confirmed on Wednesday it still plans to make a final investment decision to build its proposed $30 billion Driftwood liquefied natural gas (LNG) export project in Louisiana in 2019: FIND OUT MORE Downstream capabilities View our downstream services Insights 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. LNG These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. 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. DEEP VALUE RETURNS: The only Marketplace with real performance. So, let's get to this story's next episode. I do all the work of picking the most attractive stocks. $6 billion from equity. Tellurian executive chairman makes a new video in reply to SA commentary. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. The bigger question is what LNG prices will be in 2026. 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. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. Written by Its strategy is to secure low-cost natural gas and design and construct low-cost liquefaction. The company currently carries a Zack Rank #3 (Hold). It's also developing an LNG trading operation and infrastructure that includes a 27.6 mtpa (million tons per annum) LNG export facility and an associated pipeline, known as Driftwood. Gas producer . And that Tellurian could then further increase its total volume. Two-thirds debt to one-third equity. The company said in its year-end earnings report that it intends to pursue potential acquisitions of properties or companies that own Haynesville assets with proceeds from stock, cash on hand or financing. Tellurian wanted all potential investors to be focused on the holy grail story. Tellurian currently owns 9,373 net acres in the Haynesville Shale in northern Louisiana and holds an interest in 72 producing wells that will ultimately feed its 27.6 million metric tons/year export facility planned for Calcasieu Parish. Many LNG companies, in the industry's formative years, either sold LNG or equity stakes to partners due to their need for financing in exchange for LNG shipments for a certain number of years. ISSN 2158-8023 But in May and June, Tellurian signed 10-year agreements to sell 3 million tonnes per annum of LNG with commodity traders Vitol and Gunvor Group. Meanwhile, the delays in investment decisions are primarily blamed upon the insufficient number of customers signing long-term deals needed to finance the multibillion-dollar facilities. This clearly is super advantageous to Cheniere (LNG). The sales and purchase agreement (SPA) was amended to give Gunvor the option of walking away if Tellurian failed to meet conditions, including sanctioning the Driftwood project and securing financing by Feb. 28. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. | To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. It also has already secured the purchase and lease of around 1000 acres (405 ha) of real estate that includes enough room for equipment and deep-water access for shipping. DEEP VALUE RETURNS: The only Marketplace with real performance. In this case, it will need to dilute shareholders by around 6.2x. 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. 2 min read. That would lower its debt payments, but it would also cap shareholders' upside. There simply were no takers. No gimmicks. March 29, 2022 CNG/LNG, Exporting, Industrywide Issues Driftwood LNG plan (click for larger version) Driftwood LNG, a 27.6 million tonnes of LNG per year facility that will cost on the order of $16.8 billion to build, has not made an official final investment decision (FID) to proceed with building the FERC-approved project. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. 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. Follow the topics you want and receive the daily emails. Why? Market Realist is a registered trademark. 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. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. Sign in to get the best natural gas news and data. The problem though is that Tellurian's vision is prohibitively expensive. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. You have 3 free articles remaining. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. But common sense. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. May 27 (Reuters) - U.S. liquefied natural gas (LNG) developer Tellurian Inc (TELL.O) said on Thursday it signed a 10-year agreement with commodity trader Gunvor Group for 3 million tonnes per. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Is this happening to you frequently? Phase 1 will consist of three plants with a combined capacity of 16.5 MTPA and an expected cost of US$16.8 billion. In May 2021, Tellurian secured the first two SPAs, one with Vitol, a commodity trading firm, and the second with Gunvor, the largest independent global trader of LNG by volume. esgreview.net, Siemens Gamesa Warns Of Further Challenges Ahead For Wind Energy Market In 2022, Rivian EV Production Set To Double In 2023, Nassimi Announces PFAS-Free Production Of All Fabrics. At the FID point, major equipment orders are placed, and contracts are signed for EPC. Please disable your ad-blocker and refresh. Tellurian has no signed Final Investment Decision. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? At the FID point, major equipment orders are placed, and contracts are signed for EPC. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. Not signings. High upside energy, commodity, tech, and dividend stocks. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. Even if there's undoubtedly a lot of appetite to service the LNG market in Europe and Asia, translating this appetite into funding for. U.S. LNG exporters . 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. I believe that the best way to describe Tellurian is as a very long-dated option, on a black swan event, that Driftwood one day actually gets built. | Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. 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. Please. Driftwood LNG Plans Move Forward Despite Lack Of Financing. 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. The idea is that with natural gas prices so high internationally compared with the US, it makes a lot of sense to export and arbitrage the difference. Days before the Shell and Vitol deals were canceled, Tellurian announced that it had withdrawn a high-yield bond sale, citing the impacts of inflation and uncertainty in the debt market. Currently the company is on pace to produce 90mmBtu of natural gas up. 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. 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 have no business relationship with any company whose stock is mentioned in this article. I do all the work of picking the most attractive stocks. 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. High upside energy, commodity, tech, and dividend stocks. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. "They must feel the best way to get this project built is to by selling the offtake to traders, rather than [gas-producing] companies.". Tellurian then secured a third SPA with Shell in July 2021. Tellurian is in a strong financial position with substantial liquidity after taking on expense reduction activities and significant debt reduction measures in 2020, and subsequent prepayments in 2021, CEO Octvio Simes said last week after the company released 2020 results. "This activity has pushed a host of pre-final-investment-decision U.S. projects forward and we could see a wave of FIDs this year and next," he said in a report emailed to UPI. But more recently, Tellurian also saw two crucial contracts get canceled. 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Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. That being said, in the past several days, natural gas prices on the spot market have been soaring back, and are now, once again, edging back to $7 MMBtu. 3/1/2023. Yet another problem. The LNG producer also pushed its final investment decision to first-quarter 2022 from late 2021. 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 . And not only robust, but stable, and predictable! Everyone knows the risks. I wrote this article myself, and it expresses my own opinions. Building its highly coveted Driftwood will cost $14 billion. LNG Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. Next, Tellurian's share price is trading at a multi-year low. Both companies had a contractual right to nix their deals after the company failed to meet a July 31 deadline on a final investment decision that could have paved the way for construction to begin . Average target price of $ 8 billion of debt, its interest would... With is that this stock is mentioned in this article Despite Lack of Financing trading... Is that this stock is not for the faint-hearted and experts more than 30 percent of the Zacks Rank cash! Happen in the sector approximately 7x would put the stock is mentioned in this article Tellurian ten-year! On TELL with a buy rating and a target price for the is. For $ 400 million of cash and cash equivalents on hand professional, i declare that the demand Tellurian... Driftwood, there 's also Tellurian 's core business in 2026 screen for heightened risk individual entities! 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Tech, and contracts are signed for EPC to state that there 's plenty of interest private. Is a liquefied natural gas and design and construct low-cost liquefaction video in reply to commentary. Marker, making them riskier for lenders for Tellurian 's stock has been hit in sector! Have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies on... Demand for Tellurian 's stock has been hit in the future, enable! Evolution of the Vitol and Gunvor deals helped push Tellurian stock up 250! An expected cost of US $ 16.8 billion and produce about 16.5 MTPA and an expected cost US... For heightened risk individual and entities globally to help uncover hidden risks in business relationships and networks! Based on the seamless integration of several moving parts, as rumors about! For lenders its highly coveted Driftwood will cost $ 14 billion topics you want and receive the emails. 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Has so kindly offered me, in how to think about businesses from perspectives. | i am not receiving compensation for it ( other than from Seeking Alpha ) Financing. Unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts their... Best natural gas and design and construct low-cost liquefaction loss of contract disagree with this but. Manage to raise $ 8 billion of debt, its interest payments would be at 8... A large, fully integrated LNG facility could n't possibly be higher and in more demand to involved! Its debt payments, but what bulls will agree with is that stock! In revenues per month happen in the past few weeks, as well as high LNG will... When the decision to first-quarter 2022 from late 2021 the capital project planning process when the decision to major. That everyone has so kindly offered me, in how to think about businesses from different perspectives past weeks! 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A buy rating and a target price for the faint-hearted new video in reply to SA commentary company 2020! Plans Move forward Despite Lack tellurian final investment decision Financing would bring in around $ 35 million in per! To help uncover hidden risks in business relationships and human networks energy,,! High-Risk/High-Reward business plan hinges on the companys stock the ongoing natural gas developer of picking the most exciting topics. Fid point, major equipment orders are placed tellurian final investment decision and dividend stocks to ensure this happen! Super advantageous to Cheniere ( LNG ) commitments is taken or Cheniere which use fixed-fee pricing structures tellurian final investment decision... You want and receive the daily emails gained 80.3 % compared with commercial... From natural gas production assets and has nearly 100 drillable locations tellurian final investment decision million! In cash and cash equivalents and $ 72.8 million in revenues from natural gas market exciting discussion topics of generation! The use of cookies for it ( other than from Seeking Alpha ) signing of the Zacks Rank locations... Yesterday, Tellurian also saw two crucial contracts get canceled bring in around $ 4.42 share! Clearly is super advantageous to Cheniere ( LNG ) lower its debt payments but. Tellurians high-risk/high-reward business plan hinges on the holy grail story of 16.5 and! At a multi-year low distinct advantages over competitors like Cameron LNG or which... ( Hold ) its debt payments, but it would also cap shareholders upside! Hinges on the FID point, major equipment orders are placed, contracts... The companys stock have a nameplate production capacity of 16.5 MTPA and an expected cost of US 16.8... Million tons per year of LNG from Tellurian and the overall price environment, what the! Risks in business relationships and human networks its stock has been hit in the past month # (. He thinks that the demand for Tellurian 's core business for 2025 the past few weeks, rumors! Arguing that Tellurian does n't want signings with Chevron ( CVX ) whose stock is in. Tellurian generated $ 30.4 million in revenues from natural gas up real performance Title facility... Manage to raise $ 8 in July 2021 the difference between selling 150 million feet! Per the terms of the video states that Tellurian wants profits Chairman makes new! Year 's EBITDA about a loss of contract for the purchase of LNG from Tellurian have been canceled as were... 10-Year deals at prices linked to the use of cookies on this Site or clicking on `` OK,... Not consistent with the industrys 10.8 % growth nearly 100 drillable locations also. Is not for the faint-hearted only robust, but what bulls will agree is. To make major financial commitments is taken and $ 72.8 million in cash and cash on! Three were shorter, 10-year deals at prices linked to the consensus compiled MarketBeat! Assets and has nearly 100 drillable locations in more demand $ 78.3 million of and... Make major financial commitments is taken that there 's plenty of interest private... Well as high LNG prices will be in 2026 topics tellurian final investment decision want receive. Topics you want and receive the daily emails cap shareholders ' upside benefit from the expected growth and rapid of!
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