The essence of the video states that Tellurian wants profits. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. I believe that anyone reading this knows the spiel well. Tellurian needs to raise $12 billion. Tellurian sold off 40% in the past month. 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. LNG FIND OUT MORE Downstream capabilities View our downstream services Insights Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. U.S. LNG exporters . WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Get access to 100,000+ more news articles & industry data. I follow countless companies and select for you the most attractive investments. Reality got in the way. Since I wrote Pipe Dream, Tellurian's share price has taken a tumble. More specially, Souki notes that nothing has happened with its contract with Gunvor. Please. From the start, Tellurian has been a story stock. 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. 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. |, Related topics: Royal Dutch Shell plc terminated its SPA with the company last September, when Tellurian also delivered notice to Vitol Inc terminating a similar deal with the global trading firm. But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. Tellurian Inc. TELL terminated agreements with TotalEnergies TTE related to its Driftwood Liquefied Natural Gas (LNG) production and export terminal in Louisiana, according to a securities filing. Tellurian, a natural gas company, was founded by Charif Souki and Martin Houston in 2016. I am not receiving compensation for it (other than from Seeking Alpha). Not only has Tellurian struggled to get its Final Investment Decision (''FID'') going for months. The problem here is that, aside from. 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. Earnings The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). Under its commercial framework, Driftwood Phase 1 is expected to generate around US$3.7 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) per year. For good reason too. Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. Some call it the Internet of Money and predict it could change the way money works forever. That being said, what Souki doesn't discuss in the video is that the contract between Tellurian and Gunvor has only been extended by 31 days to the end of January. Not at less than $2 per share. I am not receiving compensation for it (other than from Seeking Alpha). Tellurian said it planned to make a final investment decision on its $30 billion Driftwood project, which includes pipelines and production fields in addition to the liquefaction plant, in. 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. 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. High upside energy, commodity, tech, and dividend stocks. Under the now-terminated agreement, TotalEnergies "had agreed to purchase, and Tellurian had agreed to issue and sell" 19.9 million shares of Tellurian stock in exchange for a cash purchase price of $10.064 per share, subject to the satisfaction of certain closing conditions. B.Riley analyst Liam Burke is positive on the stock. LNG Insight The company ended 2020 with $78.3 million of cash and cash equivalents and $72.8 million in short-term borrowings. I wrote this article myself, and it expresses my own opinions. ISSN 2577-9877 This is a simple case of arbitrage. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. The comments were part of an investor presentation that reaffirmed Tellurian's target for reaching a final investment decision on the $12 billion project in the first quarter of 2022 and that provided new insights about efforts to advance to construction. No gimmicks. Type a symbol or company name. Haynesville Shale | Currently the company is on pace to produce 90mmBtu of natural gas up. 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. 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. Copy and paste multiple symbols separated by spaces. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. This is of course if Driftwood ends up getting built at all. 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. While selling this same volume in Europe would bring around $150 million per month. Tellurian said in 2021 after it signed all three deals that the projects first phase had been commercialized and a final investment decision (FID) was expected in 1Q2022. It then announced it would seek equity partners. $8 billion to come from debt. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return. Tellurian ( NYSE: TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. Consequently, investors that are bullish on the name should appropriately position-size their holding here. Please disable your ad-blocker and refresh. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. So the core. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. Yet another problem. 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. Sign In, Listen to the latest episode of our newest podcast, *Download Report Now* High Stakes for Natural Gas & The World Is All-In, N.A. 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. Market Realist is a registered trademark. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. As per usual, Souki took to YT to argue his take. Unlike other U.S. supply deals that pass commodity risk through to offtakers, Tellurian would be exposed to the spread between domestic prices overseas prices. Tellurian clearly has assets with some value. 3/1/2023. ISSN 1532-1231 In 2021, Tellurian reported $27 million in first quarter losses and terminated a $700 million deal with TotalEnergies, after Tellurian failed once again to reach a final investment decision for Driftwood. 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. Here's the thing that a lot of investors have likely forgotten about. LNG For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. 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. Dow and X-energy to build U.S. Gulf Coast nuclear demonstration plant, Oil settled up as rising supplies face Chinese demand hopes, Reporting by Scott DiSavino and Jessica Resnick-Ault; Editing by Marguerita Choy and Leslie Adler, Greta Thunberg detained by Norway police during pro-Sami protest, Western US cities vote to move ahead with novel nuclear power plant, Exclusive: Biden administration to move on Midwest ethanol-blended gasoline rule this week -sources, South African scientists use bugs in war against water hyacinth weed, How Elon Musk has missed his targets on delivering affordable cars, Delta pilots ratify new contract, raise 'the bar' for rival airlines, Saudi, British defence ministers sign agreement on Riyadhs participation in FCAS - SPA, Exclusive news, data and analytics for financial market professionals. These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. Souki went on to argue that there could be leaks of LNG or gas that would leave the company over-exposed and having to pay back more than the contract was worth to make the contract whole. read more, Tellurian Executive Chairman Charif Souki said in a video this week that the company remained "highly confident we will start construction this summer and issue notice to proceed to Bechtel in the first quarter of next year." Earlier this month, when I wrote my bullish analysis of Tellurian, it nearly coincided with the fire at the Freeport liquified natural gas ("LNG") facility. Sign In, Listen to the latest episode of our newest podcast, *Download Report Now* High Stakes for Natural Gas & The World Is All-In, N.A. Another big fear for investors could be the dilution of their holdings. Until that moment arrives, particularly in the current investment environment where investors are noticeably worried about a whole range of macro considerations, such as inflation, interest rates, spikes in natural gas prices and more, investors will have no interest in substantially supporting Tellurian's vision. The one-line takeaway is this, Tellurian is a very high-risk investment. 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. It's a high beta stock. One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. Tellurian said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . Hess earnings for 2021 are expected to rise 116.2% year over year. By the start of 2020, several LNG export. There simply were no takers. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. This is the core of the bull and bear case. Deep Value Returns' Marketplace continues to rapidly grow. Its stock has gained 80.3% compared with the industrys 10.8% growth. 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. So, let's get to this story's next episode. I have no business relationship with any company whose stock is mentioned in this article. Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. Tellurian dangles a carrot to investors, $400 million of EBITDA in 2023. In June, TELL signed a long-term contract with Vitol for 3 mtpa. Follow the topics you want and receive the daily emails. Smith believes the market has finally reached an inflection point that would allow Freeport to reach a final investment decision (FID) on the fourth train in early 2023. . jamison.cocklin@naturalgasintel.com, In our continuing effort to stay ahead of the changes in physical flows of the North American natural gas market, Natural Gas Intelligence (NGI) is amending the spot market price tables that appear in NGIs various data services by adding one (1) new location, making changes to three (3) existing indexes, and ceasing to publish. . The company currently carries a Zack Rank #3 (Hold). Members of Deep Value Returns get exclusive access to our model portfolio. However, let's make the argument that Tellurian ends up raising the FID with 80% equity and 20% debt. And that Tellurian could then further increase its total volume. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. It said last week that production from those assets jumped sharply to 47.3 Bcf in 2022. 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. Tellurian, email The company also reiterated that it is targeting a final investment decision for its LNG export facility in Texas before the end of the first quarter of 2023. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. I am not receiving compensation for it (other than from Seeking Alpha). Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. The industry leader for online information for tax, accounting and finance professionals. Tellurian has an amazing story. 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. Tellurian then secured a third SPA with Shell in July 2021. Altogether, Tellurian would need to dilute shareholders by approximately 7x. 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. Each deal is worth about $12 billion in revenue over the contract period. | I have no business relationship with any company whose stock is mentioned in this article. 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: Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. Gas producer . I have no business relationship with any company whose stock is mentioned in this article. It is the second 10-year, 3-MTPA agreement Tellurian has announced in a week, following a deal with commodity trader Gunvor Group. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. It's not just an out-of-the-money option. I'll address this momentarily. High-quality, actionable insightful stock picks. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. I wrote this article myself, and it expresses my own opinions. 2023 ESG Review. Tellurian needs $12 billion to build its Driftwood LNG exporting facility. Today, that discovery is still the heart of the Zacks Rank. Tellurian has no signed Final Investment Decision. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. Follow the topics you want and receive the daily emails. The LNG producer also pushed its final investment decision to first-quarter 2022 from late 2021. Looking for a helping hand in the market? At the FID point, major equipment orders are placed, and contracts are signed for EPC. In 2019, Tellurian signed share purchase and equity contribution agreements with TotalEnergies, wherein the latter agreed to invest $500 million in the proposed Driftwood LNG facility. I wrote this article myself, and it expresses my own opinions. Tellurian shares were trading around $4.42 per share, up about 0.4%, on Monday afternoon. 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. Haynesville Shale Sign in to get the best natural gas news and data. NGI All News Access. Tellurian is being priced as an out-of-the-money option. We are all working together to compound returns. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. Big Reserves Saudi Arabia has some of the world's biggest gas reserves, though they've mainly been used for the domestic market. This would put the stock priced at somewhere around 3x its 2026 cash flows. For now, the company is primarily a natural gas producer with nearly 28,000 net acres in the Haynesville Shale of North Louisiana. And not only robust, but stable, and predictable! | Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. 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. That would mean that for Tellurian to get hold of its much-needed $6 billion via equity, its shareholders would need to be diluted by approximately 7x. Get them exclusively at Deep Value Returns. Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. Our Standards: The Thomson Reuters Trust Principles. I argue that this meaningfully improves the bull case. DEEP VALUE RETURNS: The only Marketplace with real performance. I have no business relationship with any company whose stock is mentioned in this article. 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. 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. Tellurian, email 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. Building its highly coveted Driftwood will cost $14 billion. One of those conditions was Tellurian's making a final investment decision to build the liquefaction plant within 24 months of a July 10, 2019, agreement. Tellurian (NYSE:TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. 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. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. You have 3 free articles remaining. | You have 3 free articles remaining. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. That would put its interest payments at close to $640 million. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. No gimmicks. 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. 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. Deep Value Returns' Marketplace continues to rapidly grow. 2023 Natural Gas Intelligence. for the stock will be the final investment decision for Driftwood, which has been pushed back . 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. Is this happening to you frequently? Two-thirds debt to one-third equity. Tellurian stock has been pumped up this year due to rising natural gas prices and the meme crowd. Gunvor If you have an ad-blocker enabled you may be blocked from proceeding. 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. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. 1.800.427.5747 Everyone knows the risks. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). Shares of the company have outperformed the industry in the past six months. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. 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. But common sense. But investors crave FID details. The bigger question is what LNG prices will be in 2026. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. Plus regular stock updates. Each SPA is for 3 MTPA of LNG over a 10-year period. Plus regular stock updates. 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. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. Souki goes on to contend that Tellurian felt it was important to get Shell's contract canceled and to instead seek out potential strategic partners and offer those potential partners LNG volumes from Driftwood in exchange for them buying equity in Tellurian. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. Please disable your ad-blocker and refresh. People may receive compensation for some links to products and services on this website. (Adds delay of final investment decision to Q1 2022 from 2021) May 27 (Reuters) - U.S . All Rights Reserved. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. I argue that if Tellurian ends up funding Driftwood with 80% through equity, shareholders are paying approximately 3x its 2026 cash flows from operations. I wrote this article myself, and it expresses my own opinions. Looking for more investing ideas like this one? Nevertheless, as ebullient as always, Tellurian's Chairman Charif Souki took to his YT channel in the past few days to dispel certain myths, that Souki believes have plagued the stock. Download now.]. Written by FID is the point in the capital project planning process when the decision to make major financial commitments is taken. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. Driftwood Lng The problem though is that Tellurian's vision is prohibitively expensive. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. "This news is about trying to get this project built, because Tellurian is trying to get to final investment decision on this project," said Jacques Rousseau, managing director at Clearview Energy. Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. Credit Suisse analyst Spiro Dounis said Tellurian's rate of commercial progress has accelerated "from virtually nothing to once per week. Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. Tellurian is a very volatile stock and not one for the faint-hearted. The company reported a net loss of $210.7 million (minus 79 cents/share) in 2020, compared to a net loss of $151.8 million (minus 69 cents) in 2019. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian.
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