In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. To read this article on Zacks.com click here. 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. . Part of this decline is due to the companys share offering in August. All quotes delayed a minimum of 15 minutes. Outsmart the market with Smart Portfolio analytical tools powered by TipRanks. Looking for a portfolio of ideas like this one? So the core. Tellurian is being priced as an out-of-the-money option. Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. For good reason too. Tellurian needs to raise $12 billion. 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. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. That would lower its debt payments, but it would also cap shareholders' upside. 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. However, Tellurian yesterday guided that it would expect to see $400 million of EBITDA in 2023. In June, TELL signed a long-term contract with Vitol for 3 mtpa. | The partners were to receive LNG from the project. 2 min read. Indeed, domestic natural gas prices fell by nearly 20% to $6 MMBtu. The LNG terminal is expected to cost $12 billion. Plus regular stock updates. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Tellurian ( NYSE: TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. 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. Offers may be subject to change without notice. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. NGI All News Access. 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. By the start of 2020, several LNG export. Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. Zacks Equity Research for Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. 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,. | As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. ISSN 2577-9877 Infrastructure Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. You have 3 free articles remaining. Tellurian has been working toward a final investment decision on Driftwood for years. 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. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. 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. The one-line takeaway is this, Tellurian is a very high-risk investment. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. 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. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Natural Gas Corporate Earnings Call list - 4Q2022, 2023 North American Pipeline, LNG & Market Hubs Map, This article is part of NGI's Daily Gas Price Index. Chairman Souki addresses the matter on a YT video. 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 problem here is that, aside from. 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. Since I wrote Pipe Dream, Tellurian's share price has taken a tumble. Next, Tellurian's share price is trading at a multi-year low. We are all working together to compound returns. The LNG would come from Tellurian's proposed 27.6-MTPA Driftwood export project in Louisiana. 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. I follow countless companies and select for you the most attractive investments. I have no business relationship with any company whose stock is mentioned in this article. 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. 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. Well, there's always hope. See here for a complete list of exchanges and delays. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. Furthermore, if Tellurian sought to dilute shareholders, it should have done so with the share price trading at $3 or $4 per share. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. 2023 Natural Gas Intelligence. Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. Gas producer . Saudi Arabia to Use $110 Billion Gas Field for Blue Hydrogen But common sense. Tellurian (NYSE:TELL) remains a highly speculative stock. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. 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. Why? Altogether, Tellurian would need to dilute shareholders by approximately 7x. 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. Plus regular stock updates. info@naturalgasintel.com No gimmicks. For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. 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. Plus regular stock updates. 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. some value. On Nov. 29, the company and former President and CEO Meg. Its strategy is to secure low-cost natural gas and design and construct low-cost liquefaction. "They must feel the best way to get this project built is to by selling the offtake to traders, rather than [gas-producing] companies.". Get them exclusively at Deep Value Returns. Driftwood isn't expected to produce its first feed gas at least until 20252026 and assume a decision by the first quarter of 2022. These symbols will be available throughout the site during your session. All rights reserved. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. Tellurian said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . 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. July 12 (Reuters) - U.S. liquefied natural gas (LNG) developer Tellurian Inc (TELL.O) said on Monday it terminated a stock and LNG purchase agreement with France's TotalEnergies SE (TTEF.PA) related to Tellurian's proposed Driftwood LNG export plant in Louisiana. 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. It's not just an out-of-the-money option. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. It's not just an out-of-the-money option. The stock presently is not pricing in the full potential of Driftwood, because investors don't know the terms on which they will get diluted. 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. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. 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. Each SPA is for 3 MTPA of LNG over a 10-year period. Please disable your ad-blocker and refresh. I follow countless companies and select for you the most attractive investments. So, let's get to this story's next episode. . 2023 Natural Gas Intelligence. Deep Value Returns' Marketplace continues to rapidly grow. The Shell, Vitol and Gunvor deals all were signed before Russias invasion of Ukraine at a time when sellers had a better advantage in negotiations as demand was slowly rebounding after the Covid-19 pandemic. According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. | Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. The agreements had built on TotalEnergies' original $207 million . At the FID point, major equipment orders are placed, and contracts are signed for EPC. Looking for more investing ideas like this one? 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. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. It is the second 10-year, 3-MTPA agreement Tellurian has announced in a week, following a deal with commodity trader Gunvor Group. Going forward, a lot will depend on the FID. Is this happening to you frequently? A wealth of resources for individual investors is available at www.zacks.com. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. This is not a hindsight remark. Bitcoin, Like the Internet Itself, Could Change Everything. Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. 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. I am not receiving compensation for it (other than from Seeking Alpha). While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. | Rumors circulated on social media that Tellurian had lost yet another crucial contract. Consequently, I declare that the demand for Tellurian's LNG facility couldn't possibly be higher and in more demand. This article provides a discussion of the bull and bear cases facing Tellurian. 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. ISSN 1532-1231 Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. 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. DEEP VALUE RETURNS: The only Marketplace with real performance. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. Please disable your ad-blocker and refresh. This one is in the bag. Tellurian (NYSE:TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. 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. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. But in case those risks were forgotten, today everyone has been reminded. In sum, there are three items overhanging Tellurian. I provide a hand-holding service. Sign in to get the best natural gas news and data. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. The problem though is that Tellurian's vision is prohibitively expensive. 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. One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. 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. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. Souki calls Driftwood the holy grail of the business model (~3:42). Everyone knows the risks. 2023 ESG Review. 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. Since then, natural gas prices have been on a wild ride. 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. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. It then announced it would seek equity partners. I wrote this article myself, and it expresses my own opinions. 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. Looking for a helping hand in the market? WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. 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. Create your Watchlist to save your favorite quotes on Nasdaq.com. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. "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. One of the biggest stock catalysts remains the progress of its Driftwood project. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. This means that investors simply aren't buying into Souki's vision. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. This is not a significant dilution and amounts to less than 4%. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Its stock has gained 80.3% compared with the industrys 10.8% growth. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. 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. 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. 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. It easier tellurian final investment decision ship placed, and contracts are signed for EPC in! While this does not fully Change the investment case here, it will create several opportunities. 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