Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. The company currently carries a Zack Rank #3 (Hold). Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. But investors crave FID details. This one is in the bag. Please disable your ad-blocker and refresh. Why? Amid a record stretch of U.S. LNG contracting activity last year that moved many other projects closer to FID, Tellurian pivoted to searching for equity partners. 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. is tellurian going out of businessmagicycle accessories is tellurian going out of business. 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. Hess earnings for 2021 are expected to rise 116.2% year over year. High upside energy, commodity, tech, and dividend stocks. So is there any hope left for Tellurian? LNG 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 . Indeed, what can go wrong? It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. I have no business relationship with any company whose stock is mentioned in this article. No gimmicks. 2023 ESG Review. Tellurian said that it has received most of the needed permits required for construction and operation with around 30% of the engineering already complete thanks to US$150 million of prior investments. Tellurian is developing a portfolio of natural gas production, LNG trading, and infrastructure that includes an ~27.6 mtpa LNG export facility and an associated pipeline. Shares of the company have outperformed the industry in the past six months. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." Create your Watchlist to save your favorite quotes on Nasdaq.com. 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. swan event, that Driftwood one day actually gets built. This is a simple case of arbitrage. The bigger question is what LNG prices will be in 2026. 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. I wrote this article myself, and it expresses my own opinions. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. All quotes delayed a minimum of 15 minutes. Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. To build Driftwood, a large, fully integrated LNG facility. Tellurian dangles a carrot to investors, $400 million of EBITDA in 2023. The essence of the video states that Tellurian wants profits. That would put its interest payments at close to $640 million. Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. "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. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. Tellurian said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . I provide a hand-holding service. 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. 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. People may receive compensation for some links to products and services on this website. Is this happening to you frequently? Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. It's not just an out-of-the-money option. On Nov. 29, the company and former President and CEO Meg. We are all working together to compound returns. 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. Earnings But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. You'll now be able to see real-time price and activity for your symbols on the My Quotes of Nasdaq.com. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. Part of this decline is due to the companys share offering in August. Tellurian, email Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. Looking for a portfolio of ideas like this one? Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. It's not just an out-of-the-money option. Offers may be subject to change without notice. Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. And not only robust, but stable, and predictable! For good reason too. See here for a complete list of exchanges and delays. Looking for a helping hand in the market? I have no business relationship with any company whose stock is mentioned in this article. Sign in to get the best natural gas news and data. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. ISSN 2158-8023 Saudi Arabia to Use $110 Billion Gas Field for Blue Hydrogen 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. Tellurian clearly has assets with some value. 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. "They must feel the best way to get this project built is to by selling the offtake to traders, rather than [gas-producing] companies.". 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. Diluting shareholders when the stock is at a 6-month low is simply poor practice. Its stock has gained 80.3% compared with the industrys 10.8% growth. 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. 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. 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. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. In June, TELL signed a long-term contract with Vitol for 3 mtpa. 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. Get access to 100,000+ more news articles & industry data. However, the company missed the. (Reuters) Sempra Energy reported fourth-quarter profit that beat analysts' estimates on Tuesday, helped by higher earnings from its California utilities. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. What Souki doesn't address is that Tellurian was expecting to sign its Final Investment Decision in the summer of 2022. That would lower its debt payments, but it would also cap shareholders' upside. $8 billion to come from debt. These symbols will be available throughout the site during your session. 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. Tellurian ( NYSE: TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. | I am not receiving compensation for it (other than from Seeking Alpha). Driftwood LNG Plans Move Forward Despite Lack Of Financing. 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. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Tellurian then secured a third SPA with Shell in July 2021. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. Liquefied Natural Gas ISSN 2577-9877 No gimmicks. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . High-quality, actionable insightful stock picks. 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. FIND OUT MORE Downstream capabilities View our downstream services Insights Tellurian sold off 40% in the past month. 1.800.427.5747 Recall, this is Tellurian's vision. Everyone knows the risks. One more deal of this size supports 2-plant FID (final investment decision).". Zacks->. NGI All News Access. A win for shareholders, as their business will be generating robust free cash flows. View Subscription Options 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. Thats an increase from 14.3 Bcf in 2021 when the company held 11,060 net acres. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. I am not receiving compensation for it (other than from Seeking Alpha). All Rights Reserved. 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. Tellurian needs $12 billion to build its Driftwood LNG exporting facility. Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. Tellurian stock has risen by nearly 190 percent YTD due to several positive developments. 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. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. I am not receiving compensation for it (other than from Seeking Alpha). Tellurian wanted all potential investors to be focused on the holy grail story. Today, that discovery is still the heart of the Zacks Rank. Reality got in the way. 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. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. The problem here is that, aside from. Altogether, Tellurian would need to dilute shareholders by approximately 7x. 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. Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. Responsive Menu. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. Currently the company is on pace to produce 90mmBtu of natural gas up. info@naturalgasintel.com Tellurian has no signed Final Investment Decision. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. | The Vitol and Gunvor deals were indexed to a combination of the Japan Korea Marker (JKM) , which is trading near $11 per million British thermal units (mmBtu), and the Dutch Title Transfer Facility (TTF) , which is trading close to its highest since September 2018. Infrastructure Building its highly coveted Driftwood will cost $14 billion. However, the company still needs to find gas feedstock and finances for the terminal. High upside energy, commodity, tech, and dividend stocks. I have no business relationship with any company whose stock is mentioned in this article. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. There simply were no takers. Gunvor Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. 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. I have no business relationship with any company whose stock is mentioned in this article. As per usual, Souki took to YT to argue his take. One more deal of this size supports 2-plant FID (final investment decision)." Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. Tellurian has been working toward a final investment decision on Driftwood for years. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. I follow countless companies and select for you the most attractive investments. 2 min read. |, Related topics: The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. This is of course if Driftwood ends up getting built at all. Market Realist is a registered trademark. Tellurian has an amazing story. 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. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. By the start of 2020, several LNG export. One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. SolarEdge And Freedom Forever Announce Multi-Year Agreement That Includes PV And Paul Danos Honored By National Safety Council, Florida Adds RNG Injection Point To Pipeline System. 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. ConocoPhillips (COP): Free Stock Analysis Report, Hess Corporation (HES): Free Stock Analysis Report, Magellan Petroleum Corporation (TELL): Free Stock Analysis Report, TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis Report. To get to Final Investment Decision, Tellurian needs to secure additional natural gas assets in the Haynesville shale. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Tellurian has no signed Final Investment Decision. DEEP VALUE RETURNS: The only Marketplace with real performance. Those assets produced 16.9 Bcf of natural gas last year, up from 13.9 Bcf in 2019. Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. I do all the work of picking the most attractive stocks. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. LNG Insight Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. 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. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. In April, Total agreed to buy shares of Tellurian common stock for about $200 million, subject to certain closing conditions, including a final investment decision by Tellurian. DEEP VALUE RETURNS: The only Marketplace with real performance. I provide a hand-holding service. Tellurian stock has been pumped up this year due to rising natural gas prices and the meme crowd. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. High upside energy, commodity, tech, and dividend stocks. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. Tellurian, email 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. If this doesn't highlight the need for another large LNG facility, very little will. In August, TELL did a secondary share offering worth $35 million. One of the biggest stock catalysts remains the progress of its Driftwood project. To read this article on Zacks.com click here. 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. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). If you have an ad-blocker enabled you may be blocked from proceeding. 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. Total also will purchase about 20 million additional. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. Two-thirds debt to one-third equity. By using this Site or clicking on "OK", you consent to the use of cookies. I provide a hand-holding service. If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. However, it has contracted a total of 9 MTPA worth of sale and purchase agreements (SPAs). In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. 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. Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. 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. Not signings. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. |, Related topics: Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. Next, Tellurian's share price is trading at a multi-year low. 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. 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. Tellurian, a natural gas company, was founded by Charif Souki and Martin Houston in 2016. All rights reserved. I argue that this meaningfully improves the bull. And that Tellurian could then further increase its total volume. I am not receiving compensation for it (other than from Seeking Alpha). For now, the company is primarily a natural gas producer with nearly 28,000 net acres in the Haynesville Shale of North Louisiana. 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. 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. More specially, Souki notes that nothing has happened with its contract with Gunvor. 2023 Natural Gas Intelligence. But common sense. DEEP VALUE RETURNS: The only Marketplace with real performance. 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: However, let's make the argument that Tellurian ends up raising the FID with 80% equity and 20% debt. 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. 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 is reasonably well capitalized, with very roughly $400 million of net cash. I have no business relationship with any company whose stock is mentioned in this article. 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. It has $474.2 million in cash and cash equivalents on hand. Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. Written by 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. Click here to request a trial. Some call it the Internet of Money and predict it could change the way money works forever. 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. This is not a hindsight remark. 2023 Natural Gas Intelligence. Tellurian (NYSE:TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. The agreements had built on TotalEnergies' original $207 million . A win for Europe, as they crave lower energy. LNG The one-line takeaway is this, Tellurian is a very high-risk investment. Some better-ranked players in the energy space are ConocoPhillips COP and Hess Corporation HES, each currently sporting a Zacks Rank #1 (Strong Buy). A story that's going to be a win-win for all parties. I wrote this article myself, and it expresses my own opinions. However, many market participants think that as the company ramps up the project, it could go in for more dilutive offerings to fund the project. Tellurian also has its core business! 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.
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