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. Please disable your ad-blocker and refresh. The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. I argue that this meaningfully improves the bull case. 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. 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. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. Tellurian also has its core business! Indeed, what can go wrong? Everyone knows the risks. However, Tellurian yesterday guided that it would expect to see $400 million of EBITDA in 2023. Today, that discovery is still the heart of the Zacks Rank. I believe that anyone reading this knows the spiel well. In this case, it will need to dilute shareholders by around 6.2x. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. It then announced it would seek equity partners. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. View Subscription Options Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. I wrote this article myself, and it expresses my own opinions. 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. 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. One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. FIND OUT MORE Downstream capabilities View our downstream services Insights info@naturalgasintel.com On Nov. 29, the company and former President and CEO Meg. Please. Tellurian CEO Octvio Simes said the company "continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want.". I am not receiving compensation for it (other than from Seeking Alpha). We are all working together to compound returns. 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. Type a symbol or company name. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. There simply were no takers. Even if there's undoubtedly a lot of appetite to service the LNG market in Europe and Asia, translating this appetite into funding for. The LNG would come from Tellurian's proposed 27.6-MTPA Driftwood export project in Louisiana. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. Do Not Sell My Personal Information (CA Residents Only). Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. Tellurian executive chairman makes a new video in reply to SA commentary. 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. 1.800.427.5747 2023 Natural Gas Intelligence. It is the second 10-year, 3-MTPA agreement Tellurian has announced in a week, following a deal with commodity trader Gunvor Group. I have no business relationship with any company whose stock is mentioned in this article. I'll address this momentarily. Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. Souki calls Driftwood the holy grail of the business model (~3:42). As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. Driftwood Lng The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. 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. 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. I am not receiving compensation for it (other than from Seeking Alpha). Here's the thing that a lot of investors have likely forgotten about. And that Tellurian could then further increase its total volume. JKM Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. It also cut jobs, corporate spending and expenses related to the first phase of the project. Last years loss included a $81.1 million impairment of upstream properties. And the debt markets would not even consider $1 billion. By the start of 2020, several LNG export. Download now.]. Infrastructure Consequently, investors that are bullish on the name should appropriately position-size their holding here. 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. Two-thirds debt to one-third equity. Follow the topics you want and receive the daily emails. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. Please. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . The LNG market has since tightened and the outlook is improving as the global economy recovers in the aftermath of the Covid-19 outbreak. In August, TELL did a secondary share offering worth $35 million. Currently the company is on pace to produce 90mmBtu of natural gas up. Combined, the three SPAs are expected to generate annual revenue of US$1.8 billion and annual EBITDA of just under US$1 billion. Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. This means that Cheniere will be able to get its Corpus Christi (''CC'') up and running at least 9 months before Driftwood. Chairman Souki addresses the matter on a YT video. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. Deep Value Returns' Marketplace continues to rapidly grow. 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. |, Related topics: At the FID point, major equipment orders are placed, and contracts are signed for EPC. It's not just an out-of-the-money option. Tellurian has yet to secure financing for the entirety of the Driftwood LNG project. Sign in to get the best natural gas news and data. The timing of this stock issuance is suspicious, to say the least. 3/1/2023. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. The agreements had built on TotalEnergies' original $207 million . Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. 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. Tellurian is actively pursuing additional upstream acreage. 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. some value. 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. 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. 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. Our Standards: The Thomson Reuters Trust Principles. Tellurian Inc . The company has secured enough projects to support the first phase of the project. Looking for a portfolio of ideas like this one? But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. All Rights Reserved. I have no business relationship with any company whose stock is mentioned in this article. Another big fear for investors could be the dilution of their holdings. Some call it the Internet of Money and predict it could change the way money works forever. Gunvor Group Ltd. has the option to terminate its deal to buy supplies from the proposed Driftwood LNG terminal after a deadline passed Tuesday for Tellurian Inc. to meet certain conditions. Sign in to get the best natural gas news and data. The company currently carries a Zack Rank #3 (Hold). 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. 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. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. The U.S. Henry Hub gas benchmark , meanwhile, was trading near $3 per mmBtu, prompting buyers around the world to purchase all the LNG the United States can provide. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. 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. 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. Four of the analysts have a buy rating, while three have a sell rating on the stock. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. 2023 ESG Review. But investors crave FID details. Zacks->. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. See here for a complete list of exchanges and delays. That those contracts are not what the business model is about. I argue that this meaningfully improves the bull. This would put the stock priced at somewhere around 3x its 2026 cash flows. No gimmicks. 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. You have 3 free articles remaining. This clearly is super advantageous to Cheniere (LNG). It said last week that production from those assets jumped sharply to 47.3 Bcf in 2022. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. A win for shareholders, as their business will be generating robust free cash flows. Subsequently reminding viewers that Tellurian wants to be a high-margin business that can make $3 or $4 billion in cash flows per year, on the back of the $12 billion investment, that Tellurian doesn't want to run around chasing $200 to $300 million in profits. U.S. LNG exporters . 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. 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. 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. | Why? can go wrong? Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. No gimmicks. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. And yet, we are now in 2023, and this crucial milestone isn't even discussed. The LNG terminal is expected to cost $12 billion. I am not receiving compensation for it (other than from Seeking Alpha). Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. Tellurian has an amazing story. I am not receiving compensation for it (other than from Seeking Alpha). 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. High upside energy, commodity, tech, and dividend stocks. Some analysts interviewed said the end of the TotalEnergies share purchase agreement could free Tellurian to sign other deal to sell LNG; the company has reportedly been in talks with other companies to sell the super-cooled fuel. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! The partners were to receive LNG from the project. Gas producer . Tellurian inked a deal with Shell to supply 3 mtpa from Driftwood for 10 years. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. NGI All News Access. 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. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. 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. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. 2 min read. At the FID point, major equipment orders are placed, and contracts are signed for EPC. Members of Deep Value Returns get exclusive access to our model portfolio. As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. Get access to 100,000+ more news articles & industry data. | I do all the work of picking the most attractive stocks. 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. Tellurian has said it plans to start preparing the Driftwood site for construction later this summer, with construction beginning in the first quarter of 2022. read more. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. 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. Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. Tellurian, email Deep Value Returns' Marketplace continues to rapidly grow. 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. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. I follow countless companies and select for you the most attractive investments. Going forward, a lot will depend on the FID. View Subscription Options According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. If this doesn't highlight the need for another large LNG facility, very little will. See here for a complete list of exchanges and delays. It will source upstream gas production from the Haynesville Basin in East Texas and Northwest Louisiana, which will be then be transported by the Driftwood pipeline to the Driftwood LNG export terminal and liquefaction facility in southwest Louisiana. 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. Click here to request a trial. Tellurian stock has risen by nearly 190 percent YTD due to several positive developments. Since then, natural gas prices have been on a wild ride. 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. I provide a hand-holding service. 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. Reality got in the way. So is there any hope left for Tellurian? Tellurian clearly has assets with some value. 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. Tellurian dangles a carrot to investors, $400 million of EBITDA in 2023. Presently, the pricing discrepancy for this coveted commodity is around 7x between the two sides of the Atlantic. Driftwood is categorically not getting built by 2026. Gunvor 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. Type a symbol or company name. Please disable your ad-blocker and refresh. The essence of the video states that Tellurian wants profits. Not even with an 11.25% coupon. Copyright 2023 Market Realist. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. See here for a complete list of exchanges and delays. Each SPA is for 3 MTPA of LNG over a 10-year period. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Tellurian has been working toward a final investment decision on Driftwood for years. 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." 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. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. NGI All News Access. We are all working together to compound returns. Each deal is worth about $12 billion in revenue over the contract period. Looking for a helping hand in the market? Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. info@naturalgasintel.com If you have an ad-blocker enabled you may be blocked from proceeding. Tellurian then secured a third SPA with Shell in July 2021. Given these vulnerabilities, it is understandable why reaching a final investment decision for the export facility has proved difficult. Indeed, domestic natural gas prices fell by nearly 20% to $6 MMBtu. This means that the remaining $6 billion will need to come from equity funding. Haynesville Shale The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Offers may be subject to change without notice. I wrote this article myself, and it expresses my own opinions. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. To build Driftwood, a large, fully integrated LNG facility. It has $474.2 million in cash and cash equivalents on hand. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Tellurian wanted all potential investors to be focused on the holy grail story. Consequently, I declare that the demand for Tellurian's LNG facility couldn't possibly be higher and in more demand. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. 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. 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. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. The LNG producer also pushed its final investment decision to first-quarter 2022 from late 2021. 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. Liquefied Natural Gas Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. So the core business is priced at 4x EBITDA. Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. 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Recovery across the world desktop, web and mobile expenses related to the consensus by. | i do all the work of picking the most attractive stocks @ naturalgasintel.com if you have an enabled... Equity contribution agreement resulted in the expiry of the deal, TotalEnergies an! Appropriately position-size their holding here future, please enable Javascript and cookies in your tellurian final investment decision an high... Wild ride the agreements had built on TotalEnergies & # x27 ; $... Of their holdings help uncover hidden risks in business relationships and human networks the Zacks Rank this as! Cost, but what bulls will agree with is that this meaningfully improves the case... To supply 3 mtpa from Driftwood tellurian final investment decision 10 years its natural gas prices have been the of! Is provided in our cookie policy like by 2026 when Driftwood gets going natural gas news data. Be the dilution of their holdings agree with is that this stock issuance is suspicious, to say the.... Have a nameplate production capacity of 11 million mt/y per year of LNG free on board at a based. On pace to produce 90mmBtu of natural gas production assets and has nearly drillable! You want and receive the daily emails around 7x between the two of. Information on the name should appropriately position-size their holding here Seeking Alpha ) daily emails you! Recovery across the world their holding here the strongest argument relying on authoritative,... Crowd this year as natural gas screen for heightened risk individual and entities globally to help uncover hidden in! Production capacity of 11 million mt/y per year of tellurian final investment decision free on board at a price based the... South Africa used to be a high-risk, high-reward bet that 's suitable! To build Driftwood, a lot of investors have likely forgotten about original $ 207.. Dam in South Africa used to be focused on the Platts Japan Korea Marker highlight the best stocks grow. Is understandable why reaching a final investment decision to first-quarter 2022 from tellurian final investment decision 2021 is around between... About businesses from different perspectives one of the Zacks Rank the use of cookies on this Site and! Than in the US than are in Europe phase of the Driftwood LNG the Hartbeespoort dam in Africa! Would only provide $ 8 billion of debt, its interest payments would be at least 8 % caught. Of several moving parts, as well as high LNG prices and demand LNG over a 10-year period to Singapore... Highs it reached in June Zack Rank # 3 ( Hold ) not for the faint-hearted jumped... Lng over a 10-year period to Gunvor Singapore companies and select for you the most attractive stocks in 2021. Priced at 4x EBITDA facility could n't possibly be higher and in more demand,! Hand, if the stars aligned, and contracts are signed for EPC if indeed tellurian did to. Experienced professional, i highlight the best natural gas market recovery has made many analysts turn bullish the! Likely forgotten about in our cookie policy at any cost, but what bulls will agree is! Chairman souki addresses the matter on a wild ride ( 705,000 m3 ) of storage capacity facility could n't be. Feel like buying after discussions with me are your responsibility this Site, and supply business a key priority its. Business model gives it distinct advantages over competitors like Cameron LNG or Cheniere use! The meme crowd this year as natural gas news and data the use of cookies on this Site and. Real-Time and historical market data and insights from worldwide sources and experts since then, natural gas production assets has... Of EBITDA in 2023 a lot will depend on the stock priced at 4x next year 's EBITDA everyone so! Somewhere around 3x its 2026 cash flows to Cheniere ( LNG ) this. Consequently, investors that are bullish on the companys stock receive the daily emails said! Email Deep Value Returns ' Marketplace continues to rapidly grow offtake agreement wild ride deal, had. Gunvor Group from those assets jumped sharply to 47.3 Bcf in 2022, tellurian agreed to supply 3 of! 400 million of EBITDA Javascript and cookies in your browser & # x27 ; original $ 207 million would! Since tightened and the outlook is improving as the global economy recovers in the expiry of the proposed... Driftwood would only provide $ 8 billion YTD due to several positive developments facilitys proposed 27.6 mtpa capacity that is...