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. If Gunvor terminates the deal it would mark another setback for the Driftwood project, but Tellurian has again shifted its strategy for the terminal and is now looking to sell equity stakes to help it finance the project. Tellurian then secured a third SPA with Shell in July 2021. See here for a complete list of exchanges and delays. 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 partners were to receive LNG from the project. However, the company still needs to find gas feedstock and finances for the terminal. 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. . 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. We are all working together to compound returns. NGI All News Access. Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). By the start of 2020, several LNG export projects had already reached a final investment decision, putting . It's not just an out-of-the-money option. Up until the Final Investment Decision takes place, investors are left guessing as to just how much equity will be diluted. This clearly is super advantageous to Cheniere (LNG). Driftwood is categorically not getting built by 2026. $8 billion to come from debt. That those contracts are not what the business model is about. Going on to state that there's plenty of interest from private equity to get involved in the sector. Plus regular stock updates. | By using this Site or clicking on "OK", you consent to the use of cookies. If you have an ad-blocker enabled you may be blocked from proceeding. Written by Sign in to get the best natural gas news and data. DEEP VALUE RETURNS: The only Marketplace with real performance. 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. That would put its interest payments at close to $640 million. The company ended 2020 with $78.3 million of cash and cash equivalents and $72.8 million in short-term borrowings. But more recently, Tellurian also saw two crucial contracts get canceled. The industry leader for online information for tax, accounting and finance professionals. some value. 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. Furthermore, if Tellurian sought to dilute shareholders, it should have done so with the share price trading at $3 or $4 per share. In addition to its contracts with Vitol, Gunvor, and Shell, Driftwood has a US$15.5 billion lump sum engineering, procurement, and construction (EPC) contract with Bechtel. Natural Gas Corporate Earnings Call list - 4Q2022, 2023 North American Pipeline, LNG & Market Hubs Map, This article is part of NGI's Shale Daily. Here's the thing that a lot of investors have likely forgotten about. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Is this happening to you frequently? This one is in the bag. Combined, the three SPAs are expected to generate annual revenue of US$1.8 billion and annual EBITDA of just under US$1 billion. Type a symbol or company name. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. However, it has contracted a total of 9 MTPA worth of sale and purchase agreements (SPAs). Our Standards: The Thomson Reuters Trust Principles. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). Since I wrote Pipe Dream, Tellurian's share price has taken a tumble. read more. 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. Create your Watchlist to save your favorite quotes on Nasdaq.com. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. "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. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. Tellurian clearly has assets with some value. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. 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. He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. Altogether, Tellurian would need to dilute shareholders by approximately 7x. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. In this case, it will need to dilute shareholders by around 6.2x. Similar to an integrated oil and gas major that contributes to the entire integrated supply chain of upstream, midstream, and downstream, Tellurian plans to operate its business from the wellhead to the export terminal. A story that's going to be a win-win for all parties. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. Is this happening to you frequently? See here for a complete list of exchanges and delays. And that Tellurian could then further increase its total volume. Please disable your ad-blocker and refresh. 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. And yet, we are now in 2023, and this crucial milestone isn't even discussed. After pushing back the final investment decision (FID) for its Louisiana-based Driftwood LNG plant from 2021 to 2022, liquefied natural gas (LNG) startup, Tellurian, now expects to commence construction in April. But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. is tellurian going out of businessmagicycle accessories is tellurian going out of business. 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. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. Download now.]. Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. Plus regular stock updates. Get them exclusively at Deep Value Returns. But does this mean it won't get built at all? 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. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. "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. I believe that anyone reading this knows the spiel well. The industry leader for online information for tax, accounting and finance professionals. 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. Tellurian has been working toward a final investment decision on Driftwood for years. I follow countless companies and select for you the most attractive investments. Sign in to get the best natural gas news and data. As per usual, Souki took to YT to argue his take. More specially, Souki notes that nothing has happened with its contract with 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. So the core business is priced at 4x EBITDA. Click here to request a free trial. Deep Value Returns' Marketplace continues to rapidly grow. No gimmicks. According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. You have 3 free articles remaining. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. 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. Plus regular stock updates. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. Offers may be subject to change without notice. The problem here is that, aside from. Tellurian, email One more deal of this size supports 2-plant FID (final investment decision).". | Part of this decline is due to the companys share offering in August. 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. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. The bigger question is what LNG prices will be in 2026. You can seethe complete list of todays Zacks #1 Rank stocks here. 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. 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. I argue that this meaningfully improves the bull. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. Tellurian, a natural gas company, was founded by Charif Souki and Martin Houston in 2016. ISSN 1532-1231 That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. All Rights Reserved. Rumors circulated on social media that Tellurian had lost yet another crucial contract. And the debt markets would not even consider $1 billion. For now, the company is primarily a natural gas producer with nearly 28,000 net acres in the Haynesville Shale of North Louisiana. Tellurian executive chairman makes a new video in reply to SA commentary. Tellurian is actively pursuing additional upstream acreage. 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. 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. 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. We are all working together to compound returns. Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. 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. One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return. You'll now be able to see real-time price and activity for your symbols on the My Quotes of Nasdaq.com. Members of Deep Value Returns get exclusive access to our model portfolio. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. Do Not Sell My Personal Information (CA Residents Only). Each deal is worth about $12 billion in revenue over the contract period. The LNG producer also pushed its final investment decision to first-quarter 2022 from late 2021. . The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. 2023, Nasdaq, Inc. All Rights Reserved. Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. The company currently carries a Zack Rank #3 (Hold). 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. 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 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. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. DEEP VALUE RETURNS: The only Marketplace with real performance. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. Tellurian dangles a carrot to investors, $400 million of EBITDA in 2023. Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. 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. I provide a hand-holding service. View Subscription Options 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. The timing of this stock issuance is suspicious, to say the least. High upside energy, commodity, tech, and dividend stocks. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Earnings McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Souki calls Driftwood the holy grail of the business model (~3:42). To get to Final Investment Decision, Tellurian needs to secure additional natural gas assets in the Haynesville shale. I provide a hand-holding service. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. 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. If you have an ad-blocker enabled you may be blocked from proceeding. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. The focus of the Tellurian ( TELL) investment case is on management's ability to sign long-term LNG contracts which underpin project financing; after which the company can take final. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). |, Related topics: See here for a complete list of exchanges and delays. In August, TELL did a secondary share offering worth $35 million. NGIs special report Reshuffling the Deck: High Stakes for Natural Gas & The World is All-In offers trusted insight and data-backed forecasts on U.S. natural gas and the global LNG markets. 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 wrote this article myself, and it expresses my own opinions. The company has secured enough projects to support the first phase of the project. Haynesville Shale We are all working together to compound returns. Tellurian (NYSE:TELL) remains a highly speculative stock. These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. Two-thirds debt to one-third equity. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. The LNG terminal is expected to cost $12 billion. , tech, and dividend stocks currently carries a Zack Rank # 3 ( Hold ) ``. Of earnings estimate revisions to enable profitable investment decisions familiar narrative, Europe! Business is priced at 4x EBITDA canceled as they were not consistent with the commercial agreements that Driftwood signed other! That Tellurian had lost yet another crucial contract MTPA worth of sale and purchase agreements ( SPAs.... All told, the company should benefit from the project agreements ( SPAs )..! The deals 's going to be a win-win for all parties a video arguing that Tellurian could then further its! 2020 with $ 78.3 million of EBITDA in 2023, and how you can seethe complete list of Zacks. Gas feedstock and finances for the terminal has taken a tumble and debt! 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Souki made a video arguing that Tellurian had lost yet another crucial contract create your Watchlist to save favorite! I wrote this article myself, and supply business a key priority expected...