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. Tellurian is actively pursuing additional upstream acreage. However, the company missed the. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). 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. You have 3 free articles remaining. Deep Value Returns' Marketplace continues to rapidly grow. But more recently, Tellurian also saw two crucial contracts get canceled. Up until the Final Investment Decision takes place, investors are left guessing as to just how much equity will be diluted. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. As per usual, Souki took to YT to argue his take. 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. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. 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. | To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. Tellurian inked a deal with Shell to supply 3 mtpa from Driftwood for 10 years. 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. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! | The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. People may receive compensation for some links to products and services on this website. (Adds delay of final investment decision to Q1 2022 from 2021) May 27 (Reuters) - U.S . 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. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. It also cut jobs, corporate spending and expenses related to the first phase of the project. Both companies had a contractual right to nix their deals after the company failed to meet a July 31 deadline on a final investment decision that could have paved the way for construction to begin . I argue that this meaningfully improves the bull. It has $474.2 million in cash and cash equivalents on hand. Sign in to get the best natural gas news and data. If you have an ad-blocker enabled you may be blocked from proceeding. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. 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. $6 billion from equity. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. 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. One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. Get them exclusively at Deep Value Returns. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. Tellurian has no signed Final Investment Decision. In this case, it will need to dilute shareholders by around 6.2x. 1.800.427.5747 Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. Plus regular stock updates. 2 min read. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. 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. Earnings Type a symbol or company name. 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,. 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. 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. 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 wrote this article myself, and it expresses my own opinions. All rights reserved. No gimmicks. Download now.]. But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. 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/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. 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. 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. 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. 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. Indeed, domestic natural gas prices fell by nearly 20% to $6 MMBtu. The bigger question is what LNG prices will be in 2026. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. You have 3 free articles remaining. Tellurian is a very volatile stock and not one for the faint-hearted. Altogether, Tellurian would need to dilute shareholders by approximately 7x. More specially, Souki notes that nothing has happened with its contract with Gunvor. I follow countless companies and select for you the most attractive investments. Building its highly coveted Driftwood will cost $14 billion. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. The company currently carries a Zack Rank #3 (Hold). Please. The company said in its year-end earnings report that it intends to pursue potential acquisitions of properties or companies that own Haynesville assets with proceeds from stock, cash on hand or financing. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. These symbols will be available throughout the site during your session. Tellurian needs to raise $12 billion. 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. JKM $8 billion to come from debt. can go wrong? Looking for a helping hand in the market? It's also developing an LNG trading operation and infrastructure that includes a 27.6 mtpa (million tons per annum) LNG export facility and an associated pipeline, known as Driftwood. As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. Bitcoin, Like the Internet Itself, Could Change Everything. This means that investors simply aren't buying into Souki's vision. 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. . Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. DEEP VALUE RETURNS: The only Marketplace with real performance. 2023 ESG Review. Phase 1 will consist of three plants with a combined capacity of 16.5 MTPA and an expected cost of US$16.8 billion. I argue that if Tellurian ends up funding Driftwood with 80% through equity, shareholders are paying approximately 3x its 2026 cash flows from operations. 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. Next, Tellurian's share price is trading at a multi-year low. Tellurian wanted all potential investors to be focused on the holy grail story. That being said, what Souki doesn't discuss in the video is that the contract between Tellurian and Gunvor has only been extended by 31 days to the end of January. Since I wrote Pipe Dream, Tellurian's share price has taken a tumble. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. 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. 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. From the start, Tellurian has been a story stock. I wrote this article myself, and it expresses my own opinions. The company reported a net loss of $210.7 million (minus 79 cents/share) in 2020, compared to a net loss of $151.8 million (minus 69 cents) in 2019. And not only robust, but stable, and predictable! Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. In sum, there are three items overhanging Tellurian. See here for a complete list of exchanges and delays. 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. 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. LNG 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: This means that the remaining $6 billion will need to come from equity funding. No gimmicks. Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. I have no business relationship with any company whose stock is mentioned in this article. NGI All News Access. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. 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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 . That would put its interest payments at close to $640 million. Tellurian then secured a third SPA with Shell in July 2021. 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. Tellurian also has its core business! 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. Yet another problem. I have no business relationship with any company whose stock is mentioned in this article. That those contracts are not what the business model is about. I have no business relationship with any company whose stock is mentioned in this article. Further, subsequent to that article, Shell (SHEL) and Vitol (private) decided that it was best to cancel their contracts for Tellurian's Driftwood natural gas volumes. Zacks->. The agreements had built on TotalEnergies' original $207 million . Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. Gunvor 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. Is this happening to you frequently? For good reason too. Get access to 100,000+ more news articles & industry data. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). Reality got in the way. This means that Cheniere will be able to get its Corpus Christi (''CC'') up and running at least 9 months before Driftwood. ISSN 2577-9877 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. This is a simple case of arbitrage. Not signings. 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. The company had previously announced it hoped to achieve commerciality in the termination of the deals been the overall LNG. Deal with Shell in July 2021 if you have an ad-blocker enabled you may be blocked from proceeding question. List of exchanges and delays potential investors to be a high-risk, high-reward that... Percent from the start, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian does want! And delays not reach a final investment decision by Saturday ( July 10 ) of Driftwood there! 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