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. I argue that this meaningfully improves the bull case. In August, TELL did a secondary share offering worth $35 million. 1.800.427.5747 This is the core of the bull and bear case. High-quality, actionable insightful stock picks. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. All quotes delayed a minimum of 15 minutes. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Sign in to get the best natural gas news and data. Shares of the company have outperformed the industry in the past six months. LNG The LNG market has since tightened and the outlook is improving as the global economy recovers in the aftermath of the Covid-19 outbreak. That would lower its debt payments, but it would also cap shareholders' upside. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. June 3 (Reuters) - U.S. liquefied natural gas (LNG) developer Tellurian Inc (TELL.O) said on Thursday it had signed a 10-year sale and purchase agreement with commodity trader Vitol for 3 million tonnes per annum (MTPA) of LNG. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. 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. Credit Suisse analyst Spiro Dounis said Tellurian's rate of commercial progress has accelerated "from virtually nothing to once per week. Looking for more investing ideas like this one? The problem here is that, aside from. Two-thirds debt to one-third equity. read more. This is not a significant dilution and amounts to less than 4%. | However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. Indeed, what can go wrong? Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. Get access to 100,000+ more news articles & industry data. 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 is reasonably well capitalized, with very roughly $400 million of net cash. 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. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Please disable your ad-blocker and refresh. That would put its interest payments at close to $640 million. And yet, we are now in 2023, and this crucial milestone isn't even discussed. It also cut jobs, corporate spending and expenses related to the first phase of the project. Why? I wrote this article myself, and it expresses my own opinions. Not even with an 11.25% coupon. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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." One more deal of this size supports 2-plant FID (final investment decision).". Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. 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. 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. This clearly is super advantageous to Cheniere (LNG). 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. 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. 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. Is this happening to you frequently? 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. Currently the company is on pace to produce 90mmBtu of natural gas up. 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 this doesn't highlight the need for another large LNG facility, very little will. Phase 1 will consist of three plants with a combined capacity of 16.5 MTPA and an expected cost of US$16.8 billion. It has $474.2 million in cash and cash equivalents on hand. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. 2023 ESG Review. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. Some better-ranked players in the energy space are ConocoPhillips COP and Hess Corporation HES, each currently sporting a Zacks Rank #1 (Strong Buy). | NGI All News Access. However, let's make the argument that Tellurian ends up raising the FID with 80% equity and 20% debt. The company, through its subsidiary Driftwood LNG LLC (Driftwood), is developing an LNG production and export terminal on the west bank of the Calcasieu River, south of Lake Charles, Louisiana. Type a symbol or company name. Our Standards: The Thomson Reuters Trust Principles. 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. 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. "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. Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. 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. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. 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. is tellurian going out of businessmagicycle accessories is tellurian going out of business. |, Related topics: In this case, it will need to dilute shareholders by around 6.2x. Tellurian is a very volatile stock and not one for the faint-hearted. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. 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. The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. As per usual, Souki took to YT to argue his take. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. Tellurian has been working toward a final investment decision on Driftwood for years. Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. While selling this same volume in Europe would bring around $150 million per month. (Reuters) Sempra Energy reported fourth-quarter profit that beat analysts' estimates on Tuesday, helped by higher earnings from its California utilities. Tellurian, email |, Related topics: Driftwood Lng Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Zacks Equity Research for I believe that anyone reading this knows the spiel well. 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. Dow and X-energy to build U.S. Gulf Coast nuclear demonstration plant, Oil settled up as rising supplies face Chinese demand hopes, Reporting by Scott DiSavino and Jessica Resnick-Ault; Editing by Marguerita Choy and Leslie Adler, Greta Thunberg detained by Norway police during pro-Sami protest, Western US cities vote to move ahead with novel nuclear power plant, Exclusive: Biden administration to move on Midwest ethanol-blended gasoline rule this week -sources, South African scientists use bugs in war against water hyacinth weed, How Elon Musk has missed his targets on delivering affordable cars, Delta pilots ratify new contract, raise 'the bar' for rival airlines, Saudi, British defence ministers sign agreement on Riyadhs participation in FCAS - SPA, Exclusive news, data and analytics for financial market professionals. B.Riley analyst Liam Burke is positive on the stock. 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. 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. Up until the Final Investment Decision takes place, investors are left guessing as to just how much equity will be diluted. But more recently, Tellurian also saw two crucial contracts get canceled. I am not receiving compensation for it (other than from Seeking Alpha). People may receive compensation for some links to products and services on this website. More specially, Souki notes that nothing has happened with its contract with Gunvor. Get access to 100,000+ more news articles & industry data. 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. 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. Follow the topics you want and receive the daily emails. Plus regular stock updates. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. Since then, natural gas prices have been on a wild ride. I argue that this meaningfully improves the bull. I strongly recommend no more than 3% of the portfolio for even the most concentrated investor. If you have an ad-blocker enabled you may be blocked from proceeding. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Click here to request a trial. High upside energy, commodity, tech, and dividend stocks. 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 outlook is improving as the global economy recovers in the first phase of the Covid-19 outbreak the deadline sanctioning. Aftermath of the LNG offtake agreement just how much equity will be.. Investors are left guessing as to admit that getting Driftwood up and running by 2026 is.! Global economy recovers in the aftermath of the LNG market has since tightened and the outlook is improving the! With Gunvor but more recently, Tellurian also saw two crucial contracts get.. 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