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. 2023 Natural Gas Intelligence. 2 min read. 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. Four of the analysts have a buy rating, while three have a sell rating on the stock. |, Related topics: In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Gunvor for the stock will be the final investment decision for Driftwood, which has been pushed back . Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. Recall, this is Tellurian's vision. 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. Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. Up until the Final Investment Decision takes place, investors are left guessing as to just how much equity will be diluted. Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. Tellurian has no signed Final Investment Decision. No gimmicks. Days before the Shell and Vitol deals were canceled, Tellurian announced that it had withdrawn a high-yield bond sale, citing the impacts of inflation and uncertainty in the debt market. 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. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. In August, TELL did a secondary share offering worth $35 million. Please disable your ad-blocker and refresh. Copy and paste multiple symbols separated by spaces. 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: | As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. If you have an ad-blocker enabled you may be blocked from proceeding. Tellurian stock has been pumped up this year due to rising natural gas prices and the meme crowd. You have 3 free articles remaining. | 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. Credit Suisse analyst Spiro Dounis said Tellurian's rate of commercial progress has accelerated "from virtually nothing to once per week. This means that the remaining $6 billion will need to come from equity funding. Presently, Tellurian's market cap is around $1 billion. Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. Gunvor Group Ltd. has the option to terminate its deal to buy supplies from the proposed Driftwood LNG terminal after a deadline passed Tuesday for Tellurian Inc. to meet certain conditions. Shares of the company have outperformed the industry in the past six months. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? I'll address this momentarily. Indeed, what can go wrong? Tellurian (NYSE:TELL) remains a highly speculative stock. Dow and X-energy to build U.S. Gulf Coast nuclear demonstration plant, Oil settled up as rising supplies face Chinese demand hopes, Reporting by Scott DiSavino and Jessica Resnick-Ault; Editing by Marguerita Choy and Leslie Adler, Greta Thunberg detained by Norway police during pro-Sami protest, Western US cities vote to move ahead with novel nuclear power plant, Exclusive: Biden administration to move on Midwest ethanol-blended gasoline rule this week -sources, South African scientists use bugs in war against water hyacinth weed, How Elon Musk has missed his targets on delivering affordable cars, Delta pilots ratify new contract, raise 'the bar' for rival airlines, Saudi, British defence ministers sign agreement on Riyadhs participation in FCAS - SPA, Exclusive news, data and analytics for financial market professionals. Download now.]. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. The industry leader for online information for tax, accounting and finance professionals. Next, Tellurian's share price is trading at a multi-year low. Click here to request a free trial. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. High upside energy, commodity, tech, and dividend stocks. 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. One of those conditions was Tellurian's making a final investment decision to build the liquefaction plant within 24 months of a July 10, 2019, agreement. The one-line takeaway is this, Tellurian is a very high-risk investment. But investors crave FID details. Tellurian reported a full-year net loss of $49.8 million (minus 9 cents/share), compared to a net loss of $114.7 million (28 cents) in 2021. I follow countless companies and select for you the most attractive investments. We are all working together to compound returns. Earnings I follow countless companies and select for you the most attractive investments. 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. By the start of 2020, several LNG export. Tellurian sold off 40% in the past month. Another big fear for investors could be the dilution of their holdings. 1.800.427.5747 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. Create your Watchlist to save your favorite quotes on Nasdaq.com. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. 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. Nevertheless, as ebullient as always, Tellurian's Chairman Charif Souki took to his YT channel in the past few days to dispel certain myths, that Souki believes have plagued the stock. 2023 ESG Review. some value. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. 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. This is a simple case of arbitrage. Everyone knows the risks. Driftwood is categorically not getting built by 2026. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. If you have an ad-blocker enabled you may be blocked from proceeding. Big Reserves Saudi Arabia has some of the world's biggest gas reserves, though they've mainly been used for the domestic market. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. Tellurian then secured a third SPA with Shell in July 2021. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. Tellurian Inc . All rights reserved. I have no business relationship with any company whose stock is mentioned in this article. Follow the topics you want and receive the daily emails. 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. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. A wealth of resources for individual investors is available at www.zacks.com. Indeed, domestic natural gas prices fell by nearly 20% to $6 MMBtu. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. Why? Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. "The Total agreements were terminated because they are not consistent with the commercial agreements that Driftwood has reached with other counterparties," Tellurian said in a federal filing on Monday. Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. 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. Tellurian inked a deal with Shell to supply 3 mtpa from Driftwood for 10 years. Not only has Tellurian struggled to get its Final Investment Decision (''FID'') going for months. High-quality, actionable insightful stock picks. 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 bigger question is what LNG prices will be in 2026. 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. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! However, the company missed the. I argue that this meaningfully improves the bull case. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. ISSN 2577-9877 "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. 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. 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. A story that's going to be a win-win for all parties. While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. No gimmicks. 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 needs $12 billion to build its Driftwood LNG exporting facility. We are all working together to compound returns. 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. Tellurian is being priced as an out-of-the-money option. Tellurian ( NYSE: TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. 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. High upside energy, commodity, tech, and dividend stocks. The company currently carries a Zack Rank #3 (Hold). Please disable your ad-blocker and refresh. 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. Tellurian shares were trading around $4.42 per share, up about 0.4%, on Monday afternoon. But more recently, Tellurian also saw two crucial contracts get canceled. Please. Total also will purchase about 20 million additional. At the FID point, major equipment orders are placed, and contracts are signed for EPC. 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. 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. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. And yet, we are now in 2023, and this crucial milestone isn't even discussed. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. A win for shareholders, as their business will be generating robust free cash flows. LNG Offers may be subject to change without notice. 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. More specially, Souki notes that nothing has happened with its contract with Gunvor. This means that investors simply aren't buying into Souki's vision. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. 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. 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. 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. | Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. However, Tellurian yesterday guided that it would expect to see $400 million of EBITDA in 2023. (Reuters) Sempra Energy reported fourth-quarter profit that beat analysts' estimates on Tuesday, helped by higher earnings from its California utilities. I wrote this article myself, and it expresses my own opinions. 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. "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. DEEP VALUE RETURNS: The only Marketplace with real performance. To read this article on Zacks.com click here. Going forward, a lot will depend on the FID. 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. Infrastructure The LNG would come from Tellurian's proposed 27.6-MTPA Driftwood export project in Louisiana. That those contracts are not what the business model is about. Not at less than $2 per share. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. On Nov. 29, the company and former President and CEO Meg. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. 1.800.427.5747 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. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. Tellurian (NYSE:TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. Some call it the Internet of Money and predict it could change the way money works forever. B.Riley analyst Liam Burke is positive on the stock. The partners were to receive LNG from the project. 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. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. So, let's get to this story's next episode. See here for a complete list of exchanges and delays. Combined, the three SPAs are expected to generate annual revenue of US$1.8 billion and annual EBITDA of just under US$1 billion. 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. Souki went on to argue that there could be leaks of LNG or gas that would leave the company over-exposed and having to pay back more than the contract was worth to make the contract whole. I argue that this meaningfully improves the bull. Last years loss included a $81.1 million impairment of upstream properties. 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. 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. 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. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. 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