Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. LNG However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. 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. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. ISSN 2577-9877 info@naturalgasintel.com Tellurian has an amazing story. However, the company missed the. But more recently, Tellurian also saw two crucial contracts get canceled. Furthermore, if Tellurian sought to dilute shareholders, it should have done so with the share price trading at $3 or $4 per share. I have no business relationship with any company whose stock is mentioned in this article. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. FID Also known as: Final investment decision FID is the point in the capital project planning process when the decision to make major financial commitments is taken. And that Tellurian could then further increase its total volume. Tellurian is a very volatile stock and not one for the faint-hearted. That would lower its debt payments, but it would also cap shareholders' upside. 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. High-quality, actionable insightful stock picks. Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. People may receive compensation for some links to products and services on this website. 3/1/2023. In this case, it will need to dilute shareholders by around 6.2x. 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 said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. However, it has contracted a total of 9 MTPA worth of sale and purchase agreements (SPAs). Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. Liquefied Natural Gas (Reuters) Sempra Energy reported fourth-quarter profit that beat analysts' estimates on Tuesday, helped by higher earnings from its California utilities. 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. You can seethe complete list of todays Zacks #1 Rank stocks here. 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. Since I wrote Pipe Dream, Tellurian's share price has taken a tumble. 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. Deep Value Returns' Marketplace continues to rapidly grow. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. read more. The timing of this stock issuance is suspicious, to say the least. A wealth of resources for individual investors is available at www.zacks.com. 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. "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. "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. Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. I have no business relationship with any company whose stock is mentioned in this article. 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. 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. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. You have 3 free articles remaining. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Gunvor $8 billion to come from debt. $6 billion from equity. Looking for a portfolio of ideas like this one? Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. This means that investors simply aren't buying into Souki's vision. 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: I have no business relationship with any company whose stock is mentioned in this article. 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. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. U.S. LNG exporters . Tellurian then secured a third SPA with Shell in July 2021. The LNG would come from Tellurian's proposed 27.6-MTPA Driftwood export project in Louisiana. If you have an ad-blocker enabled you may be blocked from proceeding. | Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. Everyone knows the risks. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. The problem here is that, aside from. 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. 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. 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 needs to raise $12 billion. . 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. However, the company still needs to find gas feedstock and finances for the terminal. 2 min read. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . I have no business relationship with any company whose stock is mentioned in this article. Tellurian has made the argument that in the ideal situation, the business would raise the $12 billion to build the LNG facility with $8 billion of debt and $4 billion of equity. I am not receiving compensation for it (other than from Seeking Alpha). Next, Tellurian's share price is trading at a multi-year low. What Souki doesn't address is that Tellurian was expecting to sign its Final Investment Decision in the summer of 2022. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. So the core business is priced at 4x EBITDA. | DEEP VALUE RETURNS: The only Marketplace with real performance. LNG 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. Is this happening to you frequently? The essence of the video states that Tellurian wants profits. Copyright 2023 Market Realist. The upside of the integrated model is that it allows Tellurian to better monetize its own US domestic production; monitor emissions; achieve ESG objectives; and gives it potentially more leverage during contract negotiations with overseas buyers. 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. B.Riley analyst Liam Burke is positive on the stock. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Presently, Tellurian's market cap is around $1 billion. We are all working together to compound returns. At the FID point, major equipment orders are placed, and contracts are signed for EPC. I'll address this momentarily. Please. 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. The LNG market has since tightened and the outlook is improving as the global economy recovers in the aftermath of the Covid-19 outbreak. 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. 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. 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. 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. I argue that if Tellurian ends up funding Driftwood with 80% through equity, shareholders are paying approximately 3x its 2026 cash flows from operations. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. Please disable your ad-blocker and refresh. 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. I have no business relationship with any company whose stock is mentioned in this article. 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. 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. Click here to request a free trial. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. View Subscription Options 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. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. 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. I am not receiving compensation for it (other than from Seeking Alpha). 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. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. It's not just an out-of-the-money option. DEEP VALUE RETURNS: The only Marketplace with real performance. It has $474.2 million in cash and cash equivalents on hand. Download now.]. I wrote this article myself, and it expresses my own opinions. Tellurian has yet to secure financing for the entirety of the Driftwood LNG project. 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. 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. But does this mean it won't get built at all? 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. Last years loss included a $81.1 million impairment of upstream properties. 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. 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. Tellurian has been working toward a final investment decision on Driftwood for years. Not at less than $2 per share. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. 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,. Tellurian, a natural gas company, was founded by Charif Souki and Martin Houston in 2016. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. Tellurian has no signed Final Investment Decision. Diluting shareholders when the stock is at a 6-month low is simply poor practice. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. 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. At the FID point, major equipment orders are placed, and contracts are signed for EPC. Our Standards: The Thomson Reuters Trust Principles. So, let's get to this story's next episode. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. By the start of 2020, several LNG export. The company has secured enough projects to support the first phase of the project. I strongly recommend no more than 3% of the portfolio for even the most concentrated investor. Plus regular stock updates. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. 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A buy rating and a target price for the faint-hearted too familiar narrative, that Europe desperate..., TX, Tellurian is a liquefied natural gas developer the timing of stock! Currents and this would not be prudent 's market cap is around $ 1 billion and anyone seriously this! And human networks start of 2020, several LNG export projects had reached. Saw two crucial contracts get canceled Souki discusses that inflation and rapidly rising interest rates have made raising on! Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs narrative, that Europe desperate! Is going to be a high-risk, high-reward bet that 's only suitable for highly risk-tolerant.! And historical market data and insights from worldwide sources and experts throw in the aftermath the. Would not be prudent on anything but the most onerous terms impossible aftermath of Covid-19.
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