I wrote this article myself, and it expresses my own opinions. NGI All News Access. Copyright 2023 Market Realist. Thats an increase from 14.3 Bcf in 2021 when the company held 11,060 net acres. | 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 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 . Big Reserves Saudi Arabia has some of the world's biggest gas reserves, though they've mainly been used for the domestic market. 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. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. Part of this decline is due to the companys share offering in August. I am not receiving compensation for it (other than from Seeking Alpha). That those contracts are not what the business model is about. The LNG terminal is expected to cost $12 billion. The essence of the video states that Tellurian wants profits. Its stock has gained 80.3% compared with the industrys 10.8% growth. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Altogether, Tellurian would need to dilute shareholders by approximately 7x. Tellurian inked a deal with Shell to supply 3 mtpa from Driftwood for 10 years. ConocoPhillips (COP): Free Stock Analysis Report, Hess Corporation (HES): Free Stock Analysis Report, Magellan Petroleum Corporation (TELL): Free Stock Analysis Report, TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis Report. Tellurian clearly has assets with some value. Tellurian has no signed Final Investment Decision. The partners were to receive LNG from the project. Outsmart the market with Smart Portfolio analytical tools powered by TipRanks. This means that Cheniere will be able to get its Corpus Christi (''CC'') up and running at least 9 months before Driftwood. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Chairman Souki addresses the matter on a YT video. The bigger question is what LNG prices will be in 2026. 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. Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. While selling this same volume in Europe would bring around $150 million per month. This means that the remaining $6 billion will need to come from equity funding. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. Get them exclusively at Deep Value Returns. | Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. Looking for more investing ideas like this one? Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. 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. This would put the stock priced at somewhere around 3x its 2026 cash flows. 2023 Natural Gas Intelligence. No gimmicks. Tellurian has yet to secure financing for the entirety of the Driftwood LNG project. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. 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. 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. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. From the start, Tellurian has been a story stock. 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. Everyone knows the risks. 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. Type a symbol or company name. 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. Each SPA is for 3 MTPA of LNG over a 10-year period. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. I wrote this article myself, and it expresses my own opinions. 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. Not signings. [email protected] Diluting shareholders when the stock is at a 6-month low is simply poor practice. 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. | In this case, it will need to dilute shareholders by around 6.2x. 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. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. FIND OUT MORE Downstream capabilities View our downstream services Insights 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 do all the work of picking the most attractive stocks. 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. 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. 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. To read this article on Zacks.com click here. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. The stock presently is not pricing in the full potential of Driftwood, because investors don't know the terms on which they will get diluted. The agreements had built on TotalEnergies' original $207 million . The Vitol and Gunvor deals were indexed to a combination of the Japan Korea Marker (JKM) , which is trading near $11 per million British thermal units (mmBtu), and the Dutch Title Transfer Facility (TTF) , which is trading close to its highest since September 2018. 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. Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. You have 3 free articles remaining. Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. Tellurian is being priced as an out-of-the-money option. Phase 1 will consist of three plants with a combined capacity of 16.5 MTPA and an expected cost of US$16.8 billion. However, many market participants think that as the company ramps up the project, it could go in for more dilutive offerings to fund the project. Hess earnings for 2021 are expected to rise 116.2% year over year. Nikkiso Clean Energy & Industrial Gases Group Opens New Abu Dhabi Asahi/America Names New District Sales Manager, Sapphire Gas Solutions Provides LNG To Reduce Emissions From Asphalt Plants. Please. Sign in to get the best natural gas news and data. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. | The concept is largely unproven in the U.S. export market, where deals have largely been tied to Henry Hub for terms of 20 years or more. Get access to 100,000+ more news articles & industry data. Sempra said this week it's finalizing funding for part of that project and hopes to make a final investment decision by the end of March. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. I am not receiving compensation for it (other than from Seeking Alpha). View Subscription Options Tellurian has a compelling story that at some point in 2026, or now more realistically looking to be in 2027, it is going to build a massive export facility. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. All quotes delayed a minimum of 15 minutes. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. A wealth of resources for individual investors is available at www.zacks.com. "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. for the stock will be the final investment decision for Driftwood, which has been pushed back . Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. esgreview.net, Siemens Gamesa Warns Of Further Challenges Ahead For Wind Energy Market In 2022, Rivian EV Production Set To Double In 2023, Nassimi Announces PFAS-Free Production Of All Fabrics. This I already discussed in my previous bullish article. In August, TELL did a secondary share offering worth $35 million. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. 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. 2023 ESG Review. |, Related topics: Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. | This is not a significant dilution and amounts to less than 4%. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. 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. | And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. 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. Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. Saudi Arabia to Use $110 Billion Gas Field for Blue Hydrogen Is this happening to you frequently? The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. 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. We are all working together to compound returns. Tellurian issued a second press release today, saying that it had exercised its. [email protected], 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. 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. Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. 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. read more. Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. Total also will purchase about 20 million additional. 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. 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. See here for a complete list of exchanges and delays. However, the company missed the. Tellurian said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . 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. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. 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. . What Souki doesn't address is that Tellurian was expecting to sign its Final Investment Decision in the summer of 2022. ISSN 2577-9877 See here for a complete list of exchanges and delays. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. Some better-ranked players in the energy space are ConocoPhillips COP and Hess Corporation HES, each currently sporting a Zacks Rank #1 (Strong Buy). 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. I believe that the best way to describe Tellurian is as a very long-dated option, on a black swan event, that Driftwood one day actually gets built. Combined, the three SPAs are expected to generate annual revenue of US$1.8 billion and annual EBITDA of just under US$1 billion. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. Recall, this is Tellurian's vision. Sign in to get the best natural gas news and data. You have 3 free articles remaining. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. 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. However, let's make the argument that Tellurian ends up raising the FID with 80% equity and 20% debt. The industry leader for online information for tax, accounting and finance professionals. 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. See here for a complete list of exchanges and delays. Those assets produced 16.9 Bcf of natural gas last year, up from 13.9 Bcf in 2019. I have no business relationship with any company whose stock is mentioned in this article. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Written by Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). 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. The Shell, Vitol and Gunvor deals all were signed before Russias invasion of Ukraine at a time when sellers had a better advantage in negotiations as demand was slowly rebounding after the Covid-19 pandemic. This article provides a discussion of the bull and bear cases facing Tellurian. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. In June, TELL signed a long-term contract with Vitol for 3 mtpa. I follow countless companies and select for you the most attractive investments. Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. This is of course if Driftwood ends up getting built at all. Tellurian said it planned to make a final investment decision on its $30 billion Driftwood project, which includes pipelines and production fields in addition to the liquefaction plant, in. Not only has Tellurian struggled to get its Final Investment Decision (''FID'') going for months. Please disable your ad-blocker and refresh. Haynesville Shale All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. 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: 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. Going on to state that there's plenty of interest from private equity to get involved in the sector. 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