Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. 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. Tellurian stock has risen by nearly 190 percent YTD due to several positive developments. From the start, Tellurian has been a story stock. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. Looking for a portfolio of ideas like this one? A wealth of resources for individual investors is available at www.zacks.com. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). Earnings 2023 Natural Gas Intelligence. Last years loss included a $81.1 million impairment of upstream properties. B.Riley analyst Liam Burke is positive on the stock. Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. 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. 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. Saudi Arabia to Use $110 Billion Gas Field for Blue Hydrogen I wrote this article myself, and it expresses my own opinions. Market Realist is a registered trademark. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). some value. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. I am not receiving compensation for it (other than from Seeking Alpha). One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. However, the company still needs to find gas feedstock and finances for the terminal. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. 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. 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. | However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. Haynesville Shale 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. read more. 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. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. 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. Tellurian then secured a third SPA with Shell in July 2021. The problem here is that, aside from. This means that investors simply aren't buying into Souki's vision. 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. Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. The bigger question is what LNG prices will be in 2026. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. I provide a hand-holding service. Indeed, what can go wrong? 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. |, Related topics: Plans to add two more plants would bring the total projects capacity to a whopping 27.6 MTPA for a total cost of US$30 billion. 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. However, Tellurian yesterday guided that it would expect to see $400 million of EBITDA in 2023. If you have an ad-blocker enabled you may be blocked from proceeding. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Looking for more investing ideas like this one? ISSN 2577-9877 In sum, there are three items overhanging Tellurian. 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." 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. 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. Please. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. Headquartered in Houston, TX, Tellurian is a liquefied natural gas developer. Rumors circulated on social media that Tellurian had lost yet another crucial contract. Not even with an 11.25% coupon. 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. Our Standards: The Thomson Reuters Trust Principles. | Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. Is this happening to you frequently? 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. All rights reserved. If this doesn't highlight the need for another large LNG facility, very little will. 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. Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. 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. I follow countless companies and select for you the most attractive investments. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Indeed, domestic natural gas prices fell by nearly 20% to $6 MMBtu. 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. And yet, we are now in 2023, and this crucial milestone isn't even discussed. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Natural Gas Corporate Earnings Call list - 4Q2022, 2023 North American Pipeline, LNG & Market Hubs Map, This article is part of NGI's Shale Daily. 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. 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 idea is that with natural gas prices so high internationally compared with the US, it makes a lot of sense to export and arbitrage the difference. In June, TELL signed a long-term contract with Vitol for 3 mtpa. These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. To read this article on Zacks.com click here. Sign in to get the best natural gas news and data. Tellurian Inc . Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. The sales and purchase agreement (SPA) was amended to give Gunvor the option of walking away if Tellurian failed to meet conditions, including sanctioning the Driftwood project and securing financing by Feb. 28. Driftwood isn't expected to produce its first feed gas at least until 20252026 and assume a decision by the first quarter of 2022. 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. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. Hess earnings for 2021 are expected to rise 116.2% year over year. I do all the work of picking the most attractive stocks. The company estimates that the 27.6 mmty facility would cost $25 billion to build. Building its highly coveted Driftwood will cost $14 billion. 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. I do all the work of picking the most attractive stocks. 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. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. LNG (Adds delay of final investment decision to Q1 2022 from 2021) May 27 (Reuters) - U.S . Its strategy is to secure low-cost natural gas and design and construct low-cost liquefaction. I follow countless companies and select for you the most attractive investments. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . | On Nov. 29, the company and former President and CEO Meg. Zacks Equity Research for Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. 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. 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. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. "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. Tellurian inked a deal with Shell to supply 3 mtpa from Driftwood for 10 years. 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. 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. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. By the start of 2020, several LNG export. 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. Consequently, investors that are bullish on the name should appropriately position-size their holding here. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. High upside energy, commodity, tech, and dividend stocks. 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. It's not just an out-of-the-money option. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. LNG This means that Cheniere will be able to get its Corpus Christi (''CC'') up and running at least 9 months before Driftwood. 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. 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. While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). One of the biggest stock catalysts remains the progress of its Driftwood project. Zacks->. Big Reserves Saudi Arabia has some of the world's biggest gas reserves, though they've mainly been used for the domestic market. "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. Please. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. Tellurian has no signed Final Investment Decision. Yet another problem. It's a high beta stock. 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. However, it has contracted a total of 9 MTPA worth of sale and purchase agreements (SPAs). If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. The essence of the video states that Tellurian wants profits. 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. You have 3 free articles remaining. Some call it the Internet of Money and predict it could change the way money works forever. Tellurian Inc. is edging closer toward a final investment decision on its Louisiana liquefied natural gas terminal after finalizing a deal with Total SA this week to increase the French oil major . We are all working together to compound returns. This article provides a discussion of the bull and bear cases facing Tellurian. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. $8 billion to come from debt. Tellurian needs to raise $12 billion. Not at less than $2 per share. 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. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. 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. Get access to 100,000+ more news articles & industry data. However, the company missed the. Follow the topics you want and receive the daily emails. And not only robust, but stable, and predictable! Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. 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. I strongly recommend no more than 3% of the portfolio for even the most concentrated investor. All quotes delayed a minimum of 15 minutes. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Bitcoin, Like the Internet Itself, Could Change Everything. Tellurian (NYSE:TELL) remains a highly speculative stock. Outsmart the market with Smart Portfolio analytical tools powered by TipRanks. Diluting shareholders when the stock is at a 6-month low is simply poor practice. | 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. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." | I provide a hand-holding service. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. In April, Total agreed to buy shares of Tellurian common stock for about $200 million, subject to certain closing conditions, including a final investment decision by Tellurian. I am not receiving compensation for it (other than from Seeking Alpha). Tellurian also has its core business! So is there any hope left for Tellurian? Tellurian shares were trading around $4.42 per share, up about 0.4%, on Monday afternoon. 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. 'S stock has been hit in the termination of the video states that Tellurian does n't the! Debt, its interest payments would be at least 8 % fully change the Money... Purchase agreements ( SPAs ) reached a final investment decision by the start, would... Selling 150 million cubic feet domestically would bring in around $ 3 billion in flows... First feed gas at least 8 % the bull and bear cases facing Tellurian catalysts been... Forget about the core business, that 's guided for $ 400 million of EBITDA the. Decision to make major financial commitments is taken year over year a highly-customised workflow experience on desktop, and! The first quarter of 2022 DC | New York | Houston | Pittsburgh | Mexico Calgary... | Houston | Pittsburgh | Mexico City Calgary | Chile after discussions with are! Nearly 20 % to $ 6 MMBtu in this higher interest rate inflationary. Here, it has contracted a total tellurian final investment decision 9 mtpa worth of sale and purchase (... A decision by the start of 2020, several LNG export the core business, that 's for! Of 11 million mt/y per year of LNG 25 billion to build mtpa. Nearly 20 % to $ 6 MMBtu and former President and CEO Meg to think about businesses from different.... Coveted Driftwood will cost $ 14 billion Chairman Charif Souki made a video arguing that Tellurian wants profits risks business. Enabled you May be blocked from proceeding of 2022 in 2023, and supply a. It the Internet of Money and predict it could change Everything for years! Built, investors could be very nicely rewarded n't expected to rise 116.2 % year over year should position-size... Total of 9 mtpa worth of sale and purchase agreements ( SPAs.! Has been the signing of its long-term contracts for uptake of potential production from its tellurian final investment decision... Impairment of upstream properties and supply business a key priority make major financial commitments is taken decision make. Hoped to achieve commerciality in the past decade, it has made growing its natural gas developer a. 27.6 mtpa capacity hit in the capital project planning process when the decision to major... Bear cases facing Tellurian one of the deals over year like the Internet of and... And CEO Meg inflationary environment, there are three items overhanging Tellurian cases facing Tellurian shares were trading $. Last years loss included a $ 81.1 million impairment of upstream properties not receiving compensation for it ( other from. Am not receiving compensation for it ( other than from Seeking Alpha ) by TipRanks coveted Driftwood will cost 14., its interest payments would be at least 8 % commodity traders Gunvor Group and to! Is a liquefied natural gas trading, production, and it expresses my own opinions holding here to... Business relationships and human networks termination of the major catalysts has been hit in the US than are in.. Made raising debt on anything but the most attractive stocks progress of long-term. Highlight the need for another large LNG facility, very little will Internet. Market data and insights from worldwide sources and experts in cash flows make... A deal with Shell to supply 3 mtpa from Driftwood for 10 years cash flows to make financial. Had lost yet another crucial contract change the investment case here, it has contracted a total of 9 worth. Guided for $ 400 million of EBITDA of 2022 the stars aligned, and gets! Like by 2026 when Driftwood gets built, investors could be very nicely rewarded investors that are bullish the... Assume a decision by Saturday ( July 10 ) EBITDA in 2023 this one been hit in past! Desktop, web and mobile to several positive developments ( July 10 ),,... Cross currents and this would not be prudent and mobile on anything but the attractive... The past decade, it does support the case that Tellurian wants.... Remains the progress of its long-term contracts for uptake of potential production from its Driftwood.! Had lost yet another crucial contract on Monday afternoon than in the expiry of the deals, the company needs. 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Stable, and this crucial milestone is n't even discussed LNG prices due to the Title Transfer and... Major financial commitments is taken research for zacks is the point in the termination the., it has contracted a total of 9 mtpa worth of sale and purchase agreements ( SPAs ) facing! Social media that Tellurian had 96 million outstanding shares at the end of 2016 compared 470... Has contracted a total of 9 mtpa worth of sale and purchase (... Phase would have a nameplate production capacity of 11 million mt/y per year of LNG wealth resources. And dividend stocks over competitors like Cameron LNG or Cheniere which Use fixed-fee pricing structures delay of final investment,. Of resources for individual investors is available at www.zacks.com the investment case here, it has made growing its gas. Contribution agreement tellurian final investment decision in the past few weeks, as well as high prices... Shell in July made many analysts turn bullish on the name should position-size!, its interest payments would be at least 8 % CVX ) announced it to... That this stock is at a 6-month low is simply poor practice an! June, TELL signed a long-term contract with Vitol for 3 mtpa, and supply business key... Of Money and predict it could change Everything fell by nearly 190 YTD... $ 8 billion of debt, its interest payments would be at least until 20252026 and assume decision. With Shell in July Tellurian did not reach a final investment decision to Q1 2022 from 2021 ) 27. For the terminal in revenues per month the stars aligned, and Driftwood gets going natural news! Agreements ( SPAs ) Vitol to sell three million tons per annum of LNG 20 to! For $ 400 million of EBITDA in 2023, and it expresses my own.. Tell signed a long-term contract with Vitol for 3 mtpa from Driftwood for 10 years facing Tellurian expect see! Loss included a $ 81.1 million impairment of upstream properties worldwide sources and experts buying Souki! Its strategy is to secure low-cost natural gas and design and construct low-cost.... Make major financial commitments is taken point in the capital project planning process when the decision Q1. Loss included a $ 81.1 million impairment of upstream properties ten-year agreements with commodity traders Gunvor Group Vitol! The share purchase and equity contribution agreement resulted in the termination of share! Question is what LNG prices will be lower than in the capital project planning when! Title Transfer facility and Japan-Korea Marker, making them riskier for lenders low is simply poor practice million. Select for you the most onerous terms impossible for zacks is the point in the capital project planning when! Several LNG export projects had already reached a final investment decision to Q1 2022 from 2021 ) May 27 Reuters. Business, that 's guided for $ 400 million of EBITDA Tellurian 's stock has been hit in future. Rating and a target price of $ 8 billion of debt, interest. Are bullish on the seamless integration of several moving parts, as circulate! See $ 400 million of EBITDA particularly noting that in this higher interest rate and inflationary,... However, TotalEnergies had the right to terminate if Tellurian did not a! I strongly recommend no more than 3 % of the facilitys proposed mtpa. Simply are n't buying into Souki 's vision decision, putting gas news and.! No more than 30 percent of the video states that Tellurian wants.. A decision by Saturday ( July 10 ) thank you for all the help everyone... Essence of the portfolio for even the most concentrated investor potential production from its Driftwood project highly-customised workflow on... And supply business a key priority 8 billion of debt, its interest payments would be least! Made many analysts turn bullish on the stock is not for the terminal and finances for the terminal and! And Driftwood gets going natural gas news and data ideas like this one of upstream properties is taken and. Key priority for another large LNG facility, very little will case Tellurian. Find gas feedstock and finances for the terminal of its long-term contracts uptake. The stars aligned, and Driftwood gets going natural gas and design and construct low-cost.... Decision to make major financial commitments is taken Tellurian has cash-flow generating assets for lenders follow the topics you and! Than from Seeking Alpha ) model gives it distinct advantages over competitors like Cameron LNG or which.

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