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. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. I believe that anyone reading this knows the spiel well. Some call it the Internet of Money and predict it could change the way money works forever. But in case those risks were forgotten, today everyone has been reminded. That those contracts are not what the business model is about. Diluting shareholders when the stock is at a 6-month low is simply poor practice. Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. 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. Tellurian said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . See here for a complete list of exchanges and delays. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. Market Realist is a registered trademark. Tellurian Inc., which continues to work toward a final investment decision on its Driftwood liquefied natural gas (LNG) terminal proposed for Louisiana, plans to acquire additional assets in the Haynesville Shale this year. However, the company missed the. It also cut jobs, corporate spending and expenses related to the first phase of the project. Tellurian is actively pursuing additional upstream acreage. 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. Consequently, I declare that the demand for Tellurian's LNG facility couldn't possibly be higher and in more demand. View Subscription Options 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 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. Tellurian executive chairman makes a new video in reply to SA commentary. 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. Looking for a helping hand in the market? It has $474.2 million in cash and cash equivalents on hand. I follow countless companies and select for you the most attractive investments. 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. Driftwood is categorically not getting built by 2026. Recall, this is Tellurian's vision. From the start, Tellurian has been a story stock. A wealth of resources for individual investors is available at www.zacks.com. All Rights Reserved. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. This is the core of the bull and bear case. Tellurian Inc. TELL terminated agreements with TotalEnergies TTE related to its Driftwood Liquefied Natural Gas (LNG) production and export terminal in Louisiana, according to a securities filing. NGI All News Access. Tellurian, a natural gas company, was founded by Charif Souki and Martin Houston in 2016. View Subscription Options Looking for a portfolio of ideas like this one? Tellurian has an amazing story. Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. Some better-ranked players in the energy space are ConocoPhillips COP and Hess Corporation HES, each currently sporting a Zacks Rank #1 (Strong Buy). 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. 2023 ESG Review. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. 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. All rights reserved. DEEP VALUE RETURNS: The only Marketplace with real performance. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. 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. And not only robust, but stable, and predictable! Tellurian stock has been pumped up this year due to rising natural gas prices and the meme crowd. He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. Part of this decline is due to the companys share offering in August. "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. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. 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. 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. It is the second 10-year, 3-MTPA agreement Tellurian has announced in a week, following a deal with commodity trader Gunvor Group. Natural Gas Corporate Earnings Call list - 4Q2022, 2023 North American Pipeline, LNG & Market Hubs Map, This article is part of NGI's Shale Daily. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. 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." 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. Sign in to get the best natural gas news and data. Sign in to get the best natural gas news and data. The essence of the video states that Tellurian wants profits. Gas producer . The company currently carries a Zack Rank #3 (Hold). But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. 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. The timing of this stock issuance is suspicious, to say the least. "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. 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. Gunvor Copy and paste multiple symbols separated by spaces. 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. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Download now.]. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . Last years loss included a $81.1 million impairment of upstream properties. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). Our Standards: The Thomson Reuters Trust Principles. However, the company still needs to find gas feedstock and finances for the terminal. Currently the company is on pace to produce 90mmBtu of natural gas up. I am not receiving compensation for it (other than from Seeking Alpha). 3/1/2023. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. 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. $6 billion from equity. Please disable your ad-blocker and refresh. what does ymb mean in the last mrs parrish; what are the chances of my dog getting heartworms; chrisfix email address; dr myron wentz covid vaccine; matter dimensions guide; The problem here is that, aside from. If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. Please. Looking for more investing ideas like this one? I provide a hand-holding service. No gimmicks. This means that investors simply aren't buying into Souki's vision. Infrastructure Everyone knows the risks. Indeed, what can go wrong? | 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. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. Furthermore, if Tellurian sought to dilute shareholders, it should have done so with the share price trading at $3 or $4 per share. Each deal is worth about $12 billion in revenue over the contract period. Bitcoin, Like the Internet Itself, Could Change Everything. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. 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. 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. 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. So is there any hope left for Tellurian? Earnings Well, there's always hope. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. "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. So the core. 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. 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. LNG Insight Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. Written by The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. Tellurian clearly has assets with some value. 2023 Natural Gas Intelligence. Four of the analysts have a buy rating, while three have a sell rating on the stock. 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. "They must feel the best way to get this project built is to by selling the offtake to traders, rather than [gas-producing] companies.". Follow the topics you want and receive the daily emails. Do Not Sell My Personal Information (CA Residents Only). 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. Tellurian shares were trading around $4.42 per share, up about 0.4%, on Monday afternoon. (Adds delay of final investment decision to Q1 2022 from 2021) May 27 (Reuters) - U.S . 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. One of the biggest stock catalysts remains the progress of its Driftwood 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. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. High upside energy, commodity, tech, and dividend stocks. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. 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. Is this happening to you frequently? 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. Haynesville Shale All quotes delayed a minimum of 15 minutes. I am not receiving compensation for it (other than from Seeking Alpha). Tellurian has been working toward a final investment decision on Driftwood for years. ISSN 2577-9877 To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. Deep Value Returns' Marketplace continues to rapidly grow. I strongly recommend no more than 3% of the portfolio for even the most concentrated investor. High upside energy, commodity, tech, and dividend stocks. ISSN 2577-9877 Haynesville Shale The downside is that it is extremely capital-intensive and places a lot more industry, macroeconomic, and geopolitical risks on Tellurian rather than a diversified network of partners. Please disable your ad-blocker and refresh. 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. Total also will purchase about 20 million additional. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. Click here to request a trial. 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. As you can see above, Tellurian's Driftwood is expected to cost approximately $14 billion. At the FID point, major equipment orders are placed, and contracts are signed for EPC. 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