Tellurian (NYSE:TELL) remains a highly speculative stock. 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. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. No gimmicks. Each deal is worth about $12 billion in revenue over the contract period. Haynesville Shale 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. In June, TELL signed a long-term contract with Vitol for 3 mtpa. There simply were no takers. Driftwood is categorically not getting built by 2026. I have no business relationship with any company whose stock is mentioned in this article. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. 3/1/2023. Tellurian has no signed Final Investment Decision. "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 needs to raise $12 billion. Click here to request a trial. This would put the stock priced at somewhere around 3x its 2026 cash flows. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. So is there any hope left for Tellurian? Each SPA is for 3 MTPA of LNG over a 10-year period. I believe that anyone reading this knows the spiel well. | I wrote this article myself, and it expresses my own opinions. This means that investors simply aren't buying into Souki's vision. Total also will purchase about 20 million additional. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. DEEP VALUE RETURNS: The only Marketplace with real performance. 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. The LNG producer also pushed its final investment decision to first-quarter 2022 from late 2021. And not only robust, but stable, and predictable! Given these vulnerabilities, it is understandable why reaching a final investment decision for the export facility has proved difficult. While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. That being said, in the past several days, natural gas prices on the spot market have been soaring back, and are now, once again, edging back to $7 MMBtu. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . Deep Value Returns' Marketplace continues to rapidly grow. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. 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. Deep Value Returns' Marketplace continues to rapidly grow. 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. Tellurian clearly has assets with some value. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. Tellurian has no signed Final Investment Decision. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. 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. What Souki doesn't address is that Tellurian was expecting to sign its Final Investment Decision in the summer of 2022. | However, Tellurian yesterday guided that it would expect to see $400 million of EBITDA in 2023. | Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. No gimmicks. Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. 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. 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. I argue that this meaningfully improves the bull. More specially, Souki notes that nothing has happened with its contract with Gunvor. 2023 Natural Gas Intelligence. One more deal of this size supports 2-plant FID (final investment decision).". 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 Arunima Kumar in Bengaluru; Editing by Maju Samuel, 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. 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. The comments were part of an investor presentation that reaffirmed Tellurian's target for reaching a final investment decision on the $12 billion project in the first quarter of 2022 and that provided new insights about efforts to advance to construction. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). This is the core of the bull and bear case. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. 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. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. High upside energy, commodity, tech, and dividend stocks. 1.800.427.5747 That would put its interest payments at close to $640 million. Next, Tellurian's share price is trading at a multi-year low. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). Some call it the Internet of Money and predict it could change the way money works forever. Saudi Arabia to Use $110 Billion Gas Field for Blue Hydrogen Click here to request a free trial. 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. 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. for the stock will be the final investment decision for Driftwood, which has been pushed back . The company has secured enough projects to support the first phase of the project. 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. All rights reserved. Tellurian also has its core business! Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. High-quality, actionable insightful stock picks. Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. Tellurian is being priced as an out-of-the-money option. But does this mean it won't get built at all? B.Riley initiated on TELL with a buy rating and a target price of $8 in July. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Not signings. Reality got in the way. LNG Insight However, let's make the argument that Tellurian ends up raising the FID with 80% equity and 20% debt. Market Realist is a registered trademark. 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. 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. LNG The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? . info@naturalgasintel.com Gunvor 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. 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. Outsmart the market with Smart Portfolio analytical tools powered by TipRanks. 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. I have no business relationship with any company whose stock is mentioned in this article. By using this Site or clicking on "OK", you consent to the use of cookies. 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. 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. That those contracts are not what the business model is about. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. Another big fear for investors could be the dilution of their holdings. Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. 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. 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. Credit Suisse analyst Spiro Dounis said Tellurian's rate of commercial progress has accelerated "from virtually nothing to once per week. Tellurian has been working toward a final investment decision on Driftwood for years. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. The essence of the video states that Tellurian wants profits. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. Responsive Menu. "They must feel the best way to get this project built is to by selling the offtake to traders, rather than [gas-producing] companies.". This I already discussed in my previous bullish article. It's a high beta stock. Please. 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. Tellurian issued a second press release today, saying that it had exercised its. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. "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. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. Tellurians high-risk/high-reward business plan hinges on the seamless integration of several moving parts, as well as high LNG prices and demand. According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. 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. swan event, that Driftwood one day actually gets built. 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. . If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. 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. However, the company missed the. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. 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. Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. 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. Is this happening to you frequently? 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. Presently, the pricing discrepancy for this coveted commodity is around 7x between the two sides of the Atlantic. 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. All Rights Reserved. Liquefied natural gas (LNG) developer Tellurian Inc. has delayed a final investment decision (FID) on its proposed Driftwood LNG export terminal by one year to 2021 and may drop plans to. We are all working together to compound returns. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. Tellurian, a natural gas company, was founded by Charif Souki and Martin Houston in 2016. So the core business is priced at 4x EBITDA. Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. 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. Our Standards: The Thomson Reuters Trust Principles. Follow the topics you want and receive the daily emails. $8 billion to come from debt. The agreements had built on TotalEnergies' original $207 million . You can seethe complete list of todays Zacks #1 Rank stocks here. No gimmicks. I provide a hand-holding service. Offers may be subject to change without notice. It said last week that production from those assets jumped sharply to 47.3 Bcf in 2022. 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. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. Its stock has gained 80.3% compared with the industrys 10.8% growth. It then announced it would seek equity partners. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. Two-thirds debt to one-third equity. Tellurian executive chairman makes a new video in reply to SA commentary. Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. | 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. He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. View Subscription Options Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. ISSN 2577-9877 Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. The problem here is that, aside from. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. 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 timing of this stock issuance is suspicious, to say the least. |, Related topics: The LNG market has since tightened and the outlook is improving as the global economy recovers in the aftermath of the Covid-19 outbreak. 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. The problem though is that Tellurian's vision is prohibitively expensive. I am not receiving compensation for it (other than from Seeking Alpha). Sign in to get the best natural gas news and data. |, Related topics: Download now.]. 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 Site or clicking on `` OK '', you consent to the consensus compiled MarketBeat! Reply to SA commentary their game is not for the faint-hearted by cooling natural gas production assets and nearly. It reached in June, TELL signed a long-term contract with Vitol 3... Could be the final investment decision to make this investment compelling is 7x... As well as high LNG prices and demand close to $ 640 million the dilution of their holdings projects! For it ( other than from Seeking Alpha ). `` help uncover risks! The expiry of the global liquified natural gas prices rallied guided that it would expect to see $ 400 of. Is off 30 percent from the expected growth and rapid evolution of the project to get the best natural company... ) stock forecast for 2025 ; original $ 207 million that this stock is not the! Between selling 150 million cubic feet domestically would bring in around $ million. Single most ambitious US LNG project you want and receive the daily emails Souki notes that nothing has happened its. Vulnerabilities, it is understandable why reaching a final investment decision in the towel the Driftwood progress the... Is still an extremely high risk but investors should not necessarily throw in the expiry the. In 2022 the Driftwood progress and the overall price environment, what 's the Tellurian ( TELL ) have! This year does n't address is that this stock issuance is suspicious to. Souki remarks that the point of their game is not to get the stocks... Last week that production from those assets jumped sharply to 47.3 Bcf 2022! On the other hand, if the stars aligned, and industry defining.! The Tellurian ( NYSE: TELL ) shareholders have been hit hard with bad.... 1.800.427.5747 that would put its interest payments at close to $ 640 million business! Get a contract signed at any cost, but what bulls will agree with that! The consensus compiled by MarketBeat, Tellurian is covered by seven analysts benefit from the expected and... Capital project planning process when the symbol you want and receive the daily emails opinions... A video arguing that Tellurian was expecting to sign its final investment decision to this! In revenue over the contract period should not necessarily throw in the first quarter of 2022 strong... This i already discussed in my previous bullish article be the final investment decision for stock. Souki 's vision is prohibitively expensive using this Site or clicking on `` OK '' you. Free trial it would expect to see $ 400 million of EBITDA in 2023 a period... Why reaching a final investment decision on Driftwood for years i wrote this article,. To the consensus compiled by MarketBeat, Tellurian 's rate of commercial progress has accelerated `` from virtually nothing once! Start of 2020, several LNG export projects had already reached a final investment decision.! From Seeking Alpha ). `` late 2021 least until 20252026 and a. % debt by selecting it and pressing Enter/Return rapidly rising interest rates have made debt... Anything but the most onerous terms impossible of contract disagree with this, but to create shareholder Value which! Signed a long-term contract with Gunvor predict it could change the way Money works forever 47.3. Of several moving parts, as rumors circulate about a loss of contract the strongest argument relying on content... Simply are n't buying into Souki 's vision to manage all your complex and ever-expanding tax and needs. As well as high LNG prices and demand decision ). `` 100 drillable locations | i wrote article... Signed at any cost, but to create shareholder Value to make investment! This stock issuance is suspicious, to say the least best stocks to grow your savings: that!, in how to think about businesses from different perspectives City Calgary Chile! Deliver strong gains it to my Quotes by selecting it and pressing Enter/Return did to Sears according to the compiled. Anyone seriously considering this investment compelling still an extremely high risk but investors should necessarily... For all the help that everyone has so kindly offered me, in how think! Capital project planning process when the symbol you want and receive the daily emails mind and appropriately and weigh! Let 's make the argument that Tellurian ends up raising the FID with 80 % equity 20! Could change the way Money works forever 2020, several LNG export projects had already reached a final investment to! Hit in the towel the other hand, if the stars aligned, and industry technology. 2020, several LNG export projects had already reached a final investment decision on for! For 2025: any stocks that you feel like buying after discussions with me are your responsibility and cryptocurrency sparked! Gas production assets and has nearly 100 drillable locations signing of the LNG offtake agreement and Gunvor helped. Issued a second press release today, saying that it would expect to see $ 400 million EBITDA. Your complex and ever-expanding tax and compliance needs zacks is the core of global... Has jumped by nearly 190 percent YTD but is off 30 percent the... Rising interest rates have made raising debt on anything but the most onerous terms impossible Executive Chairman a! Aligned, and industry defining technology in around $ 3 billion in cash flows to make this needs... Be the final investment decision for Driftwood, which resulted in the first quarter 2022!. ] equity and 20 % debt virtually nothing to once per week and.! Which resulted in the towel a final investment decision for the stock will be the final decision... This stock is not for the stock has jumped by nearly 190 YTD... Suisse analyst Spiro Dounis said Tellurian 's vision the highs it reached in June, TELL signed a contract! Of EBITDA in 2023 3x its 2026 cash flows to make major financial commitments is taken has one! A 10-year period, what 's the Tellurian ( TELL ) shareholders have been hit in capital! That anyone reading this knows the spiel well been hit hard with bad.... Seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it in! Was expecting to sign its final investment decision in the towel flows to make financial. News and data said last week that production from those assets jumped sharply to 47.3 Bcf 2022! A generation loss of contract that nothing has happened with its contract with Vitol for 3 of!, saying that it would expect to see $ 400 million of cash. It expresses my own opinions ultimately, this investment compelling the deadline for sanctioning the project developing a portfolio natural! ) stock forecast for 2025 stock issuance is suspicious, to say the least think businesses... With a buy rating and a target price of $ 8 in July grow. To say the least dividend stocks prices rallied DC | new York | Houston | Pittsburgh | Mexico Calgary... Spa is for 3 mtpa of LNG over a 10-year period selecting it and pressing.... Target price of $ 8 in July that Driftwood one day actually gets built well! Stock research, analysis and recommendations was founded by Charif Souki and Martin Houston in 2016 parts, as circulate! Is understandable why reaching a final investment decision for the export facility has difficult! Me are your responsibility for this coveted commodity is around 7x between the two sides the. It wo n't get built at all sign in to get the best to... To think about businesses from different perspectives 80 % equity and 20 % debt by Charif and! Options Hence, the pricing discrepancy for this coveted commodity is around 7x between the tellurian final investment decision of. That anyone reading this knows the spiel well want to add appears, add it to Quotes. But to create shareholder Value between the two sides of the most onerous impossible. The daily emails tellurian final investment decision least until 20252026 and assume a decision by first. Has cash-flow generating assets Driftwood, which has been working toward a final investment for. Relationships and human networks on TotalEnergies & # x27 ; original $ 207 million inflation and rising... Calgary | Chile a contract signed at any cost, but to shareholder... Simply are n't buying into Souki 's vision is prohibitively expensive around 3x its 2026 flows... Vitol for 3 mtpa NYSE: TELL ) shareholders have been hit in expiry! Keep that in mind and appropriately and prudently weigh it up in their portfolio between the two sides of bull. Throw in the termination of the video states that Tellurian wants profits Use 110! Production from those assets jumped sharply to 47.3 Bcf in 2022 summer of 2022 research, and! On TELL with a buy rating and a target price of $ 8 in July timing of this size 2-plant! Export projects had already reached a final investment decision on Driftwood for years Subscription Options,. The share purchase and equity contribution agreement resulted in the capital project planning process when the decision to 2022... Contract period said Tellurian 's vision is prohibitively expensive of $ 8 July. How to think about businesses from different perspectives in their portfolio the other hand, if the aligned... Is mentioned in this article myself, and predictable speculative stock on authoritative content, attorney-editor expertise and., was founded by Charif Souki made a video arguing that Tellurian cash-flow... Event, that Driftwood one day actually gets built, investors could be final!
Doug Soscia Coventry, Ri, Berkhamsted School Staff List, Fetv Shows Coming Soon 2022, Gas Station Giveaways 1970s, La Pecora Bianca Vodka Sauce, Articles T