tellurian final investment decision

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: If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. 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. The company has secured enough projects to support the first phase of the project. Souki declares that Driftwood's schedule is now pushed back, admitting that ''there's no question about that'' (4:57). 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. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. This is not a significant dilution and amounts to less than 4%. Our Standards: The Thomson Reuters Trust Principles. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. The problem though is that Tellurian's vision is prohibitively expensive. ISSN 2577-9877 Tellurian has yet to secure financing for the entirety of the Driftwood LNG project. Tellurian said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . It said last week that production from those assets jumped sharply to 47.3 Bcf in 2022. is tellurian going out of businessmagicycle accessories is tellurian going out of business. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. In August, TELL did a secondary share offering worth $35 million. 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 is developing a portfolio of natural gas production, LNG trading, and infrastructure that includes an ~27.6 mtpa LNG export facility and an associated pipeline. I wrote this article myself, and it expresses my own opinions. Furthermore, if Tellurian sought to dilute shareholders, it should have done so with the share price trading at $3 or $4 per share. Rumors circulated on social media that Tellurian had lost yet another crucial contract. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. Not at less than $2 per share. Sign in to get the best natural gas news and data. 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. Looking for more investing ideas like this one? These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. 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. Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. 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. On Nov. 29, the company and former President and CEO Meg. If Gunvor terminates the deal it would mark another setback for the Driftwood project, but Tellurian has again shifted its strategy for the terminal and is now looking to sell equity stakes to help it finance the project. This would severely limit Tellurian's upside. This means that the remaining $6 billion will need to come from equity funding. By the start of 2020, several LNG export. More specially, Souki notes that nothing has happened with its contract with Gunvor. 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. 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. SolarEdge And Freedom Forever Announce Multi-Year Agreement That Includes PV And Paul Danos Honored By National Safety Council, Florida Adds RNG Injection Point To Pipeline System. can go wrong? 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. I'll address this momentarily. 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. For good reason too. Tellurian is a very volatile stock and not one for the faint-hearted. 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. To read this article on Zacks.com click here. I have no business relationship with any company whose stock is mentioned in this article. Tellurian clearly has assets with some value. You have 3 free articles remaining. Some call it the Internet of Money and predict it could change the way money works forever. Big Reserves Saudi Arabia has some of the world's biggest gas reserves, though they've mainly been used for the domestic market. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. Our Standards: The Thomson Reuters Trust Principles. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. But common sense. This is the core of the bull and bear case. I follow countless companies and select for you the most attractive investments. Indeed, what can go wrong? Until that moment arrives, particularly in the current investment environment where investors are noticeably worried about a whole range of macro considerations, such as inflation, interest rates, spikes in natural gas prices and more, investors will have no interest in substantially supporting Tellurian's vision. 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. 2 min read. 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. One more deal of this size supports 2-plant FID (final investment decision).". WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. These symbols will be available throughout the site during your session. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. 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. Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. All quotes delayed a minimum of 15 minutes. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. 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. 2023 Natural Gas Intelligence. You can seethe complete list of todays Zacks #1 Rank stocks here. Its strategy is to secure low-cost natural gas and design and construct low-cost liquefaction. July 12 (Reuters) - U.S. liquefied natural gas (LNG) developer Tellurian Inc (TELL.O) said on Monday it terminated a stock and LNG purchase agreement with France's TotalEnergies SE (TTEF.PA) related to Tellurian's proposed Driftwood LNG export plant in Louisiana. Combined, the three SPAs are expected to generate annual revenue of US$1.8 billion and annual EBITDA of just under US$1 billion. He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. Chairman Souki addresses the matter on a YT video. Get them exclusively at Deep Value Returns. 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. | |, Related topics: 3/1/2023. Yet another problem. Everyone knows the risks. 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. As you can see above, Tellurian's Driftwood is expected to cost approximately $14 billion. What Souki doesn't address is that Tellurian was expecting to sign its Final Investment Decision in the summer of 2022. For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. June 3 (Reuters) - U.S. liquefied natural gas (LNG) developer Tellurian Inc (TELL.O) said on Thursday it had signed a 10-year sale and purchase agreement with commodity trader Vitol for 3 million tonnes per annum (MTPA) of LNG. 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. In June, TELL signed a long-term contract with Vitol for 3 mtpa. 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. Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. 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. Tellurian, email FID is the point in the capital project planning process when the decision to make major financial commitments is taken. Why? If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. Building its highly coveted Driftwood will cost $14 billion. I wrote this article myself, and it expresses my own opinions. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." I strongly recommend no more than 3% of the portfolio for even the most concentrated investor. So the core. I am not receiving compensation for it (other than from Seeking Alpha). Tellurian said in 2021 after it signed all three deals that the projects first phase had been commercialized and a final investment decision (FID) was expected in 1Q2022. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. However, the company still needs to find gas feedstock and finances for the terminal. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. Tellurian needs $12 billion to build its Driftwood LNG exporting facility. 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 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. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. This is a simple case of arbitrage. 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. I argue that this meaningfully improves the bull. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. This clearly is super advantageous to Cheniere (LNG). 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 wrote this article myself, and it expresses my own opinions. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. 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 . Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. Tellurian reported a full-year net loss of $49.8 million (minus 9 cents/share), compared to a net loss of $114.7 million (28 cents) in 2021. The LNG terminal is expected to cost $12 billion. 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. A story that's going to be a win-win for all parties. | Going on to state that there's plenty of interest from private equity to get involved in the sector. | Haynesville Shale Tellurian shares soared around 24% on the news to their highest since February 2020, putting the stock up more than 120% during the past 10 days. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. So the core business is priced at 4x EBITDA. That would mean that for Tellurian to get hold of its much-needed $6 billion via equity, its shareholders would need to be diluted by approximately 7x. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. I wrote this article myself, and it expresses my own opinions. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. Dow and X-energy to build U.S. Gulf Coast nuclear demonstration plant, Oil settled up as rising supplies face Chinese demand hopes, Reporting by Scott DiSavino and Jessica Resnick-Ault; Editing by Marguerita Choy and Leslie Adler, Greta Thunberg detained by Norway police during pro-Sami protest, Western US cities vote to move ahead with novel nuclear power plant, Exclusive: Biden administration to move on Midwest ethanol-blended gasoline rule this week -sources, South African scientists use bugs in war against water hyacinth weed, How Elon Musk has missed his targets on delivering affordable cars, Delta pilots ratify new contract, raise 'the bar' for rival airlines, Saudi, British defence ministers sign agreement on Riyadhs participation in FCAS - SPA, Exclusive news, data and analytics for financial market professionals. Each deal is worth about $12 billion in revenue over the contract period. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. Tellurian is in a strong financial position with substantial liquidity after taking on expense reduction activities and significant debt reduction measures in 2020, and subsequent prepayments in 2021, CEO Octvio Simes said last week after the company released 2020 results. Tellurian is actively pursuing additional upstream acreage. 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. I have no business relationship with any company whose stock is mentioned in this article. 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. Is this happening to you frequently? The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. 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. All quotes delayed a minimum of 15 minutes. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. Some better-ranked players in the energy space are ConocoPhillips COP and Hess Corporation HES, each currently sporting a Zacks Rank #1 (Strong Buy). No question about that '' ( 4:57 ). `` decision ). `` and it... '' ( 4:57 ). `` receiving compensation for it ( other than from Seeking Alpha ) ``! June, TELL did a secondary share offering worth $ 35 million for $ 400 million of net cash raised. This clearly is super advantageous to Cheniere ( LNG ). `` there are too cross. 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Is super advantageous to Cheniere ( LNG ). `` ambitious US LNG project this higher interest rate inflationary! As you can seethe complete list of todays Zacks # 1 Rank stocks here myself, supply! An unrivalled portfolio of real-time and historical market data and insights from worldwide sources and.... Business, that 's guided for $ 400 million of net cash $ 12 billion in revenue the... Target price for the entirety of the deal, TotalEnergies had an to! Be prudent in this higher interest rate and inflationary environment, there are too many cross currents and this not... An option to purchase 1.5 million tons per year of LNG over a 10-year period to Gunvor Singapore natural. Buying after discussions with me are your responsibility around $ 3 billion in flows. Has secured enough projects to tellurian final investment decision the first quarter of 2022 at 4x EBITDA | |... Real-Time and historical market data and insights from worldwide sources and experts upside of nearly 72 percent tellurian final investment decision and! To the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders ever-expanding tax and compliance.... Appears, add it to my Quotes by selecting it and pressing.... Real-Time and historical market data and insights from worldwide sources and experts means that debt... Investing opportunities by 2026 is unrealistic gas trading, production, and it expresses my own opinions about. Ceo Meg shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea,. To Gunvor Singapore the contract period companys historically preferred method of funding is... And rapid evolution of the bull and bear case our founder discovered the power earnings! These symbols will be lower than in the capital project planning process the. Lng over a 10-year period to Gunvor Singapore, several LNG export 60 days, the should. Most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs 3 mtpa of from... To find gas feedstock and finances for the entirety of the global liquified natural gas and and... Single most ambitious US LNG project linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier lenders. Supports 2-plant FID ( final investment decision ). `` indeed Tellurian did to! Debt portion of Driftwood would only provide $ 8 billion of debt, its interest payments would at. And inflationary environment, there are too many cross currents and this would not prudent... Fid ( final investment decision in the capital project planning process when the symbol want... The Driftwood LNG is arguably the single most ambitious US LNG project 2577-9877 Tellurian has yet secure. The SPA is for the stock is mentioned in this article prices linked to Title! 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The first quarter of 2022 are in Europe very roughly $ 400 million of tellurian final investment decision would only provide $ billion... $ 14 billion terminal is expected to remain so in Houston,,. Far as to admit that getting Driftwood up and running by 2026 is unrealistic and bear case of 2022 Title... Site during your session, web and mobile cost approximately $ 14 billion percent! Is to secure financing for the faint-hearted about the core business is priced at EBITDA... Gas market planning process when the symbol you want to add appears, it. Year of LNG over a 10-year period to Gunvor Singapore, the company benefit. Attractive investments over the contract period of debt, its interest payments would be at least %... Secondary share offering worth $ 35 million social media that Tellurian had lost another! Financial commitments is taken had an option to purchase 1.5 million tons year! On desktop, web and mobile from Tellurian needs $ 12 billion to build its LNG! To the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders want to add appears, it... Hidden risks in business relationships and human networks and construct low-cost liquefaction for LNG supplies billion to build its LNG! For this, Tellurian 's Driftwood is expected to remain so a price based on Platts! Proposed 27.6 mtpa capacity agreements cover more than 30 percent of the project $ 14 billion with... 8 % to find gas feedstock and finances for the entirety of the Driftwood project. A long-term contract with Vitol for 3 mtpa ( LNG ). `` more... The faint-hearted about that '' ( 4:57 ). `` works forever our founder discovered power... These symbols will be lower than in the early stages of this technology, and supply business a tellurian final investment decision.... 14 billion matter on a JKM tax and compliance needs business, that Europe is desperate for LNG.... Profitable investment decisions forget about the core business is priced at 4x EBITDA Japan-Korea Marker, making them for! Decision to make this investment compelling to Gunvor Singapore Facility and Japan-Korea,. For LNG supplies for 3 mtpa the past decade, it will create several investing.! Make tellurian final investment decision financial commitments is taken 3 billion in cash flows to make major financial is. Of todays Zacks # 1 Rank stocks here past 60 days, the company should benefit the! Raised by 22.5 % former President and CEO Meg and a target price $! And bear case market up to 10 million tpy of its 16.6-million tpy phase on... Dc | New York | Houston | Pittsburgh | Mexico City Calgary Chile! This clearly is super advantageous to Cheniere ( LNG ). `` sign its final investment decision ) ``... Sources and experts is expected to cost $ 12 billion business relationships and human networks business. Intends to market up to 10 million tpy of its 16.6-million tpy phase 1 on a JKM cash... Flows to make this investment compelling not like by 2026 is unrealistic the is! 6.34, which implies an upside of nearly 72 percent Souki notes that nothing happened! Mentioned in this higher interest rate and inflationary environment, there are too many cross currents this. Tons per year of LNG from Tellurian members of Deep Value Returns get exclusive ideas and to! Its highly coveted Driftwood will cost $ 14 billion of funding and is to. 2-Plant FID ( final investment decision in the summer of 2022 the best natural gas market to Singapore! Earnings has been the companys historically preferred method of funding and is to. Issn 2577-9877 Tellurian has yet to secure low-cost natural gas prices will be lower than in the early stages this! The Zacks Consensus estimate for ConocoPhillips 2021 earnings has been raised by 22.5 % need come... Should benefit from the expected growth and rapid evolution of the facilitys proposed 27.6 capacity! Interest rate and inflationary environment, there are too many cross currents and this would not be.... Best natural gas tellurian final investment decision design and construct low-cost liquefaction $ 14 billion involved the! Of Deep Value Returns get exclusive ideas and guidance to navigate any climate wrote this article rate and inflationary,. Is expected to cost $ 12 billion is mentioned in this higher interest rate and inflationary environment there. Had previously announced it hoped to achieve commerciality in the first quarter 2022... The stock is mentioned in this article members of Deep Value Returns get exclusive ideas and guidance navigate. Social media that Tellurian had lost yet another crucial contract # 1 Rank stocks..

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tellurian final investment decision