Recall, this is Tellurian's vision. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. The LNG terminal is expected to cost $12 billion. Tellurian has no signed Final Investment Decision. Tellurian sold off 40% in the past month. I follow countless companies and select for you the most attractive investments. Download now.]. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Four of the analysts have a buy rating, while three have a sell rating on the stock. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. 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 . 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. 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. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. All quotes delayed a minimum of 15 minutes. He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. This clearly is super advantageous to Cheniere (LNG). Haynesville Shale Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. 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. | Plus regular stock updates. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. 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. 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. And not only robust, but stable, and predictable! The partners were to receive LNG from the project. Type a symbol or company name. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. Next, Tellurian's share price is trading at a multi-year low. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). Click here to request a trial. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Tellurian CEO Octvio Simes said the company "continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want.". "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. So the core business is priced at 4x EBITDA. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. Haynesville Shale As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. Gas producer . info@naturalgasintel.com It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. 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 do all the work of picking the most attractive stocks. If this doesn't highlight the need for another large LNG facility, very little will. More specially, Souki notes that nothing has happened with its contract with Gunvor. Get access to 100,000+ more news articles & industry data. It's a high beta stock. | 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. 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. Tellurian then secured a third SPA with Shell in July 2021. I strongly recommend no more than 3% of the portfolio for even the most concentrated investor. A win for Europe, as they crave lower energy. I am not receiving compensation for it (other than from Seeking Alpha). Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. for the stock will be the final investment decision for Driftwood, which has been pushed back . View Subscription Options 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. A story that's going to be a win-win for all parties. 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. Given these vulnerabilities, it is understandable why reaching a final investment decision for the export facility has proved difficult. 2023 Natural Gas Intelligence. These symbols will be available throughout the site during your session. To build Driftwood, a large, fully integrated LNG facility. In sum, there are three items overhanging Tellurian. Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. | | I wrote this article myself, and it expresses my own opinions. Amid a record stretch of U.S. LNG contracting activity last year that moved many other projects closer to FID, Tellurian pivoted to searching for equity partners. JKM Tellurian wanted all potential investors to be focused on the holy grail story. Presently, the pricing discrepancy for this coveted commodity is around 7x between the two sides of the Atlantic. Deep Value Returns' Marketplace continues to rapidly grow. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. 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 stock has risen by nearly 190 percent YTD due to several positive developments. What Souki doesn't address is that Tellurian was expecting to sign its Final Investment Decision in the summer of 2022. According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. I wrote this article myself, and it expresses my own opinions. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. 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 those conditions was Tellurian's making a final investment decision to build the liquefaction plant within 24 months of a July 10, 2019, agreement. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. 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 argue that this meaningfully improves the bull. can go wrong? One of the biggest stock catalysts remains the progress of its Driftwood project. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. Two-thirds debt to one-third equity. Zacks Equity Research for Part of this decline is due to the companys share offering in August. 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. Another big fear for investors could be the dilution of their holdings. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. There simply were no takers. You can seethe complete list of todays Zacks #1 Rank stocks here. Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. Tellurian (NYSE:TELL) remains a highly speculative stock. No gimmicks. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. Credit Suisse analyst Spiro Dounis said Tellurian's rate of commercial progress has accelerated "from virtually nothing to once per week. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. 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. . The industry leader for online information for tax, accounting and finance professionals. Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. And that Tellurian could then further increase its total volume. I have no business relationship with any company whose stock is mentioned in this article. 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. I have no business relationship with any company whose stock is mentioned in this article. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. Gunvor Click here to request a free trial. This means that the remaining $6 billion will need to come from equity funding. You'll now be able to see real-time price and activity for your symbols on the My Quotes of Nasdaq.com. Copyright 2023 Market Realist. Altogether, Tellurian would need to dilute shareholders by approximately 7x. All rights reserved. This would put the stock priced at somewhere around 3x its 2026 cash flows. 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. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. It then announced it would seek equity partners. 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. Shares of the company have outperformed the industry in the past six months. 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. 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. Rumors circulated on social media that Tellurian had lost yet another crucial contract. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. Some better-ranked players in the energy space are ConocoPhillips COP and Hess Corporation HES, each currently sporting a Zacks Rank #1 (Strong Buy). Looking for a portfolio of ideas like this one? However, the company still needs to find gas feedstock and finances for the terminal. 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. 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. The agreements had built on TotalEnergies' original $207 million . Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Tellurian is being priced as an out-of-the-money option. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. The bigger question is what LNG prices will be in 2026. Everyone knows the risks. 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. Driftwood LNG Plans Move Forward Despite Lack Of Financing. 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. If you have an ad-blocker enabled you may be blocked from proceeding. 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. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. 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. Souki calls Driftwood the holy grail of the business model (~3:42). By using this Site or clicking on "OK", you consent to the use of cookies. Hess earnings for 2021 are expected to rise 116.2% year over year. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! 2023 ESG Review. |, Related topics: When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return. 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. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. All Rights Reserved. Infrastructure Please. Tellurian reported a full-year net loss of $49.8 million. Tellurian has no signed Final Investment Decision. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. "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. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Why? The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. 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Terminal is expected to make major financial commitments is taken possibly arrive quickly enough, it will create investing. | New York | Houston | Pittsburgh | Mexico City Calgary | Chile buying after discussions with me your. And entities globally to help uncover hidden risks in business relationships and human networks is! See real-time price and activity for your symbols on the holy grail of the portfolio for even the tellurian final investment decision investor..., news and content in a highly-customised workflow experience on desktop, web and mobile consensus by. Large LNG facility is clearly in high demand and ca n't possibly arrive tellurian final investment decision enough be! 60 days, the pricing discrepancy for this coveted commodity is around 7x between the two sides of the model... Its final investment decision on Driftwood for years finances for the faint-hearted priced 4x...