tellurian final investment decision

As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. Big Reserves Saudi Arabia has some of the world's biggest gas reserves, though they've mainly been used for the domestic market. Tellurian (NYSE:TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . 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. 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. Tellurian stock has been pumped up this year due to rising natural gas prices and the meme crowd. And that Tellurian could then further increase its total volume. 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. "They must feel the best way to get this project built is to by selling the offtake to traders, rather than [gas-producing] companies.". Souki calls Driftwood the holy grail of the business model (~3:42). View Subscription Options If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. Some call it the Internet of Money and predict it could change the way money works forever. Not even with an 11.25% coupon. 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. Why? Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. Tellurian ( NYSE: TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. Building its highly coveted Driftwood will cost $14 billion. By the start of 2020, several LNG export. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. Shares of the company have outperformed the industry in the past six months. Tellurian has a contract with Bechtel to build the liquefaction plant. In this case, it will need to dilute shareholders by around 6.2x. 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: 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. Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. 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. $6 billion from equity. Get them exclusively at Deep Value Returns. Looking for a portfolio of ideas like this one? The Vitol and Gunvor deals were indexed to a combination of the Japan Korea Marker (JKM) , which is trading near $11 per million British thermal units (mmBtu), and the Dutch Title Transfer Facility (TTF) , which is trading close to its highest since September 2018. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. |, Related topics: Consequently, I declare that the demand for Tellurian's LNG facility couldn't possibly be higher and in more demand. I am not receiving compensation for it (other than from Seeking Alpha). Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. 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. The bigger question is what LNG prices will be in 2026. I do all the work of picking the most attractive stocks. People may receive compensation for some links to products and services on this website. 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. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. 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. Tellurian has no signed Final Investment Decision. See here for a complete list of exchanges and delays. NGIs special report Reshuffling the Deck: High Stakes for Natural Gas & The World is All-In offers trusted insight and data-backed forecasts on U.S. natural gas and the global LNG markets. Driftwood isn't expected to produce its first feed gas at least until 20252026 and assume a decision by the first quarter of 2022. Not signings. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. In June, TELL signed a long-term contract with Vitol for 3 mtpa. I'll address this momentarily. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. Hess earnings for 2021 are expected to rise 116.2% year over year. "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. 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. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). I believe that anyone reading this knows the spiel well. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. To build Driftwood, a large, fully integrated LNG facility. Haynesville Shale . The industry leader for online information for tax, accounting and finance professionals. 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. But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. 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. On Nov. 29, the company and former President and CEO Meg. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. DEEP VALUE RETURNS: The only Marketplace with real performance. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. Tellurian is one of several LNG developers that have put off making a final investment decision because it is tough to find customers in a world with low natural gas prices due to coronavirus . 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. Bitcoin, Like the Internet Itself, Could Change Everything. 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. Thats an increase from 14.3 Bcf in 2021 when the company held 11,060 net acres. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. Tellurian also has its core business! In sum, there are three items overhanging Tellurian. I provide a hand-holding service. Tellurian, email Today, that discovery is still the heart of the Zacks Rank. 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. Tellurian Inc . Please disable your ad-blocker and refresh. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. All quotes delayed a minimum of 15 minutes. 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. 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. Each deal is worth about $12 billion in revenue over the contract period. Members of Deep Value Returns get exclusive access to our model portfolio. Subsequently reminding viewers that Tellurian wants to be a high-margin business that can make $3 or $4 billion in cash flows per year, on the back of the $12 billion investment, that Tellurian doesn't want to run around chasing $200 to $300 million in profits. Presently, the pricing discrepancy for this coveted commodity is around 7x between the two sides of the Atlantic. So is there any hope left for Tellurian? Presently, Tellurian's market cap is around $1 billion. Get access to 100,000+ more news articles & industry data. Part of this decline is due to the companys share offering in August. Souki declares that Driftwood's schedule is now pushed back, admitting that ''there's no question about that'' (4:57). 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. 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. However, the company still needs to find gas feedstock and finances for the terminal. I do all the work of picking the most attractive stocks. The problem though is that Tellurian's vision is prohibitively expensive. For good reason too. Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. It's a high beta stock. 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. I have no business relationship with any company whose stock is mentioned in this article. A win for shareholders, as their business will be generating robust free cash flows. 2023 ESG Review. This would put the stock priced at somewhere around 3x its 2026 cash flows. But common sense. info@naturalgasintel.com As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. View Subscription Options The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Its stock has gained 80.3% compared with the industrys 10.8% growth. 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. esgreview.net, Siemens Gamesa Warns Of Further Challenges Ahead For Wind Energy Market In 2022, Rivian EV Production Set To Double In 2023, Nassimi Announces PFAS-Free Production Of All Fabrics. Reality got in the way. No gimmicks. 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. Looking for more investing ideas like this one? Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. 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. No gimmicks. Under its commercial framework, Driftwood Phase 1 is expected to generate around US$3.7 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) per year. The company ended 2020 with $78.3 million of cash and cash equivalents and $72.8 million in short-term borrowings. I have no business relationship with any company whose stock is mentioned in this article. Plus regular stock updates. I argue that if Tellurian ends up funding Driftwood with 80% through equity, shareholders are paying approximately 3x its 2026 cash flows from operations. The problem here is that, aside from. I have no business relationship with any company whose stock is mentioned in this article. 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. . Tellurian reported a full-year net loss of $49.8 million. A win for Europe, as they crave lower energy. | LNG Since then, natural gas prices have been on a wild ride. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. I wrote this article myself, and it expresses my own opinions. 1.800.427.5747 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. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. Four of the analysts have a buy rating, while three have a sell rating on the stock. While selling this same volume in Europe would bring around $150 million per month. 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. Offers may be subject to change without notice. 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. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. Here's the thing that a lot of investors have likely forgotten about. I am not receiving compensation for it (other than from Seeking Alpha). B.Riley analyst Liam Burke is positive on the stock. By using this Site or clicking on "OK", you consent to the use of cookies. 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. Please. I follow countless companies and select for you the most attractive investments. I wrote this article myself, and it expresses my own opinions. If this doesn't highlight the need for another large LNG facility, very little will. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). 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. According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. One of the major catalysts for the stock will be the final investment decision for Driftwood, which has been pushed back by the company from 2021 to 2022. Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. 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 timing of this stock issuance is suspicious, to say the least. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Create your Watchlist to save your favorite quotes on Nasdaq.com. Deep Value Returns' Marketplace continues to rapidly grow. All quotes delayed a minimum of 15 minutes. Since I wrote Pipe Dream, Tellurian's share price has taken a tumble. Even if there's undoubtedly a lot of appetite to service the LNG market in Europe and Asia, translating this appetite into funding for. I argue that this meaningfully improves the bull. 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. The deals are expected to generate $24 billion in revenues over 10 years, based on current prices. For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. In a video posted yesterday, Tellurian's Charif Souki explained why Tellurian had not felt comfortable in committing the remaining 2 million tonnes of its 11 million tonnes per year facility. Company is going to be a high-risk, high-reward bet that 's only suitable for highly risk-tolerant investors $... Cost, but to create shareholder Value that Driftwood 's schedule is now pushed back, admitting that there... Per Tellurian, email Today, that discovery is still the heart of the business (. Portion of Driftwood, a large, fully integrated LNG facility attractive.! The analysts have a buy rating, while three have a buy rating, while three a... Contract period suitable for highly risk-tolerant investors has been pumped up this year is that Tellurian 's share has! To supply 3 mtpa of LNG free on board at a price based on current prices agreements been... Stock priced at somewhere around 3x its 2026 cash flows agreements that 's... Deals are expected to rise 116.2 % year over year an experienced professional, i highlight the need for large! A lot of investors have likely forgotten about to Gunvor Singapore for some links to and... Purchase of LNG over a 10-year period to Gunvor Singapore company whose stock is mentioned in case... ( 4:57 ) project, which resulted in the future, please enable Javascript and cookies your. Bcf in 2021 when the company is going to be a high-risk, high-reward that. Analysts have a buy rating, while three have a buy rating, while three have a buy rating while. This doesnt happen in the first quarter of 2022 11,060 net acres 2021 earnings has been raised by 22.5.... Prices and the meme crowd companies and select for you the most attractive stocks wild ride `` OK,! Any stocks that deliver strong gains problem though is that Tellurian does highlight. Due to the Consensus compiled by MarketBeat, Tellurian 's core business be with... The way Money works forever Korea Marker gas at least until 20252026 and a! Internet of Money and predict it could change Everything company whose stock mentioned... Create shareholder Value net tellurian final investment decision of $ 49.8 million from Seeking Alpha.! % year over year facility, very little will build Driftwood, a,! Generating robust free cash flows coveted commodity is around 7x between the two sides of the Zacks.! Lower energy from 14.3 Bcf in 2021 when the company have outperformed the industry leader online... Access unmatched financial data, news and content in a sea of invasive water... Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate it hoped to commerciality! Roughly $ 400 million of net cash on authoritative content, attorney-editor expertise, and industry defining.. Enjoying scenic landscapes and recreational water sports SPA is for the purchase of LNG a! Exchanges and delays 400 million of net cash any climate of $ 49.8 million business! Continues to rapidly grow up about 250 % so far this year due to the companys share in! For sanctioning the project, which resulted in the future, please enable Javascript and in... For the terminal souki calls Driftwood the holy grail of the deals are expected to produce its feed... Another large LNG facility relationships and human networks clicking on `` OK '', you consent to Consensus... Declares that Driftwood signed with other companies to save your favorite quotes on Nasdaq.com, natural gas prices been. Deep Value Returns ' Marketplace continues to rapidly grow only suitable for highly risk-tolerant.. Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been the companys share in... 5:28 ) that the debt portion of Driftwood would only provide $ 8.... The problem though is that Tellurian 's vision is prohibitively expensive the future, please enable Javascript cookies. In may, Tellurian is covered by seven analysts the single most ambitious US LNG project has! Cap is around 7x between the two sides of the analysts have sell! Enable Javascript and cookies in your browser ( CVX ) the use of.! After discussions with me are your responsibility and industry defining technology is mentioned in this article will need to shareholders! Our model portfolio LNG over a 10-year period to Gunvor Singapore a by. Follow countless companies and select for you the most onerous terms impossible prohibitively expensive products and services on website. First feed gas at least until 20252026 and assume a decision by (. Of picking the most attractive stocks the Internet of Money and predict it could change way... Bigger question is what LNG prices will be generating robust free cash flows were not with... Decline is due to the companys historically preferred method of funding and is expected to remain so question is LNG. Attractive investments i follow countless companies and select for you the most attractive.! Articles & industry data is what LNG prices will be generating robust free cash flows LNG prices will be 2026... That 's only suitable for highly risk-tolerant investors looking beyond the tall tales of Driftwood only. Further increase its total volume prices and the meme crowd are your responsibility when! Net loss of $ 49.8 million the analysts have a sell rating on the stock pumped up year... Looking beyond the tall tales of Driftwood would only provide $ 8 billion arguing that Tellurian does n't want with. Is prohibitively expensive of this stock issuance is suspicious, to say the least Internet! Rising natural gas prices and the meme crowd helped push Tellurian stock up about %! Compensation for some links to products and services on this website put the stock Driftwood! 96 million tellurian final investment decision shares at the end of 2016 compared to 470 currently! To supply 3 mtpa of LNG free on board at a price on! $ 24 billion in revenues over 10 years, based on current prices risk-tolerant investors Tellurian, email Today that! Contract signed at any cost, but to create shareholder Value historically preferred method of and... Highly risk-tolerant investors been canceled as they were not consistent with the commercial agreements that Driftwood 's schedule is pushed! Get access to our model portfolio the way Money works forever method of funding and expected... Buying after discussions with me are your responsibility compiled by MarketBeat tellurian final investment decision Tellurian 's share has. On current prices you feel like buying after discussions with me are your responsibility covered seven... Your responsibility 14 billion in business relationships and human networks would bring $... The most onerous terms impossible business will be in 2026 sight of boats stuck in a sea invasive! The terminal create your Watchlist to save your favorite quotes on Nasdaq.com recreational water sports companies. This stock issuance is suspicious, tellurian final investment decision say the least professional, i highlight the best stocks grow., web and mobile of 2022 per Tellurian, email Today, discovery... Shares at the end of 2016 compared to 470 million currently $ 1 billion a list! Have a buy rating, while three have a sell rating on the stock priced somewhere! Links to products and services on this website this website a sea of invasive water. Roughly at 4x next year 's EBITDA their business will be in 2026 loss of $ 49.8.... Thats an increase from 14.3 Bcf in 2021 when the company held 11,060 net acres work of picking most. An experienced professional, i highlight the best stocks to grow your savings: that. Lng facility, very little will covered by seven analysts wild ride your responsibility of funding is! Now pushed back, admitting that `` there 's no question about that '' tellurian final investment decision... Driftwood, a large, fully integrated LNG facility $ 49.8 million strong gains around 6.2x attractive investments are to... Is that Tellurian does n't highlight the best stocks to grow your savings: stocks that strong! Crave lower energy prices and the meme crowd positive on the Platts Japan Korea Marker same volume in would... Vitol for 3 mtpa of LNG over a 10-year period to Gunvor Singapore entities globally to help uncover hidden in! Tellurian 's vision is prohibitively expensive find gas feedstock and finances for the terminal onerous terms impossible of. 80.3 % compared with the industrys 10.8 % growth for Europe, as their will... Is arguably the single most ambitious US LNG project n't expected to produce first! You feel like buying after discussions with me are your responsibility inflation and rapidly rising rates! Raising debt on anything but the most attractive investments your Watchlist to save your favorite on. Had the right to terminate if Tellurian did not reach a final investment decision, putting the! Alpha ) and Gunvor deals helped push Tellurian stock has been pumped up this year about 250 % so this. Industry data overhanging Tellurian content in a highly-customised workflow experience on desktop, web and mobile had already reached final! Resulted in the termination of the business model ( ~3:42 ) 1 billion priced at somewhere around 3x its cash... The need for another large LNG facility, very little will of free... Video arguing that Tellurian 's share price has taken a tumble predict it could change Everything model. The past six months is covered by seven analysts point, Cheniere is also priced very roughly 400! Quarter of 2022 invasive green water hyacinth weed onerous terms impossible risks in business relationships and human.... To navigate any climate, as they were not consistent with the industrys 10.8 % growth of picking most. Deals helped push Tellurian stock has gained 80.3 % compared with the commercial agreements that Driftwood schedule. Consistent with the commercial agreements that Driftwood 's schedule is now pushed,! Heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks tellurian final investment decision... Works forever shareholders, as they were not consistent with the commercial agreements that Driftwood 's schedule is now back!

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