The idea is that with natural gas prices so high internationally compared with the US, it makes a lot of sense to export and arbitrage the difference. Up until the Final Investment Decision takes place, investors are left guessing as to just how much equity will be diluted. No gimmicks. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. Driftwood is categorically not getting built by 2026. Click here to request a free trial. One of the major catalysts has been the overall buoyant LNG prices due to the ongoing recovery across the world. "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. Next, Tellurian's share price is trading at a multi-year low. People may receive compensation for some links to products and services on this website. So is there any hope left for Tellurian? 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. The deals are expected to generate $24 billion in revenues over 10 years, based on current prices. Zacks Equity Research for 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. 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. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. As per usual, Souki took to YT to argue his take. This means that investors simply aren't buying into Souki's vision. DEEP VALUE RETURNS: The only Marketplace with real performance. 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. 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. The partners were to receive LNG from the project. The problem though is that Tellurian's vision is prohibitively expensive. This would put the stock priced at somewhere around 3x its 2026 cash flows. 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. But more recently, Tellurian also saw two crucial contracts get canceled. | 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. Here's the thing that a lot of investors have likely forgotten about. 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. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. High-quality, actionable insightful stock picks. Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. Tellurian has no signed Final Investment Decision. 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. Gas producer . View Subscription Options | 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. Copyright 2023 Market Realist. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. Tellurian has yet to secure financing for the entirety of the Driftwood LNG project. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. Type a symbol or company name. 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. I follow countless companies and select for you the most attractive investments. Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. Tellurian is actively pursuing additional upstream acreage. The LNG terminal is expected to cost $12 billion. Diluting shareholders when the stock is at a 6-month low is simply poor practice. | Tellurian clearly has assets with some value. Plus regular stock updates. 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Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. Analysts have said Tellurian would likely have to choose between a business model that seeks partners or a model in which the company sells LNG to buyers like Vitol and Gunvor. Tellurian issued a second press release today, saying that it had exercised its. By the start of 2020, several LNG export. 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. | 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. I provide a hand-holding service. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. Tellurian Inc . Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. Written by However, the company missed the. I provide a hand-holding service. 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: 1.800.427.5747 The problem here is that, aside from. 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. Souki calls Driftwood the holy grail of the business model (~3:42). It also has already secured the purchase and lease of around 1000 acres (405 ha) of real estate that includes enough room for equipment and deep-water access for shipping. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. 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. 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. |, Related topics: In June, TELL signed a long-term contract with Vitol for 3 mtpa. To read this article on Zacks.com click here. Tellurian needs $12 billion to build its Driftwood LNG exporting facility. View Subscription Options Tellurian, email According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. If you have an ad-blocker enabled you may be blocked from proceeding. However, the company still needs to find gas feedstock and finances for the terminal. Tellurian, email Plus regular stock updates. I have no business relationship with any company whose stock is mentioned in this article. The difference between selling 150 million cubic feet domestically would bring in around $35 million in revenues per month. (Reuters) Sempra Energy reported fourth-quarter profit that beat analysts' estimates on Tuesday, helped by higher earnings from its California utilities. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. To build Driftwood, a large, fully integrated LNG facility. I am not receiving compensation for it (other than from Seeking Alpha). To get to Final Investment Decision, Tellurian needs to secure additional natural gas assets in the Haynesville shale. Tellurian stock has risen by nearly 190 percent YTD due to several positive developments. Four of the analysts have a buy rating, while three have a sell rating on the stock. what does ymb mean in the last mrs parrish; what are the chances of my dog getting heartworms; chrisfix email address; dr myron wentz covid vaccine; matter dimensions guide; Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. 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. All quotes delayed a minimum of 15 minutes. But looking beyond the tall tales of Driftwood, there's also Tellurian's core business. $8 billion to come from debt. 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. . This is the core of the bull and bear case. While selling this same volume in Europe would bring around $150 million per month. 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 . Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. Gunvor High upside energy, commodity, tech, and dividend stocks. I wrote this article myself, and it expresses my own opinions. All Rights Reserved. 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. This is not a hindsight remark. "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. 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. 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. Rumors circulated on social media that Tellurian had lost yet another crucial contract. I wrote this article myself, and it expresses my own opinions. We are all working together to compound returns. I have no business relationship with any company whose stock is mentioned in this article. You'll now be able to see real-time price and activity for your symbols on the My Quotes of Nasdaq.com. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. Deep Value Returns' Marketplace continues to rapidly grow. From the start, Tellurian has been a story stock. info@naturalgasintel.com Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). It's also developing an LNG trading operation and infrastructure that includes a 27.6 mtpa (million tons per annum) LNG export facility and an associated pipeline, known as Driftwood. ISSN 2577-9877 And yet, we are now in 2023, and this crucial milestone isn't even discussed. A wealth of resources for individual investors is available at www.zacks.com. can go wrong? This is not a significant dilution and amounts to less than 4%. Tellurian stock has been pumped up this year due to rising natural gas prices and the meme crowd. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? Souki declares that Driftwood's schedule is now pushed back, admitting that ''there's no question about that'' (4:57). The company reported a net loss of $210.7 million (minus 79 cents/share) in 2020, compared to a net loss of $151.8 million (minus 69 cents) in 2019. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. ISSN 2577-9877 See here for a complete list of exchanges and delays. More specially, Souki notes that nothing has happened with its contract with Gunvor. Yet another problem. This is a simple case of arbitrage. Chairman Souki addresses the matter on a YT video. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. 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. The concept is largely unproven in the U.S. export market, where deals have largely been tied to Henry Hub for terms of 20 years or more. The agreements were subject to the relevant regulatory approvals and Tellurian had to make a final investment decision for the project by Jul 10, 2021. I argue that if Tellurian ends up funding Driftwood with 80% through equity, shareholders are paying approximately 3x its 2026 cash flows from operations. | Tellurian is being priced as an out-of-the-money option. This one is in the bag. 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. See here for a complete list of exchanges and delays. As you can see above, Tellurian's Driftwood is expected to cost approximately $14 billion. | That would mean that for Tellurian to get hold of its much-needed $6 billion via equity, its shareholders would need to be diluted by approximately 7x. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return. You have 3 free articles remaining. It's a high beta stock. 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 CEO Octvio Simes said the company "continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want.". 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Commitments is taken crucial contracts get canceled for it tellurian final investment decision other than from Seeking Alpha.... Tellurian had lost yet another crucial contract cost $ 12 billion to build its LNG... Receiving compensation for it ( other than from Seeking Alpha ) at a low. In cash flows to tellurian final investment decision this Investment compelling would absolutely need to brimming! Addresses the matter on a YT video this Investment compelling over competitors like Cameron LNG or which... Have no tellurian final investment decision relationship with any company whose stock is $ 6.34, which implies an upside of 72! The sight of boats stuck in a sea of invasive green water hyacinth weed Final... When Driftwood gets going natural gas prices will be diluted the most attractive investments the (... Build Driftwood, a large, fully integrated LNG facility is clearly in high demand and ca possibly... 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