At the FID point, major equipment orders are placed, and contracts are signed for EPC. (Adds delay of final investment decision to Q1 2022 from 2021) May 27 (Reuters) - U.S . Driftwood LNG Plans Move Forward Despite Lack Of Financing. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. To build Driftwood, a large, fully integrated LNG facility. 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. 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. I wrote this article myself, and it expresses my own opinions. The LNG producer also pushed its final investment decision to first-quarter 2022 from late 2021. For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. 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. This one is in the bag. Two-thirds debt to one-third equity. 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. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. Our Standards: The Thomson Reuters Trust Principles. 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. Consequently, Tellurian would absolutely need to be making around $3 billion in cash flows to make this investment compelling. More specially, Souki notes that nothing has happened with its contract with Gunvor. I have no business relationship with any company whose stock is mentioned in this article. 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. Copyright 2023 Market Realist. 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. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. This is not a hindsight remark. Tellurian has made the argument that in the ideal situation, the business would raise the $12 billion to build the LNG facility with $8 billion of debt and $4 billion of equity. Indeed, domestic natural gas prices fell by nearly 20% to $6 MMBtu. See here for a complete list of exchanges and delays. Driftwood Lng All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. Up until the Final Investment Decision takes place, investors are left guessing as to just how much equity will be diluted. One more deal of this size supports 2-plant FID (final investment decision).". All Rights Reserved. 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. 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. |, Related topics: However, Tellurian yesterday guided that it would expect to see $400 million of EBITDA in 2023. 3/1/2023. Souki declares that Driftwood's schedule is now pushed back, admitting that ''there's no question about that'' (4:57). Plus regular stock updates. $6 billion from equity. | Combined, the three SPAs are expected to generate annual revenue of US$1.8 billion and annual EBITDA of just under US$1 billion. It also cut jobs, corporate spending and expenses related to the first phase of the project. 2 min read. 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. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. The one-line takeaway is this, Tellurian is a very high-risk investment. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. I have no business relationship with any company whose stock is mentioned in this article. 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. I'll address this momentarily. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. 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. "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. 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. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). The essence of the video states that Tellurian wants profits. High upside energy, commodity, tech, and dividend stocks. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. A wealth of resources for individual investors is available at www.zacks.com. $8 billion to come from debt. While selling this same volume in Europe would bring around $150 million per month. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. That those contracts are not what the business model is about. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. This is the core of the bull and bear case. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. 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: McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. 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. For good reason too. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. By the start of 2020, several LNG export. 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. Since then, natural gas prices have been on a wild ride. According to the consensus compiled by MarketBeat, Tellurian is covered by seven analysts. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). Looking for a helping hand in the market? Hence, the dismissal of the share purchase and equity contribution agreement resulted in the expiry of the LNG offtake agreement. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Tellurian executive chairman makes a new video in reply to SA commentary. Tellurian also has its core business! 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. One of the biggest stock catalysts remains the progress of its Driftwood project. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. 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. No gimmicks. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." Sign in to get the best natural gas news and data. Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. All Rights Reserved. Tellurian has an amazing story. I am not receiving compensation for it (other than from Seeking Alpha). Members of Deep Value Returns get exclusive access to our model portfolio. High upside energy, commodity, tech, and dividend stocks. Responsive Menu. I am not receiving compensation for it (other than from Seeking Alpha). 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. Please. Its stock has gained 80.3% compared with the industrys 10.8% growth. Outsmart the market with Smart Portfolio analytical tools powered by TipRanks. Well, there's always hope. 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. 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. Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. Bitcoin, Like the Internet Itself, Could Change Everything. The company has secured enough projects to support the first phase of the project. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. Reality got in the way. Tellurian sold off 40% in the past month. Diluting shareholders when the stock is at a 6-month low is simply poor practice. 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. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. Many LNG companies, in the industry's formative years, either sold LNG or equity stakes to partners due to their need for financing in exchange for LNG shipments for a certain number of years. It's not just an out-of-the-money option. Infrastructure 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. 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. On Nov. 29, the company and former President and CEO Meg. 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. 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. So is there any hope left for Tellurian? 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. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. | As per usual, Souki took to YT to argue his take. Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. read more. The LNG terminal is expected to cost $12 billion. Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. Tellurian dangles a carrot to investors, $400 million of EBITDA in 2023. I wrote this article myself, and it expresses my own opinions. FIND OUT MORE Downstream capabilities View our downstream services Insights Is this happening to you frequently? This article provides a discussion of the bull and bear cases facing Tellurian. Here's the thing that a lot of investors have likely forgotten about. Tellurian is a very volatile stock and not one for the faint-hearted. Tellurian issued a second press release today, saying that it had exercised its. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. 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. LNG 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. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million 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. Get them exclusively at Deep Value Returns. Tellurian, email The partners were to receive LNG from the project. 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. Follow the topics you want and receive the daily emails. Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. (Reuters) Sempra Energy reported fourth-quarter profit that beat analysts' estimates on Tuesday, helped by higher earnings from its California utilities. Each deal is worth about $12 billion in revenue over the contract period. 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. 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. It's not just an out-of-the-money option. High-quality, actionable insightful stock picks. 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. Get access to 100,000+ more news articles & industry data. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. 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