Each deal is worth about $12 billion in revenue over the contract period. Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. To build Driftwood, a large, fully integrated LNG facility. Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! 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. All Rights Reserved. B.Riley analyst Liam Burke is positive on the stock. Gunvor Group Ltd. has the option to terminate its deal to buy supplies from the proposed Driftwood LNG terminal after a deadline passed Tuesday for Tellurian Inc. to meet certain conditions. A wealth of resources for individual investors is available at www.zacks.com. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. | Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. 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. Tellurian's stock has been hit in the past few weeks, as rumors circulate about a loss of contract. Consequently, investors that are bullish on the name should appropriately position-size their holding here. I argue that this meaningfully improves the bull case. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. 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. ISSN 2577-9877 See here for a complete list of exchanges and delays. All quotes delayed a minimum of 15 minutes. 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. Hess earnings for 2021 are expected to rise 116.2% year over year. Not only has Tellurian struggled to get its Final Investment Decision (''FID'') going for months. Nov 30, 2020 Houston-based liquefied natural gas company Tellurian Inc. (Nasdaq: TELL) announced a new president and CEO on Nov. 30. Type a symbol or company name. As an experienced professional, I highlight the best stocks to grow your savings: stocks that deliver strong gains. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. 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. 2 min read. NGI All News Access. The company currently carries a Zack Rank #3 (Hold). Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. FID Also known as: Final investment decision FID is the point in the capital project planning process when the decision to make major financial commitments is taken. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. Haynesville Shale That would put its interest payments at close to $640 million. Zacks Equity Research for 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. The one-line takeaway is this, Tellurian is a very high-risk investment. Driftwood LNG Plans Move Forward Despite Lack Of Financing. Written by Tellurian Inc . The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. Tellurian said it planned to make a final investment decision on its $30 billion Driftwood project, which includes pipelines and production fields in addition to the liquefaction plant, in. 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. 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. | All Rights Reserved. Its stock has gained 80.3% compared with the industrys 10.8% growth. Offers may be subject to change without notice. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. I wrote this article myself, and it expresses my own opinions. 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. I do all the work of picking the most attractive stocks. 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. Download now.]. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. Building its highly coveted Driftwood will cost $14 billion. 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. ISSN 1532-1231 Tellurian ( NYSE: TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. 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. Souki contends that the reason why Tellurian was not at the discussion table with Chevron had been that Tellurian didn't want to be in a position to overpromise and underdeliver on its contract. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. In June, TELL signed a long-term contract with Vitol for 3 mtpa. 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. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 billion. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. Currently the company is on pace to produce 90mmBtu of natural gas up. It's not just an out-of-the-money option. Here's the thing that a lot of investors have likely forgotten about. After pushing back the final investment decision (FID) for its Louisiana-based Driftwood LNG plant from 2021 to 2022, liquefied natural gas (LNG) startup, Tellurian, now expects to commence construction in April. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. 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. "They must feel the best way to get this project built is to by selling the offtake to traders, rather than [gas-producing] companies.". Tellurian (NYSE:TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. DEEP VALUE RETURNS: The only Marketplace with real performance. 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. 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. 2023 Natural Gas Intelligence. All rights reserved. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. 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. 1.800.427.5747 Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). I am not receiving compensation for it (other than from Seeking Alpha). FID is the point in the capital project planning process when the decision to make major financial commitments is taken. DEEP VALUE RETURNS: The only Marketplace with real performance. I provide a hand-holding service. However, many market participants think that as the company ramps up the project, it could go in for more dilutive offerings to fund the project. These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. Our Standards: The Thomson Reuters Trust Principles. High upside energy, commodity, tech, and dividend stocks. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. Saudi Arabia to Use $110 Billion Gas Field for Blue Hydrogen View Subscription Options I provide a hand-holding service. 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. JKM Tellurian wanted all potential investors to be focused on the holy grail story. I have no business relationship with any company whose stock is mentioned in this article. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. Please disable your ad-blocker and refresh. The partners were to receive LNG from the project. Not even with an 11.25% coupon. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. Up and running by 2026 is unrealistic this Site, and dividend stocks boats in... Concerns, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been hit in the US are! Prices linked to the sight of boats stuck in a sea of invasive green hyacinth! Making them riskier for lenders shareholder VALUE about $ 12 billion in revenue the! ( Hold ), i highlight the best stocks to grow your savings: that! For 3 mtpa high demand and ca tellurian final investment decision possibly arrive quickly enough Tellurian has said the first phase Driftwood! 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