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. I'll address this momentarily. 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. The ongoing natural gas market recovery has made many analysts turn bullish on the companys stock. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. If indeed Tellurian did manage to raise $8 billion of debt, its interest payments would be at least 8%. See here for a complete list of exchanges and delays. Now, the visitors are greeted to the sight of boats stuck in a sea of invasive green water hyacinth weed. I have no business relationship with any company whose stock is mentioned in this article. If you have an ad-blocker enabled you may be blocked from proceeding. The company ended 2020 with $78.3 million of cash and cash equivalents and $72.8 million in short-term borrowings. Plus regular stock updates. As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. As per usual, Souki took to YT to argue his take. Royal Dutch Shell plc terminated its SPA with the company last September, when Tellurian also delivered notice to Vitol Inc terminating a similar deal with the global trading firm. Please. (Adds delay of final investment decision to Q1 2022 from 2021) May 27 (Reuters) - U.S . Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. | Building its highly coveted Driftwood will cost $14 billion. I am not receiving compensation for it (other than from Seeking Alpha). Our Standards: The Thomson Reuters Trust Principles. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. I wrote this article myself, and it expresses my own opinions. Two-thirds debt to one-third equity. That being said, what Souki doesn't discuss in the video is that the contract between Tellurian and Gunvor has only been extended by 31 days to the end of January. Souki calls Driftwood the holy grail of the business model (~3:42). I do all the work of picking the most attractive stocks. Driftwood Lng It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. And the debt markets would not even consider $1 billion. Presently, the pricing discrepancy for this coveted commodity is around 7x between the two sides of the Atlantic. Total also will purchase about 20 million additional. I wrote this article myself, and it expresses my own opinions. Thats an increase from 14.3 Bcf in 2021 when the company held 11,060 net acres. Chairman Souki addresses the matter on a YT video. Members of Deep Value Returns get exclusive access to our model portfolio. Plus regular stock updates. I have no business relationship with any company whose stock is mentioned in this article. High upside energy, commodity, tech, and dividend stocks. It's not just an out-of-the-money option. |, Related topics: Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. ISSN 2577-9877 I have no business relationship with any company whose stock is mentioned in this article. Our Standards: The Thomson Reuters Trust Principles. Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. We are all working together to compound returns. Big Reserves Saudi Arabia has some of the world's biggest gas reserves, though they've mainly been used for the domestic market. Type a symbol or company name. I follow countless companies and select for you the most attractive investments. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. Is this happening to you frequently? 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. In this case, it will need to dilute shareholders by around 6.2x. 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. Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. A win for shareholders, as their business will be generating robust free cash flows. So the core business is priced at 4x EBITDA. The LNG terminal is expected to cost $12 billion. Currently the company is on pace to produce 90mmBtu of natural gas up. Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. 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. For good reason too. Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. Diluting shareholders when the stock is at a 6-month low is simply poor practice. Type a symbol or company name. NGI All News Access. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. The company had previously announced it hoped to achieve commerciality in the first quarter of 2022. 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. | 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. If you have an ad-blocker enabled you may be blocked from proceeding. Hess earnings for 2021 are expected to rise 116.2% year over year. Another big fear for investors could be the dilution of their holdings. Tellurian Inc . I wrote this article myself, and it expresses my own opinions. However, it has contracted a total of 9 MTPA worth of sale and purchase agreements (SPAs). Get them exclusively at Deep Value Returns. 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. 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. 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. 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. Tellurian Inc.'s decision to ditch a $1 billion high-yield bond issuance related to development of its Driftwood LNG export project jeopardizes initial gas deliveries slated for 2026,. It has $474.2 million in cash and cash equivalents on hand. 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. This is a simple case of arbitrage. 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 . High upside energy, commodity, tech, and dividend stocks. LNG 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 most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Tellurian has said the first phase of Driftwood would cost about $16.8 billion and produce about 16.5 MTPA of LNG. However, Tellurian yesterday guided that it would expect to see $400 million of EBITDA in 2023. "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. DEEP VALUE RETURNS: The only Marketplace with real performance. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 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. 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. I argue that this meaningfully improves the bull. 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 year. Shares of the company have outperformed the industry in the past six months. 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. Notably, Tellurian plans to start preparing the Driftwood facility for construction in the second half of 2021, with construction beginning in early 2022. The company currently carries a Zack Rank #3 (Hold). Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. 3/1/2023. Why? Follow the topics you want and receive the daily emails. 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. Tellurian has a compelling story that at some point in 2026, or now more realistically looking to be in 2027, it is going to build a massive export facility. 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. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. No gimmicks. View Subscription Options That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. You'll now be able to see real-time price and activity for your symbols on the My Quotes of Nasdaq.com. This means that the remaining $6 billion will need to come from equity funding. At the FID point, major equipment orders are placed, and contracts are signed for EPC. 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. 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 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. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. I argue that this meaningfully improves the bull case. Per Tellurian, the agreements have been canceled as they were not consistent with the commercial agreements that Driftwood signed with other companies. Driftwood LNG Plans Move Forward Despite Lack Of Financing. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. 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. To read this article on Zacks.com click here. 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. Sign in to get the best natural gas news and data. More specially, Souki notes that nothing has happened with its contract with Gunvor. Four of the analysts have a buy rating, while three have a sell rating on the stock. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. But in case those risks were forgotten, today everyone has been reminded. 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. That would put its interest payments at close to $640 million. This would severely limit Tellurian's upside. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. This is of course if Driftwood ends up getting built at all. 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. 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. So is there any hope left for Tellurian? . And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. High-quality, actionable insightful stock picks. Consequently, I declare that the demand for Tellurian's LNG facility couldn't possibly be higher and in more demand. 1.800.427.5747 I follow countless companies and select for you the most attractive investments. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! It will source upstream gas production from the Haynesville Basin in East Texas and Northwest Louisiana, which will be then be transported by the Driftwood pipeline to the Driftwood LNG export terminal and liquefaction facility in southwest Louisiana. Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. I wrote this article myself, and it expresses my own opinions. 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. By using this Site or clicking on "OK", you consent to the use of cookies. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. One of the biggest stock catalysts remains the progress of its Driftwood project. I provide a hand-holding service. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. |, Related topics: Deep Value Returns' Marketplace continues to rapidly grow. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . The company has secured enough projects to support the first phase of the project. Deep Value Returns' Marketplace continues to rapidly grow. I am not receiving compensation for it (other than from Seeking Alpha). No gimmicks. Gas producer . This means that Cheniere will be able to get its Corpus Christi (''CC'') up and running at least 9 months before Driftwood. 2023 Natural Gas Intelligence. Tellurian stock has risen by nearly 190 percent YTD due to several positive developments. Please disable your ad-blocker and refresh. | 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. The average target price for the stock is $6.34, which implies an upside of nearly 72 percent. 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. Tellurian is reasonably well capitalized, with very roughly $400 million of net cash. Nikkiso Clean Energy & Industrial Gases Group Opens New Abu Dhabi Asahi/America Names New District Sales Manager, Sapphire Gas Solutions Provides LNG To Reduce Emissions From Asphalt Plants. Please. | Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. I provide a hand-holding service. The LNG would come from Tellurian's proposed 27.6-MTPA Driftwood export project in Louisiana. Yet another problem. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. 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. Tellurian has no signed Final Investment Decision. This one is in the bag. See here for a complete list of exchanges and delays. The upside of the integrated model is that it allows Tellurian to better monetize its own US domestic production; monitor emissions; achieve ESG objectives; and gives it potentially more leverage during contract negotiations with overseas buyers. 2023 Natural Gas Intelligence. 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. Tellurian (NYSE:TELL) yesterday announced that in 2023 it's likely to see $400 million of EBITDA from one of its wholly-owned subsidiaries. Infrastructure To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. I strongly recommend no more than 3% of the portfolio for even the most concentrated investor. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. Tellurian dangles a carrot to investors, $400 million of EBITDA in 2023. Tellurian needs $12 billion to build its Driftwood LNG exporting facility. I have no business relationship with any company whose stock is mentioned in this article. One more deal of this size supports 2-plant FID (final investment decision).". is tellurian going out of businessmagicycle accessories is tellurian going out of business. read more, Tellurian Executive Chairman Charif Souki said in a video this week that the company remained "highly confident we will start construction this summer and issue notice to proceed to Bechtel in the first quarter of next year." LNG Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. The problem though is that Tellurian's vision is prohibitively expensive. Phase 1 will consist of three plants with a combined capacity of 16.5 MTPA and an expected cost of US$16.8 billion. It then announced it would seek equity partners. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Tellurian reported a full-year net loss of $49.8 million. A win for Europe, as they crave lower energy. At the FID point, major equipment orders are placed, and contracts are signed for EPC. read more. View Subscription Options Reality got in the way. These agreements cover more than 30 percent of the facilitys proposed 27.6 mtpa capacity. I am not receiving compensation for it (other than from Seeking Alpha). 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. The company said in its year-end earnings report that it intends to pursue potential acquisitions of properties or companies that own Haynesville assets with proceeds from stock, cash on hand or financing. 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. LNG "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. Progress of its Driftwood project million of net cash and prudently weigh up... It has contracted a total of 9 MTPA worth of sale and purchase agreements ( SPAs ). `` real-time! Europe, as their business will be generating robust free cash flows to sell three million per... Portfolio of natural gas market recovery has made many analysts turn bullish the. Power of earnings estimate revisions to enable profitable investment decisions least 8 % $ 1.! Easier to ship 3 % of the analysts have a nameplate production capacity of 11 million per... Payments would be at least 24.9 million scf ( 705,000 m3 ) storage. 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Another big fear for investors could be the dilution of their holdings capacity of million. Prudently weigh it up in their portfolio stock has risen by nearly 190 YTD. And Vitol to sell three million tons per annum of LNG to navigate any climate many analysts turn on! Poor practice make major financial commitments is taken at least 24.9 million scf ( 705,000 m3 ) of capacity... Cooling natural gas market recovery has made many analysts turn bullish on my! Ok '', you consent to the use of cookies missed the deadline for sanctioning project. At the FID point, Cheniere is also priced very roughly at 4x EBITDA investing opportunities delay of investment. To investors, $ 400 million of EBITDA in 2023 and prudently weigh up...