Basically, Tellurian is now little more than a story stock without a meaningful contract and without its Final Investment Decision (''FID'') in place. 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. The essence of the video states that Tellurian wants profits. Another big fear for investors could be the dilution of their holdings. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. All quotes delayed a minimum of 15 minutes. Tellurian, however, has not yet made that decision, making Driftwood one of more than a dozen North American LNG projects that have repeatedly pushed back decisions to start construction due primarily to an insufficient number of customers signing the long-term deals needed to finance the multi-billion-dollar facilities. This means that Cheniere will be able to get its Corpus Christi (''CC'') up and running at least 9 months before Driftwood. Why? 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. | Diluting shareholders when the stock is at a 6-month low is simply poor practice. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. | The partners were to receive LNG from the project. 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. See here for a complete list of exchanges and delays. 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. 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 LNG would come from Tellurian's proposed 27.6-MTPA Driftwood export project in Louisiana. Even if there's undoubtedly a lot of appetite to service the LNG market in Europe and Asia, translating this appetite into funding for. Days before the Shell and Vitol deals were canceled, Tellurian announced that it had withdrawn a high-yield bond sale, citing the impacts of inflation and uncertainty in the debt market. ISSN 1532-1231 1.800.427.5747 From the start, Tellurian has been a story stock. However, TotalEnergies had the right to terminate if Tellurian did not reach a final investment decision by Saturday (July 10). The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. To get to Final Investment Decision, Tellurian needs to secure additional natural gas assets in the Haynesville shale. And yet, we are now in 2023, and this crucial milestone isn't even discussed. Currently the company is on pace to produce 90mmBtu of natural gas up. When the symbol you want to add appears, add it to My Quotes by selecting it and pressing Enter/Return. 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. Is this happening to you frequently? He thinks that the company should benefit from the expected growth and rapid evolution of the global liquified natural gas market. The company ended 2020 with $78.3 million of cash and cash equivalents and $72.8 million in short-term borrowings. 1.800.427.5747 Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. 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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 needs to raise $12 billion. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. 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. Copyright 2023 Market Realist. It also cut jobs, corporate spending and expenses related to the first phase of the project. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. 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: To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. 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. At the FID point, major equipment orders are placed, and contracts are signed for EPC. I am not receiving compensation for it (other than from Seeking Alpha). Thats an increase from 14.3 Bcf in 2021 when the company held 11,060 net acres. Yesterday, Tellurian Executive Chairman Charif Souki made a video arguing that Tellurian doesn't want signings with Chevron (CVX). 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. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. 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. While selling this same volume in Europe would bring around $150 million per month. 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. To read this article on Zacks.com click here. 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 . 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. And that Tellurian could then further increase its total volume. See here for a complete list of exchanges and delays. I have no business relationship with any company whose stock is mentioned in this article. 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. Tellurian generated $30.4 million in revenues from natural gas sales, up from $28.8 million in 2019. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. Tellurian CEO Octvio Simes said the company "continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want.". Presently, the pricing discrepancy for this coveted commodity is around 7x between the two sides of the Atlantic. This I already discussed in my previous bullish article. Tellurian has a contract with Bechtel to build the liquefaction plant. Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. Since then, natural gas prices have been on a wild ride. Looking for a portfolio of ideas like this one? Tellurian said in 2021 after it signed all three deals that the projects first phase had been commercialized and a final investment decision (FID) was expected in 1Q2022. It is the second 10-year, 3-MTPA agreement Tellurian has announced in a week, following a deal with commodity trader Gunvor Group. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. 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,. Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. 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. 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. 2023 Natural Gas Intelligence. 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. 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. Altogether, Tellurian would need to dilute shareholders by approximately 7x. 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. View Subscription Options Driftwood isn't expected to produce its first feed gas at least until 20252026 and assume a decision by the first quarter of 2022. You'll now be able to see real-time price and activity for your symbols on the My Quotes of Nasdaq.com. Gunvor | It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. [email protected] Per the now-terminated agreements, the company agreed to divest about 20 million shares of its common stock to TotalEnergies for around $200 million. Tellurian is actively pursuing additional upstream acreage. Bitcoin, Like the Internet Itself, Could Change Everything. 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. Over the past decade, it has made growing its natural gas trading, production, and supply business a key priority. Tellurian has no signed Final Investment Decision. 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. I wrote this article myself, and it expresses my own opinions. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. I am not receiving compensation for it (other than from Seeking Alpha). See here for a complete list of exchanges and delays. 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. For now, the company is primarily a natural gas producer with nearly 28,000 net acres in the Haynesville Shale of North Louisiana. It has $474.2 million in cash and cash equivalents on hand. This means that investors simply aren't buying into Souki's vision. Tellurian then secured a third SPA with Shell in July 2021. Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. | You have 3 free articles remaining. All quotes delayed a minimum of 15 minutes. 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. "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. Gas producer . The LNG terminal is expected to cost $12 billion. Infrastructure Tellurian's LNG facility is clearly in high demand and can't possibly arrive quickly enough. 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. This is not a hindsight remark. 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. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. Consequently, investors that are bullish on the name should appropriately position-size their holding here. The definitive agreements are consistent with the terms contemplated by the Heads of Agreement announced on April 3, 2019, and are subject to certain closing conditions, including the final investment decision (FID) to construct Driftwood. Driftwood is categorically not getting built by 2026. At the FID point, major equipment orders are placed, and contracts are signed for EPC. This is a simple case of arbitrage. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. One more deal of this size supports 2-plant FID (final investment decision)." 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