A win for Europe, as they crave lower energy. This is not a hindsight remark. 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 problem though is that Tellurian's vision is prohibitively expensive. Here's the thing that a lot of investors have likely forgotten about. Tellurian is being priced as an out-of-the-money option. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. I provide a hand-holding service. swan event, that Driftwood one day actually gets built. 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. Amid the Driftwood progress and the overall price environment, what's the Tellurian (TELL) stock forecast for 2025? Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. ISSN 2577-9877 Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every 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. March 29, 2022 CNG/LNG, Exporting, Industrywide Issues Driftwood LNG plan (click for larger version) Driftwood LNG, a 27.6 million tonnes of LNG per year facility that will cost on the order of $16.8 billion to build, has not made an official final investment decision (FID) to proceed with building the FERC-approved project. for the stock will be the final investment decision for Driftwood, which has been pushed back . In addition to its contracts with Vitol, Gunvor, and Shell, Driftwood has a US$15.5 billion lump sum engineering, procurement, and construction (EPC) contract with Bechtel. 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. 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. 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. All Rights Reserved. There simply were no takers. The industry leader for online information for tax, accounting and finance professionals. 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. Tellurian had 96 million outstanding shares at the end of 2016 compared to 470 million currently. Zacks->. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. NGI All News Access. Type a symbol or company name. I provide a hand-holding service. Tellurian (NYSE:TELL) remains a highly speculative stock. 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. Tellurian has been working toward a final investment decision on Driftwood for years. | Get them exclusively at Deep Value Returns. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. Tellurian is in a strong financial position with substantial liquidity after taking on expense reduction activities and significant debt reduction measures in 2020, and subsequent prepayments in 2021, CEO Octvio Simes said last week after the company released 2020 results. Please disable your ad-blocker and refresh. A wealth of resources for individual investors is available at www.zacks.com. Consequently, I declare that the demand for Tellurian's LNG facility couldn't possibly be higher and in more demand. LNG Indeed, domestic natural gas prices fell by nearly 20% to $6 MMBtu. Looking for a helping hand in the market? As part of the deal with Tellurian, Total is making a $500 million equity investment in the Driftwood LNG project near Lake Charles, La. 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. Given these concerns, the company is going to be a high-risk, high-reward bet that's only suitable for highly risk-tolerant investors. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. On Nov. 29, the company and former President and CEO Meg. | 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. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. 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. I do all the work of picking the most attractive stocks. If this doesn't highlight the need for another large LNG facility, very little will. 2023 ESG Review. By using this Site or clicking on "OK", you consent to the use of cookies. 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. Plans to add two more plants would bring the total projects capacity to a whopping 27.6 MTPA for a total cost of US$30 billion. Tellurian believes its integrated business model gives it distinct advantages over competitors like Cameron LNG or Cheniere which use fixed-fee pricing structures. It's not just an out-of-the-money option. Tellurian is developing a portfolio of natural gas production, LNG trading, and infrastructure that includes an ~27.6 mtpa LNG export facility and an associated pipeline. Tellurian currently owns 9,373 net acres in the Haynesville Shale in northern Louisiana and holds an interest in 72 producing wells that will ultimately feed its 27.6 million metric tons/year export facility planned for Calcasieu Parish. Tellurian said it intends to market up to 10 million tpy of its 16.6-million tpy Phase 1 on a JKM . This is a simple case of arbitrage. However, the company missed the. You have 3 free articles remaining. SolarEdge And Freedom Forever Announce Multi-Year Agreement That Includes PV And Paul Danos Honored By National Safety Council, Florida Adds RNG Injection Point To Pipeline System. Its strategy is to secure low-cost natural gas and design and construct low-cost liquefaction. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. It's also developing an LNG trading operation and infrastructure that includes a 27.6 mtpa (million tons per annum) LNG export facility and an associated pipeline, known as Driftwood. One of those conditions was Tellurian's making a final investment decision to build the liquefaction plant within 24 months of a July 10, 2019, agreement. View Subscription Options Great chart showing how coal prices should increase with LNG prices.$LNG $TELL $TGA $BTU $AR $CRK https://t.co/SazUOygfKk. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. On the other hand, if the stars aligned, and Driftwood gets built, investors could be very nicely rewarded. Presently, Tellurian's market cap is around $1 billion. 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. No gimmicks. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. Our Standards: The Thomson Reuters Trust Principles. We are all working together to compound returns. 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. All quotes delayed a minimum of 15 minutes. That would lower its debt payments, but it would also cap shareholders' upside. Per the terms of the deal, TotalEnergies had an option to purchase 1.5 million tons per year of LNG from Tellurian. Chairman Souki addresses the matter on a YT video. Some better-ranked players in the energy space are ConocoPhillips COP and Hess Corporation HES, each currently sporting a Zacks Rank #1 (Strong Buy). some value. 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. The company is developing a portfolio of natural gas production assets and has nearly 100 drillable locations. By the start of 2020, several LNG export. Plus regular stock updates. Combined, the three SPAs are expected to generate annual revenue of US$1.8 billion and annual EBITDA of just under US$1 billion. 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. And not only robust, but stable, and predictable! The company estimates that the 27.6 mmty facility would cost $25 billion to build. To build Driftwood, a large, fully integrated LNG facility. | That would put its interest payments at close to $640 million. The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. 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