Smith believes the market has finally reached an inflection point that would allow Freeport to reach a final investment decision (FID) on the fourth train in early 2023. . 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. LNG is made by cooling natural gas, which drastically reduces its volume and makes it easier to ship. High upside energy, commodity, tech, and dividend stocks. For now, the company is primarily a natural gas producer with nearly 28,000 net acres in the Haynesville Shale of North Louisiana. 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. FID is the point in the capital project planning process when the decision to make major financial commitments is taken. High-quality, actionable insightful stock picks. This would severely limit Tellurian's upside. Tellurian has a contract with Bechtel to build the liquefaction plant. All Rights Reserved. Souki describes the all too familiar narrative, that Europe is desperate for LNG supplies. ISSN 2577-9877 Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips 2021 earnings has been raised by 22.5%. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. In the past, Tellurian wanted partners like TotalEnergies to invest in its Driftwood project, which will include a liquefaction plant, pipelines and natural gas production. Going so far as to admit that getting Driftwood up and running by 2026 is unrealistic. All told, the facility would have 20 LNG trains and at least 24.9 million scf (705,000 m3) of storage capacity. I have no business relationship with any company whose stock is mentioned in this article. 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. It then announced it would seek equity partners. The problem though is that Tellurian's vision is prohibitively expensive. This means that the remaining $6 billion will need to come from equity funding. | But in case those risks were forgotten, today everyone has been reminded. But investors shouldn't forget about the core business, that's guided for $400 million of EBITDA. I follow countless companies and select for you the most attractive investments. I wrote this article myself, and it expresses my own opinions. 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. Follow the topics you want and receive the daily emails. This is not a significant dilution and amounts to less than 4%. Is this happening to you frequently? However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. From the start, Tellurian has been a story stock. You have 3 free articles remaining. Tellurian sold off 40% in the past month. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). 3/1/2023. The LNG would come from Tellurian's proposed 27.6-MTPA Driftwood export project in Louisiana. 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. Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. I argue that this meaningfully improves the bull. Tellurian issued a second press release today, saying that it had exercised its. If you have an ad-blocker enabled you may be blocked from proceeding. Create your Watchlist to save your favorite quotes on Nasdaq.com. Click here to request a free trial. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. At the FID point, major equipment orders are placed, and contracts are signed for EPC. Here's the thing that a lot of investors have likely forgotten about. B.Riley initiated on TELL with a buy rating and a target price of $8 in July. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. When the symbol you want to add appears, add it to Watchlist by selecting it and pressing Enter/Return. 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. Since I wrote Pipe Dream, Tellurian's share price has taken a tumble. 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. Tellurian shares were trading around $4.42 per share, up about 0.4%, on Monday afternoon. Indeed, what can go wrong? 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. That would put its interest payments at close to $640 million. 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. 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. Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. 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. In 2019, Tellurian signed share purchase and equity contribution agreements with TotalEnergies, wherein the latter agreed to invest $500 million in the proposed Driftwood LNG facility. Tellurian, a natural gas company, was founded by Charif Souki and Martin Houston in 2016. I do all the work of picking the most attractive stocks. Responsive Menu. "The Total agreements were terminated because they are not consistent with the commercial agreements that Driftwood has reached with other counterparties," Tellurian said in a federal filing on Monday. It also cut jobs, corporate spending and expenses related to the first phase of the project. Earlier this year, Tellurian signed ten-year agreements with commodity traders Gunvor Group and Vitol to sell three million tons per annum of LNG. 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. There simply were no takers. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Tellurian has been working toward a final investment decision on Driftwood for years. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. Tellurian (NYSE:TELL) shareholders have been hit hard with bad news. The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. Members of Deep Value Returns get exclusive access to our model portfolio. The Hartbeespoort dam in South Africa used to be brimming with people enjoying scenic landscapes and recreational water sports. Written by Plus regular stock updates. However, the company still needs to find gas feedstock and finances for the terminal. 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. You have 3 free articles remaining. 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. | Get them exclusively at Deep Value Returns. |, Related topics: | And the debt markets would not even consider $1 billion. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Tellurian clearly has assets with some value. Tellurian is based in Houston, Texas, and its common stock is listed on the Nasdaq Capital Market under the symbol "TELL." 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. While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. 2 min read. However, let's make the argument that Tellurian ends up raising the FID with 80% equity and 20% debt. It has $474.2 million in cash and cash equivalents on hand. Deep Value Returns' Marketplace continues to rapidly grow. As per usual, Souki took to YT to argue his take. Plus regular stock updates. DEEP VALUE RETURNS: The only Marketplace with real performance. Tellurian has no signed Final Investment Decision. See here for a complete list of exchanges and delays. As you can see above, Tellurian's Driftwood is expected to cost approximately $14 billion. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. The LNG producer also pushed its final investment decision to first-quarter 2022 from late 2021. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. Going forward, a lot will depend on the FID. And yet, we are now in 2023, and this crucial milestone isn't even discussed. Total also will purchase about 20 million additional. ISSN 1532-1231 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. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. 2023, Nasdaq, Inc. All Rights Reserved. For good reason too. It is the second 10-year, 3-MTPA agreement Tellurian has announced in a week, following a deal with commodity trader Gunvor Group. Offers may be subject to change without notice. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. 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. Infrastructure Its stock has gained 80.3% compared with the industrys 10.8% growth. Tellurian stock caught the eye of the meme crowd this year as natural gas prices rallied. 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. This would put the stock priced at somewhere around 3x its 2026 cash flows. 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. Experts agree were still in the early stages of this technology, and as it grows, it will create several investing opportunities. Saudi Arabia to Use $110 Billion Gas Field for Blue Hydrogen Not only has Tellurian struggled to get its Final Investment Decision (''FID'') going for months. Hess earnings for 2021 are expected to rise 116.2% year over year. JKM Bulls may disagree with this, but what bulls will agree with is that this stock is not for the faint-hearted. 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. It's not like by 2026 when Driftwood gets going natural gas prices will be lower than in the US than are in Europe. Get access to 100,000+ more news articles & industry data. Another big fear for investors could be the dilution of their holdings. 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. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. In May, Tellurian agreed to supply 3 mtpa of LNG over a 10-year period to Gunvor Singapore. To build Driftwood, a large, fully integrated LNG facility. I have no business relationship with any company whose stock is mentioned in this article. To read this article on Zacks.com click here. In August, TELL did a secondary share offering worth $35 million. Recall, this is Tellurian's vision. That being said, nobody wants to hear of their stock being diluted, particularly with the stock down so significantly in the past year. I provide a hand-holding service. Tellurian then secured a third SPA with Shell in July 2021. High upside energy, commodity, tech, and dividend stocks. Gas producer . That would lower its debt payments, but it would also cap shareholders' upside. Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. View Subscription Options 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. But does this mean it won't get built at all? 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. ISSN 2158-8023 Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. 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 core business, that Europe is desperate for LNG supplies in Louisiana and finances the! 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