tellurian 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. But common sense. This is not a significant dilution and amounts to less than 4%. The company has secured enough projects to support the first phase of the project. Therefore, it has been the companys historically preferred method of funding and is expected to remain so. NGI All News Access. 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. Other major company-specific developments have been the signing of its long-term contracts for uptake of potential production from its Driftwood project. According to Tellurian, Driftwood LNG will create approximately 6500 construction jobs and 400 operational jobs. 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. People may receive compensation for some links to products and services on this website. 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. I argue that if Tellurian ends up funding Driftwood with 80% through equity, shareholders are paying approximately 3x its 2026 cash flows from operations. Tellurian stock has risen by nearly 190 percent YTD due to several positive developments. Souki calls Driftwood the holy grail of the business model (~3:42). Is this happening to you frequently? 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. 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. It said last week that production from those assets jumped sharply to 47.3 Bcf in 2022. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. For good reason too. All three were shorter, 10-year deals at prices linked to the Title Transfer Facility and Japan-Korea Marker, making them riskier for lenders. So is there any hope left for Tellurian? Today, that discovery is still the heart of the Zacks Rank. Presently, Tellurian's market cap is around $1 billion. Tellurian CEO Octvio Simes said the company "continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want.". Type a symbol or company name. High-quality, actionable insightful stock picks. Tellurian Inc., which continues to work toward a final investment decision on its Driftwood liquefied natural gas (LNG) terminal proposed for Louisiana, plans to acquire additional assets in the Haynesville Shale this year. View Subscription Options "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. $6 billion from equity. Washington DC | New York | Houston | Pittsburgh | Mexico City Calgary | Chile. Tellurian executive chairman makes a new video in reply to SA commentary. WARNING: Any stocks that you feel like buying after discussions with me are your responsibility. 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. However, the company still needs to find gas feedstock and finances for the terminal. For this, Tellurian's Chairman openly declares (5:28) that the debt portion of Driftwood would only provide $8 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. Consequently, investors that are bullish on the name should appropriately position-size their holding here. In June, TELL signed a long-term contract with Vitol for 3 mtpa. I do all the work of picking the most attractive stocks. And the debt markets would not even consider $1 billion. THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. | Not signings. Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. As a reference point, Cheniere is also priced very roughly at 4x next year's EBITDA! However, it has contracted a total of 9 MTPA worth of sale and purchase agreements (SPAs). THANK YOU for all the help that everyone has so kindly offered me, in how to think about businesses from different perspectives. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. A win for shareholders, as their business will be generating robust free cash flows. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. Tellurian also has its core business! 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. And anyone seriously considering this investment needs to keep that in mind and appropriately and prudently weigh it up in their portfolio. Please. It then announced it would seek equity partners. 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. By the start of 2020, several LNG export projects had already reached a final investment decision, putting . Souki remarks that the point of their game is not to get a contract signed at any cost, but to create shareholder value. Please disable your ad-blocker and refresh. Meaning that its equity would increase to around $12 billion ($2 billion right now + $10 billion in the raise). NGI All News Access. In this case, it will need to dilute shareholders by around 6.2x. 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. Ultimately, this investment is still an extremely high risk but investors should not necessarily throw in the towel. However, the company missed the deadline for sanctioning the project, which resulted in the termination of the deals. 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. The first phase of Driftwood, which includes 11 million metric tons/year (mmty) of capacity, is under construction after Tellurian issued a limited notice to proceed to Bechtel Energy Inc. last year. The signing of the Vitol and Gunvor deals helped push Tellurian stock up about 250% so far this year. 1.800.427.5747 Please. Indeed, what can go wrong? Get access to 100,000+ more news articles & industry data. Two-thirds debt to one-third equity. Earnings Particularly noting that in this higher interest rate and inflationary environment, there are too many cross currents and this would not be prudent. The SPA is for the purchase of LNG free on board at a price based on the Platts Japan Korea Marker. Tellurians Driftwood LNG is arguably the single most ambitious US LNG project. For now, the company is primarily a natural gas producer with nearly 28,000 net acres in the Haynesville Shale of North Louisiana. Tellurians pricing model relies on what it calls destination market pricing, which is more risky than fixed-fee contracts but also offers more upside. Infrastructure Please disable your ad-blocker and refresh. I wrote this article myself, and it expresses my own opinions. Written by Our Standards: The Thomson Reuters Trust Principles. Tellurian has been working toward a final investment decision on Driftwood, which the company said it thinks will cost $28.9 billion, for years. That would put its interest payments at close to $640 million. The stock has jumped by nearly 190 percent YTD but is off 30 percent from the highs it reached in June. 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. Haynesville Shale 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. 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. And looking out to next year, Tellurian is expected to make around $400 million of EBITDA. 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. | 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 have no business relationship with any company whose stock is mentioned in this article. Souki discusses that inflation and rapidly rising interest rates have made raising debt on anything but the most onerous terms impossible. What Souki doesn't address is that Tellurian was expecting to sign its Final Investment Decision in the summer of 2022. $8 billion to come from debt. The agreements had built on TotalEnergies' original $207 million . ISSN 2158-8023 See here for a complete list of exchanges and delays. Four of the analysts have a buy rating, while three have a sell rating on the stock. ConocoPhillips (COP): Free Stock Analysis Report, Hess Corporation (HES): Free Stock Analysis Report, Magellan Petroleum Corporation (TELL): Free Stock Analysis Report, TotalEnergies SE Sponsored ADR (TTE): Free Stock Analysis Report. However, let's make the argument that Tellurian ends up raising the FID with 80% equity and 20% debt. 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. "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. Sign in to get the best natural gas news and data. Not even with an 11.25% coupon. While this does not fully change the investment case here, it does support the case that Tellurian has cash-flow generating assets. 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