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PierPunk
LSU Fan
#BugaNation
Member since Apr 2013
3238 posts

re: Tellurian: A Potential Hundred Bagger?
Tellurian says talks with banks underway for 12-billion Driftwood LNG project

quote:

Tellurian is in talks with bank groups about financing its proposed Driftwood LNG export terminal in Louisiana after signing a series of supply deals with buyers that cover the project's first phase, the company said Aug. 9.

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.
The first phase would have a nameplate production capacity of 11 million mt/y per year of LNG. Tellurian in recent months chose to pursue the smaller of two options for the first phase of the natural gas liquefaction and export facility, which at full construction would be capable of producing up to 27.6 million mt/y. As recently as May, Tellurian had estimated a capacity of about 16.6 million mt/y for the first phase.

The decision to pursue the smaller option coincided with the developer lining up three similar medium-term supply contracts with commodity traders Gunvor Group, Vitol and the portfolio player Shell. That marked significant commercial progress for Tellurian, after a two-year lull in the LNG industry that saw only a few long-term contracts signed for supplies linked to US terminals. The company said the 10-year offtake commitments, which total 9 million mt/y, more than cover the first phase of the project.

Questions remained about whether the company's strategy of using 10-year supply contracts to finance an LNG export project will ultimately be successful. LNG project developers have traditionally relied on longer-term sale and purchase agreements that cover periods of 15 or 20 years. But an answer may materialize in the months ahead.

International financing

Tellurian estimated that $5 billion in annual cash flows from operations of the first phase could be enough for a payback period of less than three years for the development cost, based on a margin of $9/MMBtu. The estimate, which factored in Tellurian's upstream production plans, included an LNG sales price of $12/MMBtu after transportation costs, using the S&P Global Platts Japan Korea Marker, or JKM, the benchmark price in Northeast Asia. The company estimated liquefaction and transport costs of about $1/MMBtu and gas sourcing cost of $2/MMBtu.

Tellurian said it expects to secure financing from a group of between eight and 10 international banks and that it expects leverage levels for the first phase of between 60% and 70%. The developer said it also planned to fund future phases from retained cash flow.

Tellurian did not immediately respond to a request for comment on Aug. 9. But Executive Chairman Charif Souki said during a July podcast that Tellurian expects to be able to announce the bank group that will finance the project by the end of 2021. Souki also described banks as bullish about the Driftwood LNG project because of the strength of market fundamentals in recent months.

Haynesville Shale

Tellurian has said it wants to produce all the gas it will need to feed the Driftwood terminal, and it will not sanction the project until it has secured sufficient upstream reserves for the first phase.

Based on its current drilling program in the Haynesville Shale province, Tellurian expected to have almost 100 MMcf/d in production by the end of the year, three times the volume it was producing at the end of 2020. Tellurian said the feedgas requirement for the first phase of the project would be about 550 Bcf/y, or about 1.5 Bcf/d, and that there was a "process underway with several upstream counterparties" to acquire an "estimated total 5-10 Tcf of resource" funded by a mix of cash, debt and equity.

Tellurian's cash position, with no debt on its balance sheet, sets the stage for the developer to proceed with the purchase of gas production assets, which may prove an important catalyst for the company, B. Riley Securities analyst Liam Burke said in an Aug. 9 note to clients.

"There are other benefits to internally produced natural gas other than supporting stable gross margins and the company's strategy of providing low-cost LNG to global markets," Burke wrote. "The cash flows derived from Haynesville natural gas production also provide underlying cash flows that would support the company's internal operation during the liquefaction project development period and could make it easier for the company to secure the larger project financing debt required for the build-out of Driftwood LNG on better terms."


PierPunk
LSU Fan
#BugaNation
Member since Apr 2013
3238 posts

re: Tellurian: A Potential Hundred Bagger?


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80
DaTruth7
LSU Fan
Member since Apr 2020
1621 posts

re: Tellurian: A Potential Hundred Bagger?
This is dropping. Still a good play?


lsuoilengr
USA Fan
Member since Aug 2008
3957 posts

re: Tellurian: A Potential Hundred Bagger?
My price target is 8$

They have 3 long term deals already signed
Driftwood should start construction Q1 2022

Only concern is a broad market pullback


TAFP
LSU Fan
Member since Jan 2021
7 posts

re: Tellurian: A Potential Hundred Bagger?
Doesn’t sound good
This post was edited on 8/13 at 10:34 pm


tenderfoot tigah
LSU Fan
Red Stick
Member since Sep 2004
7163 posts

re: Tellurian: A Potential Hundred Bagger?
Thanks for the DD. I'm removing them from my watch list.


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ChasinTails
USA Fan
USA
Member since Oct 2017
112 posts

re: Tellurian: A Potential Hundred Bagger?
At the very bottom of the linked article.

quote:

Disclaimer The author may have short position in stock.


Interesting.. sounds like I need to buy more.


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60
sneakytiger
LSU Fan
Member since Oct 2007
2390 posts

re: Tellurian: A Potential Hundred Bagger?
I've been following TELL off and on since they were formed. When I read these contracts I can tell you they aren't going to underwrite a new LNG facility. At best TELL will supply these with existing infrastructure


LChama
Member since May 2020
703 posts

re: Tellurian: A Potential Hundred Bagger?
So.. is that consistent with the title thread.. “100 bagger”? Or is that bad news for this stock price.


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Samso
Tulane Fan
nyc
Member since Jun 2013
4214 posts

re: Tellurian: A Potential Hundred Bagger?
quote:

I've been following TELL off and on since they were formed. When I read these contracts I can tell you they aren't going to underwrite a new LNG facility. At best TELL will supply these with existing infrastructure


Well if they don’t the company is finished

If the banks don’t play ball, there has to be something else that is going on because the whole premise of the company’s existence is Driftwood. Maybe M&A?
This post was edited on 8/14 at 1:51 pm


lsuoilengr
USA Fan
Member since Aug 2008
3957 posts

re: Tellurian: A Potential Hundred Bagger?
Seems to me like the crux of the situation is whether or not they build driftwood. If they build it, share price is 7-10, if not watch out below.... apparently there are more LNG deals out there waiting to be finalized. No reason to think Souki would stop at 3. Strategy could be sign 3 shitty deals enough to justify construction then roll out a few more with better terms. IDK just speculating here....

I don’t know what will happen. But Tell is the main sponsor at the current NAPE conference happening in Houston and they are building the roads for driftwood in lake Charles. All investments carry risk, don’t invest more than you are willing to lose.


igoringa
LSU Fan
South Mississippi
Member since Jun 2007
11671 posts

re: Tellurian: A Potential Hundred Bagger?
So I havent deep dived into the contracts yet (which is my bad).

But I am suspicious of that short seller analysis on a few fronts. Putting that to the side, correct me if I am wrong, but in simplest terms - the Tell strategy simply is:

TTF/JKM less freight less cost nat gas (whether produced or purchased) less capex investment. It is a play on TTF/JKM prices and their spread with Henry Hubb (or our own production).

I am not hung up on some perceived PV for Shell.


Samso
Tulane Fan
nyc
Member since Jun 2013
4214 posts

re: Tellurian: A Potential Hundred Bagger?
Everything just seems like such a heavy lift for this to succeed. Not only do they need to get financing to build the multi-billion dollar infrastructure but they also need to become one of the biggest Haynesville producers to satisfy their customer’s demand. The vertically integrated structure is no joke.

The HH vs TTM/JKM Spread risk is something I’ve heard about before too but don’t really get it.
This post was edited on 8/14 at 8:01 pm


PierPunk
LSU Fan
#BugaNation
Member since Apr 2013
3238 posts

re: Tellurian: A Potential Hundred Bagger?


JustForThisThread
Member since Mar 2013
325 posts

re: Tellurian: A Potential Hundred Bagger?
Been thinking of starting a small position in this for awhile. Still have to dive deep and research some more before deciding but I came across this article today. I saw LNG and immediately thought of TELL.

I know it's a completely different port and this is probably a very stupid question but does the Port of Nola signing this have any bearing on the TELL deal or LNG as whole in the region?

Port of Nola LNG Memorandum


ThatsWhatSheSaid69
Member since Aug 2012
74 posts

re: Tellurian: A Potential Hundred Bagger?
It's been on a steady downtrend lately. Starting to regret those 2023 calls I bought 2 weeks ago.


Them
New Orleans Saints Fan
People's Republic of Bozeman
Member since Nov 2008
10557 posts

re: Tellurian: A Potential Hundred Bagger?
Up 11% in the last 24 hours


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40
JDPndahizzy
LSU Fan
JDP
Member since Nov 2013
3107 posts

re: Tellurian: A Potential Hundred Bagger?
quote:

does the Port of Nola signing this have any bearing on the TELL deal or LNG as whole in the region

the way I interpret it is for supplying ship with LNG as a fuel instead of diesel.


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10
bstew3006
USA Fan
318
Member since Dec 2007
10149 posts

re: Tellurian: A Potential Hundred Bagger?
Who’s buying?


igoringa
LSU Fan
South Mississippi
Member since Jun 2007
11671 posts

re: Tellurian: A Potential Hundred Bagger?
Notes Offering

Light on amount and interest rate, but from a quick read I do not see any conversion feature or warrants so it should not be dilutive.

Rather stunned the market hasn't reacted yet. We all know they need a massive amount of debt, and to see a start that is non dilutive is a win in my book. Yes devil will be in details when released


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