Tellurian Inc (NASDAQ: TELL): Organic and Inorganic Growth to Support Volume and Profitability

Tellurian Inc (NASDAQ: TELL), U.S. liquefied natural gas (LNG) developer, intends to increase its gas production, either by increasing its production or through mergers and acquisitions. The increasing output is backed by strong prices, as they can realize much better revenue by being exposed to international gas prices through the Driftwood LNG export plant being developed by the Company in Louisina.

LNG assets are expected to remain in focus

U.S. gas prices at the Henry Hub were up over 50% this year to around $3.75 per million British thermal units (mmBtu) after falling to a multiyear low of $2.03 in 2020. To take the benefit of higher gas prices, gas producers like Tellurian, are scouting for all the LNG assets globally, as prices are expected to remain high in the near term. Gas prices in Europe and Asia were trading over $12per mmBtu.

Driftwood site to come finally on stream

The development of Driftwood was pushed back due to the paucity of customers signing long-term deals. However, with the recent uptick in the gas prices, Tellurian started preparing the site for construction and is expected to commence with the first phase of the 27.5-million tonnes per annum (MTPA) project in the first quarter of 2022. 

The uptick in the gas prices has also helped the Tellurian to sign two ten-year agreements to sell 3MTPA of LNG with commodity traders Gunvor and Vitol. This opportunity has come after two years of a lull in commercial activity.

As per the street, this is the lifetime opportunity for all the gas producers, including Tellurian, to realize the maximum opportunity of the uptick in the gas prices, improve profitability, strengthen the balance sheet and fund the acquisition or improve the efficiency at their existing site.

Leave a Comment

Your email address will not be published.