Eshma
Funding Thesis
Tellurian Inc. (NYSE:TELL) Chairman Charif Souki continues to place collectively a really compelling narrative.
How Driftwood, an LNG terminal, will probably be constructed for about $12 billion, and the way its constructing continues to progress even at this second. And that buyers ought to count on an analogous setup to Sempra Power (SRE), the place an LNG terminal will begin to be constructed imminently, with an analogous capital construction to Driftwood.
In the meantime, within the background, Souki continues to incessantly liquidate his holding in Tellurian. Souki has prior to now over-promised and under-delivered. Buyers ought to method this with warning.
Driftwood, a Temporary Background
Final yr, Tellurian said that it might have reached a Ultimate Funding Determination (”FID”). This time got here and went. And nothing was reached. Completely nothing. In the meantime, Tellurian’s ebullient Chairman Charif Souki continues to make numerous assertions on his YouTube channel, together with that investor urge for food is there.
Recall, Tellurian wants about $12-$13 billion of capital to construct its Driftwood undertaking, earlier than inflation. It will come within the type of $3.5 billion of fairness, roughly $2 billion of mezzanine financing (that means high-yield debt, with convertible choices hooked up), and about $7 billion of debt.
In actual fact, it must be famous that in final week’s video, Souki states at 2.20 that within the subsequent few weeks, some form of mezzanine financing must be finalized. Buyers ought to watch this area.
By the way, recall that final summer season, Tellurian’s SEC submitting said that in 2023, there could be round $400 million of EBITDA.
TELL SEC submitting
Though we’re nonetheless ready for Tellurian’s Q1 2023 to be reported, I might be astounded if Tellurian even stories $40 million of EBITDA in Q1. In the meantime, final week, Tellurian needed to deposit roughly $170 million of money to fulfill convertible redemptions.
TELL SEC submitting
Subsequent, let’s focus on Souki’s newest video.
Tellurian’s Newest Video Mentioned
Within the newest video, at roughly 9:40, Souki discusses how the contractors nonetheless imagine that by the tip of 2026, Driftwood would be capable of begin exporting LNG cargos.
Tellurian YouTube
The entire video is made to perform the next. To point out buyers that, regardless of the chatter that Bechtel is leaving the location, work on the location is progressing.
Additional, throughout a current interview, Bechtel Power President Paul Marsden confirmed that work at Driftwood stays underway, however on ”restricted launch.”
Souki, Placing Capital on the Line?
Finviz
What you see above is Souki’s holding is being liquidated. Previously few months, Souki has been relentlessly promoting his inventory to cowl a margin mortgage.
In response to the Reuters report, as of March 1, Souki held round 11 million shares. However prior to now month, Souki has in all probability introduced down his holding to round 4 or 5 million shares. Merely put, I think Souki now holds lower than $6 million value of inventory in Tellurian.
The Backside Line
To sum up the funding case, Tellurian Inc. is a really speculative guess. A really long-dated possibility. One ought to dimension TELL inventory accordingly.
Personally, I am extraordinarily uncertain that Souki will handle to lift the wanted capital to construct Driftwood. However that perception can be mirrored within the Tellurian Inc. share worth, too.
