Tellurian Signs 10-year LNG Sales Agreement Valued at US$12 Billion

Source: Streetwise Reports   05/27/2021

Tellurian Inc. shares traded 18% higher after the company reported it entered into an agreement with Gunvor Singapore Pte. Ltd. to provide 3 million metric tons of liquefied natural gas yearly, representing “the equivalent of approximately $12 billion in revenue” over the 10-year term.

Natural gas production, pipeline and LNG port operator Tellurian Inc. (TELL:NASDAQ) and Gunvor Singapore Pte. Ltd., today announced that the two companies have entered into “a liquefied natural gas (LNG) sales and purchase agreement (SPA) for three million tonnes per annum (mtpa) for a ten year period.”

The firms indicated that over the course of the agreement, LNG prices are to be calculated based upon a formula derived from the Japan Korea Marker (JKM) and the Dutch Title Transfer Facility (TTF) indices. The report stated the total amount of the deliveries will be netted back to adjust for associated transportation charges.

Under the contract terms, “the LNG will be delivered free on board (FOB) from Tellurian’s Driftwood LNG, a 27.6 mtpa liquefaction facility proposed near Lake Charles, Louisiana, in the United States Gulf Coast.”

The company’s President and CEO Octávio Simões commented, “Tellurian intends to market up to 10 mtpa of LNG in our first phase on a JKM, TTF or blended price basis, as our integrated model provides the flexibility to offer this valuable product. We welcome Gunvor, the largest independent global trader of LNG volumes, to Driftwood and look forward to providing a cleaner fuel to meet growing global energy needs and enable energy access.”

Tarek Souki, Tellurian’s E.V.P. of LNG Marketing & Trading, remarked, “Our business model creates significant value for Tellurian; at today’s LNG prices, this agreement represents the equivalent of approximately $12 billion in revenue over the 10-year term of the agreement.”

Tellurian Inc. is an oil and gas exploration and production company that is now concentrating its efforts primarily upon developing low-cost liquefied natural gas (LNG) projects along the Gulf Coast in the U.S. for export worldwide. The company advised that “it is developing a portfolio of natural gas production, LNG marketing and trading, and infrastructure that includes an approximately 27.6 mtpa LNG export facility and an associated pipeline.”

The report indicated that Gunvor is the leading independent global trader of liquefied natural gas (LNG). As an independent commodities trading house, the company notes that it specializes in moving physical energy from the place where it is sourced and stored to where it is highest in demand globally.

Tellurian began the day with a market cap around $1.3 billion with approximately 409.6 million shares outstanding and a short interest of about 6.7%. TELL shares opened nearly 26% higher today at $3.99 (+$0.82, +25.87%) over yesterday’s $3.17 closing price. The stock has traded today between $3.58 and $4.13 per share and is presently trading at $3.72 (+$0.55, +17.51%).

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