Tellurian (NYSE:TELL) CEO Charif Souki made a podcast appearance Tuesday to discuss the latest updates at the company. The podcast comments are particularly noteworthy, as the company elected not to host a Q1 quarterly conference call in concert with its earnings release earlier this month:
- Guide - Tellurian (TELL) will continue to spend $150m per year on upstream capex to tap around 12 wells per year; the company is now producing over 100mcf/d net, and everything is on target to reach 200mcf/d by year end and 300mcf/d by the end of 2023.
- US LNG - the International Group of Liquefied Natural Gas Importers (GIIGNL) released its annual report last week, noting that the US is on its way to take more than 30% market share in the global LNG sector; global gas prices will never be lower than US prices in Souki's view, as international markets will need to trade at a premium to incentivize US exports going forward.
- Financing - in the past week six upstream companies included LNG plans in their quarterly reporting; EQT (EQT), Chesapeake (CHK), Comstock (CRK), Devon (DVN), Coterra (CTRA), Antero (AR) all indicated they would look favorably on making an investment in an LNG facility to provide access to global gas markets.
Souki believes he can make a deal with US E&Ps to raise the equity needed to finance Driftwood. When Souki worked at Cheniere (LNG), Blackstone (BX) provided equity financing and banks followed with financing commitments very quickly. Phase one of Driftwood is budgeted to cost $12b, and Souki believes it should be financed with 33% equity. "It will not be difficult for us to negotiate some deal in the next few weeks, of course, nothing may happen with any of these companies; however, it's a very encouraging signal that they are starting to recognize the value of being exposed to the global markets."
The Tellurian (TELL) investment case is largely focused on progress at the company's flagship Driftwood LNG project. In March, Souki said he expected to reach final investment decision by April; however, the company's Q1 update in early May provided little detail on progress. To the extent, Wednesday's update is an indication that financing is progressing well, Tellurian (TELL) shareholders could be well positioned to benefit from improved LNG export economics in coming years.