Tellurian Reports 2023 Financial Results and Driftwood LNG Progress

Rhea-AI Summary

Tellurian Inc. (NYSE American: TELL) reported its full year 2023 financial results, showcasing progress on the Driftwood LNG project, securing FERC certificates, and improving financial flexibility. Despite a net loss, Tellurian remains optimistic about commercialization and financing opportunities.

Positive

• Tellurian made significant strides in advancing the Driftwood LNG project in 2023, including driving over 14,000 piles at the site and progressing on concrete foundations for critical equipment.
• The Company secured the FERC Certificate for its pipelines (Lines 200 and 300) and continued to advance the fabrication of zero-emissions ICL compressors for the pipeline.
• Tellurian amended its senior secured notes and senior convertible notes post-year end, providing financial flexibility and additional collateral related to the Driftwood Project.
• Despite a net loss of approximately $166.2 million for the year ended December 31, 2023, Tellurian remains positive about its improved near-term liquidity and engagement with potential counterparties and financing sources.
• Tellurian generated $166.1 million in natural gas revenue for 2023, with total assets of approximately $1.3 billion as of December 31, 2023.

Negative

• Tellurian reported a net loss of $166.2 million for the year ended December 31, 2023, compared to a net loss of $49.8 million for 2022.
• Revenue decreased to $166.1 million in 2023 from $391.9 million in 2022 due to decreased realized natural gas prices.
• Operating activities resulted in an operating loss of $11.3 million for the three months ended December 31, 2023, compared to an operating profit of $47.5 million for the same period in 2022.

Insights

Energy Sector Financial Analyst

The reported financial results from Tellurian Inc. highlight a significant net loss increase from $49.8 million in 2022 to $166.2 million in 2023, which is a critical concern for investors and stakeholders. The increase in net loss per share from $0.09 to $0.29 suggests that operational efficiencies and cost management strategies need to be assessed. Despite the reported progress on the Driftwood LNG project, the financial health of the company, as indicated by the widening net loss, could impact future financing opportunities and investor confidence.

It is worth noting the decrease in natural gas revenue from $391.9 million to $166.1 million, alongside a decline in net production from 20.7 Bcf to 16.4 Bcf in the fourth quarter year-over-year. This revenue reduction, in the context of global energy markets, suggests that Tellurian may have faced challenges in optimizing its production and sales strategy amidst fluctuating natural gas prices. The potential sale of upstream assets indicates a strategic pivot that could help alleviate the financial strain, but it is essential to monitor how this will affect the company's long-term production capabilities and revenue streams.

Energy Project Analyst

The advancement of the Driftwood LNG project is a step forward in Tellurian's strategic development, with the FERC Certificate for the pipelines and progress on site construction indicating a move towards operational readiness. The emphasis on zero-emissions ICL compressors aligns with industry trends towards sustainability and could provide Tellurian with a competitive advantage in the market. However, the substantial investment in infrastructure, as evidenced by the driven piles and concrete foundations, requires a careful evaluation of the project's long-term return on investment, especially in the context of current financial losses.

The FERC order extension allowing the construction of all five plants and the non-free trade agreement export authorization are pivotal in enhancing the project's viability and market access. These regulatory milestones could facilitate commercial agreements and partnerships, which are crucial for the project's success. Stakeholders should closely watch the impact of these developments on Tellurian's commercial discussions and the potential implications for the company's revenue and profitability in the future.

Debt Financing Expert

Tellurian's amendment of its senior secured notes and senior convertible notes to provide financial flexibility is a strategic move to manage its debt profile. By providing additional collateral related to the Driftwood Project, Tellurian is leveraging its assets to negotiate better terms for debt repayment, which could enhance its liquidity position in the near term. However, the effectiveness of this strategy depends on the company's ability to meet its financial obligations without compromising the commercialization and financing of the Driftwood Project.

The company's statement on expecting improved near-term liquidity to enable higher engagement with potential counterparties and financing sources indicates a proactive approach to managing its capital structure. Investors should consider the potential risks associated with this debt restructuring, such as the impact on Tellurian's creditworthiness and the terms of future financing, which could influence the company's financial stability and growth prospects.

HOUSTON--(BUSINESS WIRE)-- Tellurian Inc. (Tellurian or the Company) (NYSE American: TELL) reported its full year 2023 financial results today. During 2023, Tellurian took significant steps to advance the Driftwood LNG project, having driven over 14,000 piles at site and making progress on concrete foundations for critical equipment thus de-risking site construction. Tellurian also secured the Federal Energy Regulatory Commission (FERC) Certificate for the Company’s pipelines (Lines 200 and 300) and continued to advance the fabrication of Baker Hughes zero-emissions ICL compressors for the pipeline.

Subsequent to year end, Tellurian amended its senior secured notes and senior convertible notes to provide financial flexibility. While Tellurian provided additional collateral relating to the Driftwood Project until the repayment of the senior secured notes, this should not interfere with the commercialization or financing of the Driftwood Project and Tellurian expects that its improved near-term liquidity will enable a higher degree of engagement with potential counterparties and financing sources.

Chief Executive Officer Octávio Simões said, “Tellurian ended 2023 with an exemplary safety record. Driftwood’s recent FERC order extension to construct all five plants, with a capacity of ~27.6 million tonnes per annum (mtpa), coupled with its non-free trade agreement export authorization, have differentiated the project and have intensified our commercial discussions. In addition, we have received very favorable feedback from interested parties on the potential sale of our upstream assets and believe our financial discipline will provide a sustainable path forward. As disclosed in our financial statements, we have made significant progress in executing our plans to alleviate substantial doubt.”

Upstream segment results

	Three Months Ended December 31, 2023	Three Months Ended December 31, 2022
Net production	16.4 Bcf	20.7 Bcf
Revenue	$40.0 million	$102.5 million
Operating (loss) profit	$(11.3) million	$47.5 million
Adjusted EBITDA**	$21.7 million	$80.2 million

Operating activities
Tellurian produced 72.5 Bcf of natural gas for the year ended December 31, 2023. As of December 31, 2023, Tellurian's natural gas assets include 30,034 net acres and interests in 161 producing wells.

Consolidated financial results
Tellurian generated approximately $166.1 million in natural gas revenue, driven by decreased realized natural gas prices and increased production volumes for the year ended December 31, 2023, compared to $391.9 million in total revenues for 2022. Tellurian reported a net loss of approximately $166.2 million, or $0.29 per share (basic and diluted), for the year ended December 31, 2023, compared to a net loss of $49.8 million, or $0.09 per share (basic and diluted), for 2022.

As of December 31, 2023, Tellurian had approximately $1.3 billion in total assets, including approximately $75.8 million of cash and cash equivalents.

^{** Non-GAAP measure – see the end of this press release for a definition and a reconciliation to the most comparable GAAP measure.}

About Tellurian Inc.
Tellurian intends to create value for shareholders by building a low-cost, global natural gas business, profitably delivering natural gas to customers worldwide. Tellurian is developing a portfolio of LNG marketing and infrastructure assets that includes an ~ 27.6 mtpa LNG export facility and an associated pipeline. Tellurian is based in Houston, Texas, and its common stock is listed on the NYSE American under the symbol “TELL.”

For more information, please visit www.tellurianinc.com. Follow us on Twitter at twitter.com/TellurianLNG.

CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of U.S. federal securities laws. The words “anticipate,” “assume,” “believe,” “budget,” “estimate,” “expect,” “forecast,” “initial,” “intend,” “may,” “plan,” “potential,” “project,” “proposed,” “should,” “will,” “would,” and similar expressions are intended to identify forward- looking statements. Forward-looking statements herein relate to, among other things, the capacity, timing, construction, and other aspects of the Driftwood LNG project, and commercial and financing activities. These statements involve a number of known and unknown risks, which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements. These risks include the matters discussed in Item 1A of Part I of the Annual Report on Form 10-K of Tellurian for the fiscal year ended December 31, 2023, filed by Tellurian with the Securities and Exchange Commission (the SEC) on February 23, 2024, and other Tellurian filings with the SEC, all of which are incorporated by reference herein. The forward-looking statements in this press release speak as of the date of this release. Although Tellurian may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

Explanation and Reconciliation of Non-GAAP Financial Measures

The Company reports its financial results in accordance with accounting principles generally accepted in the United States of America (“GAAP”). However, management believes that upstream segment Adjusted EBITDA may provide financial statement users with additional meaningful comparisons between current results and the results of the Company’s peers and of prior periods.

Upstream segment Adjusted EBITDA excludes certain charges or expenditures. Upstream segment Adjusted EBITDA is a supplemental measure of performance and should not be viewed as a substitute for any GAAP measure.

Management presents Upstream segment Adjusted EBITDA because (i) it is consistent with the manner in which the Company’s position and performance are measured relative to the position and performance of its peers and (ii) it is more comparable to earnings estimates provided by securities analysts.

Upstream segment Adjusted EBITDA (in thousands):
	Three Months Ended December 31,				Twelve Months Ended December 31,
	2023		2022		2023		2022
Upstream segment operating (loss) profit	$(11,263)		$47,493		$(55,501)		$130,663
Add back:
Depreciation, depletion and amortization	$26,281		$21,525		$95,202		$43,966
Allocated corporate general and administrative	$ 6,645		$11,230		$38,150		$42,385
Upstream segment Adjusted EBITDA	$21,663		$80,248		$77,851		$217,014

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240222601309/en/

Media:

Joi Lecznar

EVP Public and Government Affairs

Phone +1.832.962.4044

joi.lecznar@tellurianinc.com

Investors:

Matt Phillips

Vice President, Investor Relations

Phone +1.832.320.9331

matthew.phillips@tellurianinc.com

Source: Tellurian Inc.

FAQ

What is Tellurian's ticker symbol?

Tellurian's ticker symbol is TELL.

What significant steps did Tellurian take in 2023?

Tellurian advanced the Driftwood LNG project, secured FERC certificates for its pipelines, and progressed on the fabrication of zero-emissions ICL compressors.

How much natural gas did Tellurian produce in 2023?

Tellurian produced 72.5 Bcf of natural gas for the year ended December 31, 2023.

What was Tellurian's net loss for the year ended December 31, 2023?

Tellurian reported a net loss of approximately $166.2 million, or $0.29 per share (basic and diluted), for the year ended December 31, 2023.

What were Tellurian's total assets as of December 31, 2023?

Tellurian had approximately $1.3 billion in total assets, including approximately $75.8 million of cash and cash equivalents, as of December 31, 2023.