Tellurian (TELL) Stock Flies On LNG Agreement

Tellurian Inc (NASDAQ: TELL) is screaming for the top in the market this morning, and for good reason. The company announced that it has signed a 10-year liquid natural gas (LNG) agreement that will drive substantial revenue. Here’s what’s happening:

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TELL Stock Pops On LNG Agreement

In the press release, Tellurian announced that it has finalized a LNG sales and purchase agreement with Vitol. According to the SPA, Vitol will purchase three million tonnes per year on a free on board basis at Driftwood LNG for a ten-year period. 

In the release, the company said that at today’s prices, the agreement is valued at $12 billion over the next ten years. 

Management Commentary

In a statement, Octávio Simões, President and CEO at TELL, had the following to offer:

Tellurian continues to execute on our plan to market Driftwood LNG volumes on indices that our customers want. Vitol expressed interest in the development of Driftwood early on, and it is fulfilling to finalize this agreement with the world’s largest independent trader of energy. As the world electrifies and our population grows, the demand for reliable, low-cost energy will continue to increase. LNG provides a stable source of fuel at an attractive price, and Tellurian’s integrated model is positioned perfectly to offer volumes on JKM, TTF or blended price basis.

The above statement was followed up by Tarek Souki, Executive Vice President of LNG Marketing & Trading. Here’s what he had to say:

Tellurian has made exceptional progress on our intended first phase capacity sales by securing this second SPA with another respected global energy trading business. The two recent agreements represent an aggregate of $24 billion in estimated revenue; we will continue to be deliberate and selective in choosing our additional customers.

Pablo Galante Escobar, Global Head of LNG and European Gas & Power at Vitol was up next. Here’s what he said:

Vitol is excited to conclude this agreement with Tellurian. Our long-term commitment and investment grade rating will help Tellurian as they continue their path to financial close.

Finally, Ben Marshall, CEO at Vitol closed out the commentary with the following:

Vitol’s business continues to grow and evolve in the Americas and around the world. This agreement will make Vitol one of North America’s largest exporters of natural gas, providing our customers with cost effective and cleaner fuel solutions.

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The Bottom Line

The bottom line here is simple. The contract represents a massive win for Tellurian and will drive more than a billion dollars per year through the company’s doors. Not only is this contract a revenue story, it shows that the company can compete with major players in the space to latch onto some of the biggest contracts flying around. As such, there’s good reason to be excited about TELL stock. 

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