Tellurian Demonstrates A List Of Catalysts, Baird Says

Baird analyst Ethan H. Bellamy initiated coverage on Tellurian Inc. TELL with an Outperform rating and a $15 price target.

The Thesis

Tellurian, Bellamy said in a note, possesses a long slate of catalysts that will likely be executed through next year. He noted Tellurian is the leading contender in its proposed Driftwood LNG project.

The pipeline should continue to push shares higher, Bellamy said. Environment impact statements, signing of a customer-partner and positive FID on Driftwood are some of the biggest catalysts within the company.

The customer-partner model is on trend, Bellamy said.

“Contrasting legacy long-term sale and purchase agreements (SPA), TELL’s ownership model addresses the mismatch in which LNG suppliers seek long-term contracts to secure financing, while customers prefer flexible shorter contracts to enhance domestic market competitiveness,” the analyst wrote in the note.

Bellamy also considers the company’s top management team. He views the group as a distinct competitive advantage in the race to FID. Co-founder Charif Souki orchestrated the U.S.’ first LNG exports, while co-founder Martin Houston built out BG Group’s LNG business.

“We initiate a Speculative Risk rating based on financing, construction, commodity price, and timing and cash burn risks, including lack of cash flow until 2023,” Bellamy said.

Price Action

Tellurian shares were down marginally at $7.08 at time of publication Wednesday.

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