On Friday, B.Riley made adjustments to its outlook on Tellurian Inc. (NYSE:TELL), reducing the company's price target to $3.00 from the previous $5.00. Despite this change, the firm maintained its Buy rating on the stock. The adjustment was made in light of current natural gas market conditions and the status of Tellurian's Driftwood LNG project financing.
The analyst from B.Riley noted that while domestic natural gas prices have dropped, the difference between U.S. and European gas prices continues to favor the long-term prospects of Tellurian's Driftwood LNG production project. The project's economics are underpinned by this price spread, which remains significant despite the domestic downturn.
Tellurian's share valuation is currently influenced by its role as a natural gas exploration and production (E&P) operator, alongside its net positive cash position. The analyst's decision to lower the price target reflects a reevaluation of the company's upstream assets, which are estimated to be worth less than previously thought.
The timeline for the Driftwood LNG project has also become less certain, impacting Tellurian's stock valuation. The project's financing, which is a mixture of debt and equity, has yet to be fully secured. This uncertainty has contributed to the analyst's decision to adjust the price target while still recognizing the company's potential through the maintained Buy rating.
Tellurian Inc. is working towards raising the necessary financing for its Driftwood LNG project, which is a critical factor in the company's future performance and stock valuation. The B.Riley analyst's comments indicate that once financing is in place, there may be a shift in the company's stock performance.
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