Stifel cuts Tellurian stock target, maintains sell rating

Stifel lowers Tellurian price target to $0.25, maintains sell rating after deal to sell Haynesville assets for $260 million.

On Wednesday, Stifel revised its evaluation of Tellurian (NYSE:TELL) shares, lowering the price target to $0.25 from $0.30 while maintaining a Sell rating on the stock. This adjustment comes after Tellurian announced a deal to sell its Haynesville gas-producing assets.

The agreement entails the sale of Haynesville acreage to Aethon Energy for $260 million, slightly below the initial analyst expectations of $280 million. Despite falling short, this transaction is seen as a viable method for Tellurian to handle its debt obligations, supported by ongoing offerings through its ATM equity sales program.

In addition to the asset sale, Aethon Energy has also agreed to a Heads of Agreement (HoA) to purchase 2 million tons per annum (mpta) of liquefied natural gas (LNG) from Tellurian's Driftwood project. However, analysts caution that historically, the conversion rate from HoAs to Sales and Purchase Agreements (SPAs) is low, raising doubts about the commercial impact of this deal.

While the agreement represents progress for Tellurian in reducing debt leverage and advancing the Driftwood project to some extent, the evaluation of the company's equity value suggests it remains significantly undervalued compared to the current stock price. This reaffirms Stifel's sell rating on the stock.

As Tellurian (NYSE:TELL) navigates its financial challenges and project development plans, real-time data from InvestingPro sheds light on the company's financial position. With a market capitalization of $468.96 million, Tellurian faces obstacles reflected in its negative P/E ratio of -1.64, indicating negative investor sentiment towards its earnings. The significant revenue decline of -52.47% over the last twelve months underscores concerns about the company's future prospects.

InvestingPro Tips highlight Tellurian's substantial debt burden and the associated risks of meeting interest payments, aligning with the decision to sell Haynesville assets to address these financial commitments. The stock's volatility is evident in the 14.45% return over the last month and a -29.36% return over the last three months, adding complexity to investment decisions.

For a more comprehensive analysis, InvestingPro offers additional insights on Tellurian Inc., accessible through their platform. Readers can use coupon code PRONEWS24 for a 10% discount on yearly or biyearly Pro and Pro+ subscriptions, providing a comprehensive toolkit for navigating the unpredictable energy sector.