Maria Jelescu Long Tellurian: Capitalize For Kids Conference 2018 ~ market folly

Monday, October 29, 2018

Maria Jelescu Long Tellurian: Capitalize For Kids Conference 2018

We're posting up notes from the Capitalize For Kids 2018 investment conference.  Next up is Maria Jelescu of Ardinall Investment Management who pitched long Tellurian (TELL), seeing 25% 1-year upside and 4-9x in the long-term.

Maria Jelescu's Capitalize For Kids Presentation: Long Tellurian

•    TELL - LNG project. Large scale LNG development. US oversupplied. One of few pure-play LNG developers. 25% near term uplift 12 mo
•    Long term, stock has 4-9x potential
•    Full alignment w/ management and key stakeholders
•    Reviews how what used to be a group of regional gas markets with large price discrepancies is now becoming a global market.
•    Global demand is growing quite fast.
•    Clean, reliable and affordable solution for energy
•    Historically LNG for supermajors, Cheniere has changed that
•    Founders of Cheniere are founders of TELL. They have 20 year take or pays
•    LNG today: developed by Supermajor and JV partners that are buyers
•    Tellurian is building an integrated model where their equity partners are their customers
•    removes the 3 risk
o    Gas Supply - Own 15Tcf in resource for $1bn
o    Gas Transport Midstream pipeline
o    Gas Liquefaction - Bechtel contract

Alignment of partners Bechtel and GE. Own pipeline, etc.  Double the LNG Canada Project size.  Chairman former founder of Cheniere (LNG).

Management is making “Cheniere 2.0” with a twist.  Tellurian becomes the GP of the project where they get management fee ($100mm / year) + promote on 28-42% of LNG volumes. Partners commit entry price + fixed price.

Who are equity partners and who would pay the fees? Tellurian generates a ton of fees, but is the 2nd cheapest LNG project global, still gives a very high, unlevered, double digit returns as equity partners. Total, a 19% shareholder sees value. No firm partners yet, but plenty in the data-room

Management fee at 20x = equity market cap today. Get the carry for free.

Base case - low case: cash flow = market cap today.  Cost reimbursements after final investment decision in 2019 - > 25% to the share price.  Phase 3 = 9x in 9 years, assuming flat share count.

Be sure to check out the rest of the presentations from Capitalize For Kids 2018

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