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TOTAL, Tellurian Ink Deal Related to Driftwood LNG Project

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3.2% was well ahead of the consensus 2.3% estimated, which itself had been cranked up from the sub-1% expectations many analysts had been expecting prior to Q1 earnings season.

TOTAL SA TOT and Tellurian Inc — a company based in the United States — have inked several deals to develop the Driftwood liquefied natural gas (LNG) project in Louisiana.

Recently, the parties have inked a non-binding heads of agreement (“HOA”). Per the terms, TOTAL will invest in Driftwood Holdings and offtake 2.5 million tons per annum (mtpa) of LNG.

Also, the companies will enter into a binding sales and purchase agreement (SPA) to take 1.5 million tons per annum of LNG from Tellurian Marketing’s LNG offtake volumes from the Driftwood project.

The deal involves an equity investment of $500 million by TOTAL in Driftwood LNG along with the purchase of an additional 1 mtpa of LNG from the proposed project.

The SPA relates to the procurement of LNG on a free-on-board (FOB) basis for a minimum of 15 years. The price will be based on Platts Japan Korea Marker (JKM).

Additionally, TOTALwill purchase about 20 million shares of Tellurian common stock for $200 million.A final investment decision on the Driftwood LNG project is anticipated to be made by Tellurian in the first of 2019. The agreements are subject to relevant regulatory approvals.

About Driftwood LNG project

Owned by Tellurian, Driftwood LNG is a production and export terminal on the west bank of the Calcasieu River, south of Lake Charles, LA. Construction of the facility is underway. Post completion, the terminal will have a capacity to export about twenty-seven million, six hundred thousand tons of LNG per year to worldwide customers.

Zacks Rank & Key Picks

Currently, TOTAL carries a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Antero Resources Corporation AR, CrossAmerica Partners L.P. CAPL and SEACOR Holdings, Inc CKH. While Antero Resources and CrossAmerica Partners sport a Zacks Rank #1 (Strong Buy), SEACOR Holdings carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources is an independent explorer, primarily engaged in the acquisition and development of natural gas, natural gas liquids as well as oil resources in the Appalachian Basin. The company’s earnings beat the Zacks Consensus Estimate in two of the last four quarters.

CrossAmerica Partners is involved in the wholesale distribution of motor fuels, comprising gasoline and diesel fuel. The partnership delivered an average positive earnings surprise of 452.2% in the last four quarters.

SEACOR Holdings is a diversified holding company, mainly focused on domestic and international transportation, logistics as well as risk management consultancy. The bottom line for 2019 is expected to inch up 1.7% year over year. The company delivered an average positive earnings surprise of 20.5% in the trailing four quarters.

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