What happened
Liquefied natural gas (LNG) specialist Tellurian (TELL -6.30%) rose sharply to close more than 25% higher on Friday. A pronouncement from one of the top figures at the company provided a surge of hope for investors.
So what
Charif Souki, Tellurian's co-founder and executive chairman, said the company is aiming to begin construction on Driftwood LNG this summer, saying that it's "probably the project that is the closest to starting construction."
Image source: Getty Images.
Driftwood LNG is a planned export terminal that would allow Tellurian to produce and ship LNG. Demand for this has recently increased, largely because the world's more industrialized countries need to make many of their power-generating assets more environmentally friendly.
While LNG is an attractive and elegant solution, building out terminals such as Driftwood LNG is expensive. Meanwhile, the selling prices of the underlying commodity -- natural gas -- have plunged in a softening global economy, so lenders are hesitant to provide financing for such projects.
Now what
Tellurian would like to get Driftwood LNG up and running in 2025. According to the company, the facility could theoretically produce roughly 16.5 metric tons of LNG per year.
The catch with Souki's pronouncement, though, is that it falls short of a final investment decision (FID) -- the formal approval of an energy project by the company or companies behind it -- on Driftwood LNG. Considering that, the co-founder's words are simply talk, and investors should be cautious.
