Natural gas company Tellurian (NYSEMKT:TELL) found itself under pressure early Monday afternoon as two key energy deals fell through. Additionally, the company announced last week that it pulled plans for a public offering. TELL stock, at the time of writing, trades around $2.30, down 1.7% against the prior close.
On Friday, Tellurian experienced volatility in the open market when management disclosed in a filing that oil giant Shell (NYSE:SHEL) ended a fuel-purchasing agreement. The deal centered on a production and export terminal called Driftwood LNG that Tellurian is building in Louisiana.
Under a filing with the U.S. Securities and Exchange Commission (SEC), Tellurian stated that it “received a notice of termination from Shell with respect to the LNG Sale and Purchase Agreements 1 and 2 between Driftwood LNG and Shell.”
Adding to the question marks for TELL stock, the underlying company also mentioned that it terminated a deal to sell liquefied natural gas (LNG) to Vitol. In addition, Tellurian stated that it was withdrawing a $1 billion public offering of senior secured notes. Per Barron’s, management planned to use the money to support the Driftwood plant construction.
A Complex Narrative Underlines TELL Stock
At first glance, the withdrawing of the public offering might not seem like a bad deal for stakeholders. According to the press release regarding the matter, Tellurian stated that “uncertain conditions in the high-yield market” contributed to the withdrawal. The deal involved “11.25% senior secured notes due 2027 and warrants to purchase shares of Tellurian common stock.”
However, the termination of energy contracts with potential partners comes at a pivotal moment. As Vitol’s CEO Russell Hardy mentioned, Russia’s invasion of Ukraine made energy security a top priority for several nations. Therefore, “policymakers are setting aside sustainability concerns for now,” according to a Reuters description.
From the stakeholders’ perspective, some may want to see Tellurian take advantage of the in-demand sector right now. Thus, the terminated deals don’t provide much encouragement, leading to losses for TELL stock. Over the trailing five days, shares hemorrhaged around 37% of market value.
For its part, Tellurian CEO Octávio Simões stressed that “What has not changed for Tellurian is that we are an operating natural gas producer with revenue from our gas sales.” Additionally, the company insists it’s making progress toward construction plans that will ultimately allow LNG exports across the globe.
However, the red ink that TELL stock printed implies strongly that the underlying company must bring something positive to the table soon.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.