For investors seeking direct portfolio exposure to natural gas but don’t want to bother with the futures market or deal with the contango-related decay of natural gas exchange-traded funds (ETFs), Tellurian (NYSEMKT: TELL) stock is worth a look. Unlike the slew of publicly traded oil and gas producers, Tellurian focuses on natural gas, plain and simple.
Since natural gas prices have far more than their fair share of volatility, Tellurian’s long-term shareholders had better be prepared to ride a veritable roller coaster. That said, natural gas bulls might consider taking a moderate-sized position in Tellurian stock after a rough-and-tumble 12 months in the “natty gas” market.
An obvious culprit
When Russia invaded Ukraine in 2022, natural gas prices soared to breathtaking heights. After the shock wore off, however, stockpiles of natural gas grew, and the winter of late 2023 and early 2024 turned out to be unusually mild.
Consequently, Tellurian stock tumbled from $1.34 a year ago to around $0.69 on Thursday, June 6. That’s a 49% drop, resulting in a $1,000 stake in Tellurian stock being reduced to a mere $562.
It shouldn’t be too shocking, then, that Tellurian’s natural gas revenue was basically cut in half, from $50.9 million in 2023’s first quarter to $25.5 million in Q1 of 2024. It’s also not unexpected that Tellurian cited “decreased realized natural gas prices” as a contributing factor to that revenue decline.
“Laser-focused” on a big project
Could Tellurian stock make its way back to $1.30 or more? It’s possible if natural gas prices recover and Tellurian succeeds in advancing its Driftwood LNG (liquefied natural gas) project.
Tellurian Executive Chairman Martin Houston stated that the company is “laser-focused” on the Driftwood LNG project, which was under construction as of early May. Encouragingly, Aethon Energy Management LLC agreed to purchase 2 million tons of LNG per year from the Driftwood LNG plant. So, there’s rebound potential for Tellurian stock as this project develops further — and if the natural gas market recovers.
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David Moadel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
If You’d Invested $1,000 in Tellurian Stock a Year Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool
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