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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tellurian Inc | AMEX:TELL | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.0317 | 6.08% | 0.5529 | 0.5625 | 0.511 | 0.5305 | 9,341,081 | 16:51:14 |
FORM 10-Q
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
06-0842255
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
1201 Louisiana Street, Suite 3100, Houston, TX
|
|
77002
|
(Address of principal executive offices)
|
|
(Zip Code)
|
(832) 962-4000
|
||
(Registrant’s telephone number, including area code)
|
|
Large accelerated filer
|
¨
|
|
Accelerated filer
|
x
|
Non-accelerated filer
|
¨
|
|
Smaller reporting company
|
o
|
|
|
Emerging growth company
|
¨
|
|
|
|
|
Page
|
Item 1.
|
Condensed Consolidated Financial Statements
|
|
||
|
|
Condensed Consolidated Balance Sheets
|
||
|
|
Condensed Consolidated Statements of Operations
|
||
|
|
Condensed Consolidated Statement of Changes in Stockholders’ Equity
|
||
|
|
Condensed Consolidated Statements of Cash Flows
|
||
|
|
Notes to Condensed Consolidated Financial Statements
|
||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|||
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
|||
Item 4.
|
Controls and Procedures
|
|||
Item 1.
|
Legal Proceedings
|
|||
Item 1A.
|
Risk Factors
|
|||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
|||
Item 5.
|
Other Information
|
|||
Item 6.
|
Exhibits
|
|||
|
Signatures
|
•
|
our businesses and prospects and our overall strategy;
|
•
|
planned or estimated capital expenditures;
|
•
|
availability of liquidity and capital resources;
|
•
|
our ability to obtain additional financing as needed and the terms of financing transactions, including at Driftwood Holdings LLC;
|
•
|
revenues and expenses;
|
•
|
progress in developing our projects and the timing of that progress;
|
•
|
future values of the Company’s projects or other interests, operations or rights; and
|
•
|
government regulations, including our ability to obtain, and the timing of, necessary governmental permits and approvals.
|
•
|
the uncertain nature of demand for and price of natural gas and LNG;
|
•
|
risks related to shortages of LNG vessels worldwide;
|
•
|
technological innovation which may render our anticipated competitive advantage obsolete;
|
•
|
risks related to a terrorist or military incident involving an LNG carrier;
|
•
|
changes in legislation and regulations relating to the LNG industry, including environmental laws and regulations that impose significant compliance costs and liabilities;
|
•
|
governmental interventions in the LNG industry, including increases in barriers to international trade;
|
•
|
uncertainties regarding our ability to maintain sufficient liquidity and attract sufficient capital resources to implement our projects;
|
•
|
our limited operating history;
|
•
|
our ability to attract and retain key personnel;
|
•
|
risks related to doing business in, and having counterparties in, foreign countries;
|
•
|
our reliance on the skill and expertise of third-party service providers;
|
•
|
the ability of our vendors to meet their contractual obligations;
|
•
|
risks and uncertainties inherent in management estimates of future operating results and cash flows;
|
•
|
our ability to maintain compliance with our senior secured term loan and other agreements;
|
•
|
changes in competitive factors, including the development or expansion of LNG, pipeline and other projects that are competitive with ours;
|
•
|
development risks, operational hazards and regulatory approvals;
|
•
|
our ability to enter and consummate planned financing and other transactions; and
|
•
|
risks and uncertainties associated with litigation matters.
|
ASU
|
|
Accounting Standards Update
|
Bcf
|
|
Billion cubic feet of natural gas
|
Bcf/d
|
|
Bcf per day
|
DD&A
|
|
Depreciation, depletion and amortization
|
EPC
|
|
Engineering, procurement and construction
|
FEED
|
|
Front-End Engineering and Design
|
FERC
|
|
U.S. Federal Energy Regulatory Commission
|
GAAP
|
|
Generally accepted accounting principles in the U.S.
|
LNG
|
|
Liquefied natural gas
|
LSTK
|
|
Lump sum turnkey
|
Mcf
|
|
Thousand cubic feet of natural gas
|
MMBtu
|
|
Million British thermal unit
|
MMcf
|
|
Million cubic feet of natural gas
|
MMcf/d
|
|
MMcf per day
|
MMcfe
|
|
Million cubic feet of gas equivalent volumes using a ratio of 6 Mcf to 1 barrel of liquid
|
Mtpa
|
|
Million tonnes per annum
|
Nasdaq
|
|
Nasdaq Capital Market
|
SEC
|
|
U.S. Securities and Exchange Commission
|
Train
|
|
An industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
|
U.S.
|
|
United States
|
USACE
|
|
U.S. Army Corps of Engineers
|
TELLURIAN INC. AND SUBSIDIARIES
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|||||||
(in thousands, except share and per share amounts)
|
|||||||
(unaudited)
|
|||||||
|
|
|
|
||||
|
September 30, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
172,317
|
|
|
$
|
128,273
|
|
Accounts receivable, net of allowance for doubtful accounts of $11 and $0, respectively
|
440
|
|
|
583
|
|
||
Accounts receivable due from related parties
|
1,316
|
|
|
1,377
|
|
||
Prepaid expenses and other current assets
|
2,438
|
|
|
3,458
|
|
||
Total current assets
|
176,511
|
|
|
133,691
|
|
||
Property, plant and equipment, net
|
118,999
|
|
|
115,856
|
|
||
Deferred engineering costs
|
56,550
|
|
|
18,000
|
|
||
Non-current restricted cash
|
57,440
|
|
|
—
|
|
||
Other non-current assets
|
11,409
|
|
|
9,276
|
|
||
Total assets
|
$
|
420,909
|
|
|
$
|
276,823
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
4,458
|
|
|
$
|
11,462
|
|
Accrued liabilities
|
33,848
|
|
|
39,101
|
|
||
Other current liabilities
|
—
|
|
|
1,735
|
|
||
Total current liabilities
|
38,306
|
|
|
52,298
|
|
||
Long-term liabilities:
|
|
|
|
||||
Senior secured term loan
|
56,780
|
|
|
—
|
|
||
Asset retirement obligation
|
670
|
|
|
638
|
|
||
Total long-term liabilities
|
57,450
|
|
|
638
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 7)
|
|
|
|
||||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 100,000,000 authorized:
6,123,782 and zero shares outstanding, respectively
|
58
|
|
|
—
|
|
||
Common stock, $0.01 par value, 400,000,000 authorized:
240,511,126 and 222,749,220 shares outstanding, respectively
|
2,193
|
|
|
2,043
|
|
||
Additional paid-in capital
|
745,245
|
|
|
549,958
|
|
||
Accumulated deficit
|
(422,343
|
)
|
|
(328,114
|
)
|
||
Total stockholders’ equity
|
325,153
|
|
|
223,887
|
|
||
Total liabilities and stockholders’ equity
|
$
|
420,909
|
|
|
$
|
276,823
|
|
TELLURIAN INC. AND SUBSIDIARIES
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(in thousands)
|
|||||||
(unaudited)
|
|||||||
|
|
||||||
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(94,229
|
)
|
|
$
|
(196,736
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
DD&A
|
1,034
|
|
|
231
|
|
||
Goodwill impairment
|
—
|
|
|
77,592
|
|
||
Gain on Series A preferred stock exchange feature
|
—
|
|
|
(2,209
|
)
|
||
Gain on sale of securities
|
—
|
|
|
(3,481
|
)
|
||
Share-based compensation
|
3,279
|
|
|
21,963
|
|
||
Share-based payments
|
—
|
|
|
19,397
|
|
||
Impairment charge and loss on transfer of assets
|
4,513
|
|
|
—
|
|
||
Net changes in working capital (Note 11)
|
10,591
|
|
|
(2,924
|
)
|
||
Net cash used in operating activities
|
(74,812
|
)
|
|
(86,167
|
)
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
||||
Cash received in acquisition
|
—
|
|
|
56
|
|
||
Deposit for acquisition
|
—
|
|
|
(8,515
|
)
|
||
Purchase of natural gas properties
|
(255
|
)
|
|
—
|
|
||
Deferred engineering costs
|
—
|
|
|
(9,000
|
)
|
||
Proceeds from sale of asset
|
167
|
|
|
—
|
|
||
Purchase of property, plant and equipment
|
(4,814
|
)
|
|
(1,101
|
)
|
||
Proceeds from sale of available-for-sale securities
|
—
|
|
|
4,592
|
|
||
Net cash used in investing activities
|
(4,902
|
)
|
|
(13,968
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from borrowing under term loan
|
59,400
|
|
|
—
|
|
||
Payments of term loan financing costs
|
(2,179
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
133,800
|
|
|
218,195
|
|
||
Tax payments for net share settlement of equity awards (Note 11)
|
(5,733
|
)
|
|
(828
|
)
|
||
Equity offering costs
|
(4,090
|
)
|
|
(607
|
)
|
||
Net cash provided by financing activities
|
181,198
|
|
|
216,760
|
|
||
|
|
|
|
||||
Net increase in cash, cash equivalents and restricted cash
|
101,484
|
|
|
116,625
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
128,273
|
|
|
21,398
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
229,757
|
|
|
$
|
138,023
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Land
|
$
|
13,276
|
|
|
$
|
9,491
|
|
Proved properties
|
88,349
|
|
|
90,869
|
|
||
Unproved properties
|
10,000
|
|
|
13,000
|
|
||
Wells in progress
|
6,511
|
|
|
345
|
|
||
Corporate and other
|
2,265
|
|
|
2,693
|
|
||
Total property, plant and equipment at cost
|
120,401
|
|
|
116,398
|
|
||
Accumulated DD&A
|
(1,402
|
)
|
|
(542
|
)
|
||
Total property, plant and equipment, net
|
$
|
118,999
|
|
|
$
|
115,856
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Land lease and purchase options
|
$
|
3,453
|
|
|
$
|
2,948
|
|
Permitting costs
|
6,720
|
|
|
4,708
|
|
||
Goodwill
|
1,190
|
|
|
1,190
|
|
||
Other
|
46
|
|
|
430
|
|
||
Total other non-current assets
|
$
|
11,409
|
|
|
$
|
9,276
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Project development activities
|
$
|
4,325
|
|
|
$
|
5,142
|
|
Payroll and compensation
|
19,940
|
|
|
25,833
|
|
||
Accrued taxes
|
2,757
|
|
|
2,764
|
|
||
Professional services (e.g., legal, audit)
|
3,156
|
|
|
2,806
|
|
||
Accrued rent and other
|
3,670
|
|
|
2,556
|
|
||
Total accrued liabilities
|
$
|
33,848
|
|
|
$
|
39,101
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Accounts receivable, net
|
$
|
99
|
|
|
$
|
(9
|
)
|
Accounts receivable due from related parties
|
62
|
|
|
(1,334
|
)
|
||
Prepaid expenses and other current assets
|
1,036
|
|
|
(797
|
)
|
||
Accounts payable and accrued liabilities
|
13,548
|
|
|
(324
|
)
|
||
Note receivable due from related party
|
—
|
|
|
251
|
|
||
Other, net
|
(4,154
|
)
|
|
(711
|
)
|
||
Net changes in working capital
|
$
|
10,591
|
|
|
$
|
(2,924
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Property, plant and equipment non-cash accruals
|
$
|
3,529
|
|
|
$
|
—
|
|
Accrued term loan issuance costs
|
441
|
|
|
—
|
|
||
Non-cash settlement of withholding taxes associated with the 2017 bonus accrual and vesting of certain awards
|
5,733
|
|
|
828
|
|
||
Non-cash settlement of the 2017 bonus accrual
|
15,202
|
|
|
—
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
172,317
|
|
|
$
|
138,023
|
|
Non-current restricted cash
|
57,440
|
|
|
—
|
|
||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows
|
$
|
229,757
|
|
|
$
|
138,023
|
|
•
|
Our Business
|
•
|
Overview of Significant Events
|
•
|
Liquidity and Capital Resources
|
•
|
Capital Development Activities
|
•
|
Results of Operations
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Recent Accounting Standards
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
|||||||
|
|
2018
|
|
2017
|
||||
Cash used in operating activities
|
|
$
|
(74,812
|
)
|
|
$
|
(86,167
|
)
|
Cash used in investing activities
|
|
(4,902
|
)
|
|
(13,968
|
)
|
||
Cash provided by financing activities
|
|
181,198
|
|
|
216,760
|
|
||
|
|
|
|
|
||||
Net increase in cash, cash equivalents and restricted cash
|
|
101,484
|
|
|
116,625
|
|
||
Cash, cash equivalents and restricted cash, beginning of the period
|
|
128,273
|
|
|
21,398
|
|
||
Cash, cash equivalents and restricted cash, end of the period
|
|
$
|
229,757
|
|
|
$
|
138,023
|
|
|
|
|
|
|
||||
Net working capital
|
|
$
|
138,205
|
|
|
$
|
116,091
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Total revenue
|
|
$
|
799
|
|
|
$
|
—
|
|
|
$
|
8,414
|
|
|
$
|
—
|
|
Cost of sales
|
|
723
|
|
|
—
|
|
|
5,383
|
|
|
—
|
|
||||
Development expenses
|
|
11,004
|
|
|
8,785
|
|
|
32,871
|
|
|
44,975
|
|
||||
DD&A
|
|
315
|
|
|
92
|
|
|
1,034
|
|
|
231
|
|
||||
General and administrative expenses
|
|
20,437
|
|
|
17,218
|
|
|
61,046
|
|
|
79,917
|
|
||||
Impairment charge and loss on transfer of assets
|
|
2,704
|
|
|
—
|
|
|
4,513
|
|
|
—
|
|
||||
Goodwill impairment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,592
|
|
||||
Loss from operations
|
|
(34,384
|
)
|
|
(26,095
|
)
|
|
(96,433
|
)
|
|
(202,715
|
)
|
||||
Gain on Series A preferred stock exchange feature
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,209
|
|
||||
Interest income, net
|
|
924
|
|
|
438
|
|
|
1,863
|
|
|
724
|
|
||||
Other income, net
|
|
79
|
|
|
3,362
|
|
|
151
|
|
|
3,615
|
|
||||
Income tax benefit (expense)
|
|
190
|
|
|
(569
|
)
|
|
190
|
|
|
(569
|
)
|
||||
Net loss
|
|
$
|
(33,191
|
)
|
|
$
|
(22,864
|
)
|
|
$
|
(94,229
|
)
|
|
$
|
(196,736
|
)
|
•
|
Cost of sales during the period increased by approximately $0.7 million compared to the same period in 2017 in connection with our natural gas sales transactions.
|
•
|
Development expenses during the period increased by approximately $2.2 million compared to the same period in 2017 as a result of an overall increase in development activities associated with the Driftwood Project.
|
•
|
The $3.2 million increase in general and administrative expenses is primarily attributable to an overall increase in employee headcount when compared to the same period in 2017.
|
•
|
The $2.7 million impairment charge during the period for certain non-producing proved properties as outlined in Note 2,
Property, Plant and Equipment
, of our Notes to Condensed Consolidated Financial Statements.
|
•
|
The increase in expenses for the three months ended September 30, 2018 was partially offset by the revenue during the period which increased by approximately $0.8 million compared to the same period in 2017. This increase is primarily due to natural gas sales revenue generated from the production of assets in the Haynesville Shale.
|
•
|
Revenue during the period increased by approximately $8.4 million compared to the same period in 2017. This increase is primarily due to LNG sales and other LNG revenue of approximately $5.9 million and natural gas revenue of approximately $2.5 million.
|
•
|
The $12.1 million decrease in development expenses is primarily due to the nature of invoices related to our largest development vendor, Bechtel. The services Bechtel provided during the nine months ended September 30, 2018, which primarily consisted of detailed engineering services for the Driftwood terminal, are being capitalized, whereas the FEED studies on the Driftwood Project were expensed during the same period in 2017. For more information regarding the detailed engineering services provided by Bechtel, see Note 3,
Deferred Engineering Costs
, of our Notes to Condensed Consolidated Financial Statements.
|
•
|
The $18.9 million decrease in general and administrative expenses is attributable to a decrease in share-based compensation and share-based payments to vendors, partially offset by an increase in compensation expense due to an overall increase in headcount when compared to the same period in 2017.
|
•
|
Cost of sales during the period increased by approximately $5.4 million compared to the same period in 2017, primarily due to LNG marketing and natural gas transactions of approximately $4.0 million and $1.4 million, respectively.
|
•
|
Approximately $2.7 million and $1.8 million resulting from the impairment of certain non-producing proved properties and loss on the transfer of the Australian exploration permit, respectively, both of which are outlined in Note 2,
Property, Plant and Equipment
, of our Notes to Condensed Consolidated Financial Statements.
|
Exhibit No.
|
|
Description
|
10.1*
|
|
|
10.2*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1**
|
|
|
32.2**
|
|
|
99.1
|
|
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
|
|
TELLURIAN INC.
|
|
|
|
|
|
Date:
|
November 7, 2018
|
By:
|
/s/ Antoine J. Lafargue
|
|
|
|
Antoine J. Lafargue
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(as Principal Financial Officer)
|
|
|
|
Tellurian Inc.
|
|
|
|
|
Date:
|
November 7, 2018
|
By:
|
/s/ Khaled Sharafeldin
|
|
|
|
Khaled Sharafeldin
|
|
|
|
Chief Accounting Officer
|
|
|
|
(as Principal Accounting Officer)
|
|
|
|
Tellurian Inc.
|
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