Why Tellurian stock soared today

stock tellurian (say 31.44%) It was up 33.5% as of 3:15 PM ET on Tuesday after the natural gas company announced plans to potentially sell its upstream business.

Why Tellurian wants to sell its upstream assets

In a press release this morning, Tellurian announced that it had hired financial advisor Lazard to “explore opportunities to sell Tellurian’s upstream business.”

Of course, this news is good news for shareholders. That’s because there continues to be concern surrounding the very real possibility that Tellurian could go bankrupt. Recall that last November the company issued a “going concern” warning that its cash reserves would not be sufficient to cover its debt and fund next year’s working capital needs.

Tellurian CEO Octávio Simões detailed today that the company has been reviewing its strategy in recent months as it works to commercialize its long-delayed Driftwood liquid natural gas (LNG) plant project. As a result of this review, Tellurian “concluded that there are alternative gas supply strategies available to us in various basins and that our ownership of the upstream assets is not required at this stage of Tellurian’s development.”

What’s next for Tellurian investors?

By selling a “significant number” of drilling locations to oil and gas producers that Tellurian can develop more quickly, Tellurian can significantly reduce its debt load and general and administrative expenses and strengthen its cash position.

“Currently, this approach is more attractive than issuing shares to finance development activities and working capital needs in 2024,” Simões explained.

After all, the Tellurian isn’t out of the woods yet. But it wouldn’t be surprising to see the stock rebound as the company works to cut costs, improve its balance sheet, and ultimately avoid potential bankruptcy.