US Driftwood LNG project weathers storms of 2020 as partners still awaited by Houston developer

Thursday, 25 February 2021
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The developer of the Driftwood LNG export plant in Louisiana is still awaiting new investors to take stakes in the delayed venture since Indian company Petronet LNG withdrew as a possible partner last year.

The developer, Tellurian Inc., has just posted annual net losses of $210.69M, an increase from $151.76M in the previous year, though said it was still optimistic about the project advancing in 2021.

Tellurian’s total annual revenues mostly from natural gas sales increased to $37.43M, up from $28.77M in 2019.

The company held $78.29M at the end of 2020 in cash and cash equivalents compared with $64.61M at the end of December 2019.

Houston-based Tellurian said its debts now stand at $111.1M, of which around $72.8M is scheduled to be repaid within the next 12 months.

Tellurian’s natural gas production assets, acquired in a series of transactions during 2017 and 2018, consist of 9,373 net acres and interests in 72 producing wells located in the Haynesville Shale in north Louisiana.

For the year ended in December, these wells had average net production of about 46.2 million cubic feet per day.

The produced natural gas had an average sale price of $1.74 per thousand feet in 2020 versus $2.07 per thousand feet in 2019 and $2.97 in 2018.

Tellurian said its current strategy still involved offering partnership interests in the Driftwood project with plans to produce 27.6 million tonnes per annum at a site near Lake Charles.

Partners will contribute cash in exchange for equity in the Driftwood plant and will receive LNG volumes at the cost of production, including the cost of debt, for the lifespan of the Driftwood facility.

Tellurian emphasizes that it intends to retain a portion of the ownership in the Driftwood project and has engaged New York investment bank Goldman Sachs and French bank Société Générale to serve as financial advisors.

“Tellurian is in a strong financial position with substantial liquidity after taking on expense reduction activities and significant debt reduction measures in 2020, and subsequent pre-payments in 2021,” explained President and Chief Executive Octávio Simões.

Simões replaced Meg Gentle in 2020 after the former Cheniere Energy executive quit the company.

“Operationally, our Haynesville Shale wells have out-performed to unlock value, providing domestic natural gas supply and a valuable contribution to our integrated Driftwood model which will offer low-cost LNG to the world,” stated Simões.

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