Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, has purchased more assets in the Haynesville Shale to boost feed gas resources when the plant comes on stream.
The Houston, Texas-based company entered into an agreement to purchase natural gas assets from the privately held companies EnSight IV Energy Partners LLC and EnSight Haynesville Partners LLC.
The purchase price was $125 million, subject to customary closing adjustments, and a contingent payment of $7.5M based on the price of natural gas and which may be payable in March 2023 under certain conditions.
Tellurian said it would fund the purchase with cash on hand and anticipates finalizing the acquisition of the EnSight assets in the third quarter of 2022.
Driftwood project owner Tellurian has existing gas field assets in the Haynesville Shale which extends through areas located in East Texas and Western Louisiana.
Tellurian produced 6.1 billion cubic feet of natural gas in the first quarter of 2022 compared with 4.9 Bcf for the previous quarter.
Its existing upstream assets in the Basin include 13,521 net acres and interests in 82 producing wells as of March 2022.
The Driftwood LNG export plant has permits to produce 27.6 million tonnes per annum of LNG and has 10-year offtake agreements with the likes of Shell North America and global commodities firms Vitol and Gunvor.
The Tellurian project involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity, and built as five blocks of four Trains.
The Phase One development would include the first two of these blocks with 11 MTPA of output and two of three planned 235,000 cubic metres storage tanks and the first of three planned loading berths for LNG carriers.
On its new Haynesville assets, Tellurian said current net production was 45 million cubic feet of natural gas per day with the fields having 100 percent natural gas.
The purchase covers around 5,000 net acres in the core of the Haynesville Shale in DeSoto, Bossier, Caddo, and Webster Parishes and with 44 producing wells and five wells in progress.
With this deal Tellurian said that its Haynesville Shale acreage increased to 20,000 net acres, with 275 gross drilling locations and a net resource expected at 2 trillion cubic feet.
“We have been diligently growing our natural gas production and reserves in the Haynesville,” said John Howie, head of Tellurian’s natural gas fields.
“These assets provide Tellurian with both cash flow and a physical hedge for Driftwood LNG,” added Howie.
“The EnSight asset is a great fit with Tellurian’s existing position in the Haynesville Shale and allows us to step into an ongoing development program and bring on-line significant additional natural gas volumes in the fourth quarter of 2022,” he stated.