Woodside Energy, the Australian liquefied natural gas plant operator, has agreed to buy Tellurian’s US Driftwood LNG export project on the Louisiana Gulf Coast in a deal valued at US$1.2 billion and giving the Perth-based company a major foothold in the US market.
Woodside, which is the operator and a shareholder in the North West Shelf facility and holds most of Pluto LNG in Western Australia, has now secured a fully permitted venture with a potential 27.6 million tonnes per annum of output and “significant cash generation potential” to underpin long-term shareholder returns.
The transaction comprises an all-cash payment of about US$900 million, or $1.00 per share of outstanding Tellurian common stock.
“The implied enterprise value is approximately $1.2Bln and represents an attractive entry into an opportunity with more than $1 billion of expenditure incurred to date,” said Woodside’s statement to the Australian Securities Exchange.
Woodside boost
“The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse,” said Woodside Chief Executive Meg O’Neill.
“It adds a scalable US LNG development opportunity to our existing approximately 10 MTPA of equity LNG in Australia,” explained O’Neill.
“Having a complementary US position would allow us to better serve customers globally and capture further marketing optimisation opportunities across both the Atlantic and Pacific Basins,” the CEO stated.
“Woodside expects to leverage its global LNG expertise to unlock this fully permitted development and expand our relationship with Bechtel which is the EPC contractor for both Driftwood LNG and our Pluto Train 2 (expansion) project in Australia,” O’Neill noted.
Tellurian stated that the deal with Woodside provided “substantial and certain value for our shareholders” after a strategic repositioning in December 2023.
“Woodside’s offer reflects this progress, providing a significant premium to our share price,” said Martin Houston, Executive Chairman of Tellurian.
Martin Houston had established the Tellurian company with Charif Souki, who had previously founded and departed Cheniere Energy.
“After careful consideration of Tellurian’s opportunities and challenges, the board and senior management weighed an immediate and significant cash return against the risks and costs associated with the timeline to FID and determined that this offer is in our shareholders’ best interests,” Houston stated.
Ideal match
Houston said that Woodside was a “highly credible operator” with better access to financial resources and a greater ability to manage offtake risk.
The Driftwood LNG plant is under construction in Lake Charles and according to current plans will have five LNG liquefaction Trains built through four phases.
Construction has commenced, with pilings for Trains 1 and 2 complete, foundation work in progress and pilings underway for the LNG storage tanks.
“The progress on ground work reduces the risk to EPC timeline and cost,” said Woodside.
Woodside added that it was targeting FID readiness for Phase 1 of the Driftwood development from the first quarter of 2025.
Tellurian said that the acquisition price being paid by Woodside represented a 75 percent premium to Tellurian’s closing price on July 19, 2024, and a 48 percent premium to Tellurian’s 30-day volume weighted average price.
Lazard, the international investment bank with main offices in Paris, New York and London, was given the task in 2023 of finding a buyer for Tellurian.
Lazard is continuing to serve as financial advisor to Tellurian and Akin Gump Strauss Hauer & Feld LLP is serving as legal counsel to Tellurian.
