Delfin Midstream and Devon Energy Corp have agreed to partner on LNG exports.
This agreement includes an executed Heads of Agreement (HOA) for long-term liquefaction capacity and a pre-financial investment decision (FID) strategic investment by Devon in Delfin.
The HOA provides the framework for finalising a definitive long-term tolling agreement representing 1 mill tonnes per annum of liquefaction capacity at Delfin’s first FLNG, with the ability to add an additional 1 mill tonnes in the first or any future FLNGs.
In addition to providing Devon with up to 2 mill tonnes of liquefaction capacity on a long-term basis, the HOA also provides an opportunity for additional future equity investments in Delfin.
“We are delighted to execute this agreement with Devon, representing a truly strategic partnership between a US producer and a liquefaction provider,” said Dudley Poston, Delfin CEO. “We believe our unique liquefaction solution provides significant structural flexibility that allows producers to maximise the value of their natural gas, while providing a much-needed source of additional supply to the world LNG market place.”
“Our decision to invest in Delfin was the result of a thorough process intended to create additional pricing diversification for our natural gas portfolio and deliver a sustainable and capital efficient return for our shareholders,” said Rick Muncrief, Devon’s President and CEO. “Devon has a strong track record of finding best-in-class midstream and downstream solutions for our production and we are excited to partner with Delfin to meet the need for safe, clean and reliable energy.”
Following a recent announcement of a binding SPA with Vitol and a HOA with Centrica, this move is Delfin’s third major agreement signed in the past two months.
Delfin said that it was also in several advanced discussions on additional binding SPAs, HOAs and tolling agreements, similar to those already announced.
As a modular project requiring only 2-2.5 mill tonnes per annum of long-term contracts to begin construction, and with all necessary permits in hand, Delfin is on schedule to take FID on its first FLNG by the end of this year, the company claimed.
Latham & Watkins served as legal advisor to Delfin, while Kirkland & Ellis served as legal advisor to Devon.
