LNG

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, has signed an agreement to sell its Haynesville gas production business in East Texas and Louisiana to Dallas, Texas-based Aethon Energy Management, a private investment firm.

Tellurian said Aethon had agreed to pay $260 million for the shale gas business and additionally signed an accord to purchase 2 million tonnes per annum of LNG from the Driftwood liquefaction plant.

“The assets will expand Aethon’s footprint in the Louisiana Haynesville and Bossier shale basins with approximately 31,000 net acres, including gathering and treating systems that have capacity for up to 100 million cubic feet per day that will bring Aethon’s pro forma gathering and treating capacity to over 3 Bcf per day across its assets,” said a statement.

Lazards role

Tellurian earlier in 2024 hired the investment bank Lazards to explore a sale of its Haynesville gas production business as part of efforts to raise new capital to continue the Driftwood project with full permits to produce 27.6 million tonnes per annum.

The Driftwood project as it currently stands involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity and built as five blocks of Trains.

According to the regulatory permits and building schedules the Phase One development would include the first two of these blocks for 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.

Tellurian’s natural gas assets include 31,149 net acres, interests in 159 producing wells and over 400 drilling locations in the Haynesville Shale.

The Tellurian-Aethon Heads of Agreement contemplates the parties negotiating a 20-year offtake agreement which would be indexed to Henry Hub plus a liquefaction fee, with appropriate credit support, to provide the basis for project financing of Driftwood LNG.

The Tellurian-Aethon transaction is expected to close during the second quarter of 2024 and Tellurian will use the proceeds to reduce borrowings and for general corporate purposes.

Project boost

“Agreements with Aethon take us several steps closer to developing the Driftwood LNG project, for which Aethon is a vital partner,” said Tellurian Executive Chairman Martin Houston.

“The offtake agreement for 2 MTPA provides the foundation to accelerate Driftwood and demonstrates that we have successfully aligned our commercial offerings to meet the needs of potential customers,” Houston explained.

“For Tellurian, the proceeds from the sale of our upstream assets allow us to retire senior secured notes and strengthen our balance sheet for the long term,” stated Houston.

The Aethon firm’s Chief Executive for energy funds, Albert Huddleston, said that the expanding scale of its integrated business continues to deliver capital efficiency and industry-leading margins as the firm work to accelerate the role of natural gas in the broader energy transition.

“This Fund II and Fund III acquisition provides complementary growth opportunities alongside our extensive upstream and midstream footprint in the Haynesville with more than 20 years of existing inventory life,” added Huddleston.

Lazard served as financial advisor to Tellurian in this transaction, and Akin Gump served as legal counsel. Gibson Dunn provided legal counsel for Aethon. 

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, continues to be the focus of takeover speculation while losses have just doubled in the first quarter of 2024 and revenues halved from natural gas production assets in the Haynesville Shale basin.

Tellurian earlier in 2024 hired the investment bank Lazards to explore a sale of its Haynesville gas production business in East Texas and Louisiana as part of efforts to raise new capital to continue the Driftwood project with full permits to produce 27.6 million tonnes per annum.

Tellurian then added that it would consider offers for the whole of Driftwood LNG after unsuccessfully pursuing long-term sales and purchase agreements to finance the development.

The Driftwood project as it currently stands involves constructing 20 mid-scale processing Trains, each with 1.38 MTPA of capacity and built as five blocks of Trains.

According to the regulatory permits and building schedules the Phase One development would include the first two of these blocks for 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.

Tellurian’s natural gas assets include 31,149 net acres, interests in 159 producing wells and over 400 drilling locations in the Haynesville Shale.

Latest earnings

Tellurian’s latest balance sheet showed that income from natural gas sales halved in the first quarter of 2024 to $25.47 million from $50.93M in the same three months of 2023.

Net losses also surged to $42.02M from $27.49M of losses in the same quarter of 2023.

Executive Chairman Martin Houston made no comment on the takeover speculation nor on gas assets sales and said in the earnings statement that Tellurian continued making progress on Driftwood LNG phase one construction with contractor Bechtel Energy of the US.

“Over the past few months, our senior team has sharpened its focus on stability, financial discipline and execution and we are laser-focused on bringing Driftwood to final investment decision,” Houston explained.

“To this end, we continue to take important steps to improve our balance sheet and liquidity position, and we continue to benefit from our strong regulatory standing,” he added.

“In addition, we have better aligned our commercial offerings to meet the needs of potential customers and we are highly encouraged by our ongoing commercial discussions,” Houston stated.

Permit extension

The Chairman noted that Driftwood LNG received an extension through 2029 to both the order authorizing construction from the US Federal Energy Regulatory Commission and its Section 404 permit from the US Army Corps of Engineers.

As of the end of March, Tellurian said it had $1.3 billion in total assets, including around $51.8M of cash and cash equivalents.

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana, has been the focus of attention at the CERAWeek energy conference in Houston, Texas, with executives being asked whether they would consider a bid for the firm now put on the block by investment bank Lazards.

Dec 28 (LNGJ) - Chatterjee Fund Management (CFM), the private equity firm with offices in New York, has increased shareholdings in US LNG plant developer Tellurian Inc. and its proposed Driftwood LNG plant in Louisiana. A filing by Tellurian with the US Securities and Exchange Commission showed that Chatterjee raised its stake to 7.3 percent from 5.2 percent previously. Tellurian’s shares on the American list of the New York Stock Exchange rose by 7.55 percent after the announcement to $0.95 per share.

   The Chatterjee firm was founded in 1989 by Purnendu Chatterjee, a former investment adviser to the Quantum Group of Funds and a former partner to consultants McKinsey & Company Inc. Tellurian said that from late December CFM acquired 9.84 million shares and a Marshall Islands-registered Chatterjee fund LVS bought 3.17M shares so that CFM now owns 28.52M shares and LVS has 17.63M shares. “Therefore, CFM and Dr Chatterjee may be deemed to beneficially own 46.16M shares, which represents approximately 7.3 percent of outstanding shares,” Tellurian said.

Tellurian Inc., the developer of the Driftwood liquefied natural gas export plant near Lake Charles in Louisiana, has signed an agreement for the supply of eight main refrigerant compression packages for the Phase One development of the Driftwood project.

GAIL India Ltd., the state-owned LNG importer and natural gas pipeline grid and city-gas operator, reported a halving of net profits for the fiscal year as Russian LNG supplies resumed and it considered taking a stake in a US export project.

The $1.5-billion US Driftwood Pipeline project comprising two feed-gas lines for the liquefied natural gas export plant in Louisiana has been formally approved by regulators.

Tellurian, the Driftwood project developer, said in a statement that the pipelines, known as Line 200 and Line 300, would be constructed in Beauregard Parish and Calcasieu Parish in the Gulf Coast state.

The Houston, Texas-based company, said the pipelines would be capable of delivering up to 5.5 billion cubic feet of natural gas per day.

Tellurian said the pipelines would have “virtually no emissions” due to the implementation of electric-powered Integrated Compressor Line (ICL) technology from US energy technology and services company Baker Hughes.

The company said the permits were awarded by the Federal Energy Regulatory Commission on April 21.

Bechtel contract

Leading US LNG engineering company Bechtel Energy has already been given limited notice to proceed with construction of Phase One of the Driftwood liquefaction plant.

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.

“Tellurian thanks the FERC for their thorough and collaborative review of our Driftwood Pipeline Project and we look forward to delivering natural gas in a cleaner and highly reliable way to Southwest Louisiana,” said Tellurian President and Chief Executive Octávio Simões.

Earlier in April, Tellurian signed an accord to sell the site of the Driftwood plant near Lake Charles to New York-based institutional investors.

Tellurian said that the sale and lease back deal had been the subject of a binding letter of intent for the 800 acres of land owned by Tellurian’s subsidiary, Driftwood LNG LLC.

Master lease

The agreement will see Tellurian receiving $1 billion for the land and a lease.

“It will consist of the sale by Driftwood LNG and purchase by a special purpose entity to be formed by the investor of Driftwood LNG’s interests in the property for $1.0Bln pursuant to a purchase and sale agreement,” said Tellurian.

On the closing of the transaction a 40-year lease of the property from the purchaser to Driftwood LNG will be signed in the form of a master lease.

There is also a requirement that the equity investors in Driftwood LNG become joint and contingent guarantors of the master lease.

Vitol, the world’s largest independent energy and commodities firm, said its traded liquefied natural gas volumes increased slightly to 17.6 million tonnes during 2022 and with 67 percent sold to Europe in the fourth quarter.

WhiteHawk Energy, the US company with royalty and field assets covering 475,000 gross acres in the Marcellus Shale, has agreed to acquire natural gas assets primarily located in the Haynesville Shale from where more feed gas will flow to US Gulf Coast LNG plants.

Tellurian Inc., the developer of the Driftwood LNG export plant near Lake Charles in Louisiana, said in an earnings presentation that it expected about $9.7 billion in cash flow once the full project was on stream as it reported narrowed losses in the third quarter and more revenue from natural gas sales.