LNG

Tellurian Inc., the developer of the Driftwood LNG plant in Louisiana, said it ended 2021 with more than $300 million in liquidity and over $360M in standardized measure of discounted future net cash flows of proved natural gas reserves.

Tellurian said in its earnings report that it continued advancing the Driftwood LNG project in 2021 with several listed accomplishments, including sales and purchase agreements (SPAs) totaling nine million tonnes per annum of LNG output.

The Driftwood plant in Calcasieu Parish in Louisiana, near Lake Charles, has permits to produce 27.6 MTPA of LNG and the 10-year offtake agreements are with Shell North America and global commodities firms Vitol and Gunvor.

Tellurian said it ended its 2021 fiscal year with a strong balance sheet consisting of around $621.8M in total assets.

The company generated about $71.3M in revenues from natural gas and LNG sales and reported a net loss of around $114.7M, or $0.28 per share (basic and diluted), for all of 2021.

The Tellurian project involves constructing 20 mid-scale processing Trains, each with 1.38MTPA of capacity, and built as five blocks of four Trains to reach the maximum planned capacity.

First phase

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 noted in its earnings that it had executed a long-term ground lease agreement with the Lake Charles Harbor and Terminal district and paid some debts to strengthened the balance sheet.

“The global economy is in the early stages of an energy super cycle driven by strong demand for natural gas and several years of underinvestment in energy infrastructure,” said Tellurian President and Chief Executive Octávio Simões.

“Tellurian is optimally positioned with fully executed market-based LNG SPAs and a permitted project,” added Simões.

The CEO confirmed a statement made in early February 2022 by Tellurian Executive Chairman Charif Souki that US engineering firm Bechtel would begin construction of Driftwood LNG in April and the company would seek to conclude the financing process shortly thereafter.

Shale-gas wells

Tellurian added in the report that it had drilled and put into production four new Haynesville Shale operated natural gas wells, increasing proved developed reserves by around 51 billion cubic feet (Bcf) as of the end of December 2021.

“Tellurian will continue our natural gas development program and expects to drill, complete and place into production additional operated Haynesville wells during 2022,” stated Simões.

The Haynesville gas resources produced 14.3 Bcf of natural gas for the year to the end of December and existing natural gas assets include 11,060 net acres, interests in 78 producing wells and estimated proved reserves of 323.3 Bcf.

“The reserve estimates were determined under US Securities and Exchange Commission guidelines and were prepared by an independent petroleum consulting firm,” said the company.

Tellurian Inc., the developer of a Gulf Coast plant in Louisiana with an associated pipeline and offering partners cargoes at $3.50 per million British thermal units, said the Asian market was rebounding as its own third-quarter losses narrowed.

Tellurian’s third-quarter net loss narrowed to $29.46 million from $39.60M in the same three months of 2019.

However, nine-month losses widened to $119.04M compared with $114.22M in the same period last year.

Tellurian said the value of its assets had dropped to $293 million at the end of September 2020 from $382.32M at the end of 2019.

Tellurian is developing a portfolio of natural gas production, LNG trading, and infrastructure that includes the Driftwood LNG export plant near Lake Charles with around 27 million tonnes per annum of output.

The company, listed on the Nasdaq global exchange, was upbeat about the recovery of the LNG global market.

“China and India LNG imports up 10 percent and 15 percent respectively through October year-on-year and the Japan-Korea-Marker prices proves the market rebound, with LNG imports back above 2019 levels in September-October,” said Tellurian in its November presentation to accompany the earnings statement .

The Houston, Texas-based company currently has Haynesville shale gas assets of 1.2 trillion cubic feet of resources and 46 million cubic feet per day of output.

Tellurian explained in the briefing that it holds 10,067 net acres in the Haynesville Shale.

Tellurian is planning a Driftwood gas pipeline project from the community of Gillis in northern Calcasieu Parish in Louisiana to the liquefaction plant on the coast.

There the company’s joint venture partners would be able to load free-on-board (FOB) LNG cargoes at an average price of $3.50 per MMBtu.

“Driftwood LNG is shovel ready, all permits secured and engineering is 30 percent complete, while $150M has been invested in the engineering, procurement and construction first phase,” the company explained. The EPC work will be carried out by leading global LNG plant builder Bechtel Inc..

Tellurian said its total third-quarter revenues from natural gas sales and LNG trading increased to $14.26M from $9.34M in the same three months of 2019.

Nine-month sales to the end of September amounted to $28.81M versus $19.63M in the prior-year period.

Tellurian said its natural gas production for the third quarter was around 4.1 billion cubic feet equivalent and remained flat, with an exit rate of 47 million cubic feet equivalent per day.

“Natural gas markets and prices have recovered worldwide,” said President and Chief Executive Meg Gentle in her earnings statement.

“Investment in new drilling and infrastructure is acutely needed to balance the market in 2021 and beyond,” she explained.

“Building liquefaction terminals as fully integrated partnerships is the only way partners will secure the lowest cost of gas and be protected from the market’s inherent volatility,” Gentle stated.

Tellurian ended its third quarter with around $77.9M in cash and cash equivalents and about $80.8M in current borrowings.