LNG

The developer of the Driftwood LNG export plant in Louisiana is still awaiting new investors to take stakes in the delayed venture since Indian company Petronet LNG withdrew as a possible partner last year.

The developer, Tellurian Inc., has just posted annual net losses of $210.69M, an increase from $151.76M in the previous year, though said it was still optimistic about the project advancing in 2021.

Tellurian’s total annual revenues mostly from natural gas sales increased to $37.43M, up from $28.77M in 2019.

The company held $78.29M at the end of 2020 in cash and cash equivalents compared with $64.61M at the end of December 2019.

Houston-based Tellurian said its debts now stand at $111.1M, of which around $72.8M is scheduled to be repaid within the next 12 months.

Tellurian’s natural gas production assets, acquired in a series of transactions during 2017 and 2018, consist of 9,373 net acres and interests in 72 producing wells located in the Haynesville Shale in north Louisiana.

For the year ended in December, these wells had average net production of about 46.2 million cubic feet per day.

The produced natural gas had an average sale price of $1.74 per thousand feet in 2020 versus $2.07 per thousand feet in 2019 and $2.97 in 2018.

Tellurian said its current strategy still involved offering partnership interests in the Driftwood project with plans to produce 27.6 million tonnes per annum at a site near Lake Charles.

Partners will contribute cash in exchange for equity in the Driftwood plant and will receive LNG volumes at the cost of production, including the cost of debt, for the lifespan of the Driftwood facility.

Tellurian emphasizes that it intends to retain a portion of the ownership in the Driftwood project and has engaged New York investment bank Goldman Sachs and French bank Société Générale to serve as financial advisors.

“Tellurian is in a strong financial position with substantial liquidity after taking on expense reduction activities and significant debt reduction measures in 2020, and subsequent pre-payments in 2021,” explained President and Chief Executive Octávio Simões.

Simões replaced Meg Gentle in 2020 after the former Cheniere Energy executive quit the company.

“Operationally, our Haynesville Shale wells have out-performed to unlock value, providing domestic natural gas supply and a valuable contribution to our integrated Driftwood model which will offer low-cost LNG to the world,” stated Simões.

Tellurian Inc., the developer of the Driftwood LNG export project in Louisiana,  said it intended to reduce corporate spending and reorganize financing for its 2019 term loan as it prepares for uncertain market conditions.

Tellurian Inc., the developer of the Driftwood LNG export plant, said it had extended its accord with Petronet LNG of India on seeking a firm agreement for the purchase of LNG volumes and the Indian company investing in the venture.

The accord involving the supply of 5 million tonnes per annum of LNG was signed in September 2019 with the aim of being finalized by March 31, 2020. 

“The timing has been extended to May 31, 2020 to support Petronet’s consultative review process,” said Tellurian.

Tellurian and Petronet are also negotiating an equity investment in the Driftwood project in Louisiana by the Indian firm of up to $2.5 billion.

The Driftwood plant is proposed for the west bank of the Calcasieu River, south of Lake Charles, and with output of just over 26 MTPA.

“Tellurian was in India this week meeting with Petronet and affiliates to progress negotiations, and we are very supportive of Petronet’s process to ensure their robust project review,” said Tellurian President and Chief Executive Meg Gentle.

“With India’s LNG demand increasing 27 percent year-over-year, and  Prime Minister Narendra Modi planning for $60Bln of investments in natural gas infrastructure, India is perfectly poised to benefit from strategic project agreements such as Petronet’s equity investment in Driftwood,” added Gentle.

Petronet currently operates India’s busiest regasification facility at Dahej, north of Mumbai, with 15 million tonnes per annum of capacity and six storage tanks. The terminal is being expanded to handle 17.5 MTPA.

The company was formed by the Government of India in 1998 specifically to import LNG and will be expanding its interests in the years ahead into LNG fuel distribution.

Shareholders in Petronet, which began operations in 2004, include the other big Indian energy players, Gas Authority of India, Indian Oil Corp., Oil and Natural Gas Corp. and Bharat Petroleum Corp.

The Indian Minister of Petroleum and Natural Gas, Dharmendra Pradhan, said the government was committed to promoting a natural gas-based economy and that infrastructure investment requirements amounted to around $100 billion for pipelines, city-gas connections, LNG terminals and gas fuel projects.