LNG

Chesapeake Energy Corp., the US natural gas producer with LNG interests and currently completing a merger with Southwestern Energy to create one of America’s biggest natural gas companies, reported a slump in profits and revenues in the first quarter, citing weak market dynamics.

Global natural gas demand is expected to rise by 3.6 percent in 2021 before easing to an average growth rate of 1.7 percent over the following three years, though by 2024 demand is forecast to be up 7 percent from 2019 pre-Covid-19 levels, according to the latest quarterly Gas Market Report from the Paris-based International Energy Agency.

Tellurian Inc., the US company planning the Driftwood LNG export project at Lake Charles in Louisiana, posted a first-quarter loss as it focused on debt reduction and said market fundamentals may favour the signing soon of supply agreements.

The Houston, Texas-based company said it continued to build its integrated global natural gas business and concentrated on paying down debt.

“Subsequent to the quarter end, Tellurian made a voluntary $17M debt repayment on April 23, 2021, and has now paid off all borrowing obligations,” said the company.

President and Chief Executive Octávio Simões said Tellurian now had a much stronger balance sheet and global customers continue to be “very interested” in the integrated, market-based LNG product offering.

The overall project plan for Tellurian now is for the Driftwood liquefaction plant to have first-phase production of 16 million tonnes per annum, rising to 27 MPTA with expansions.

“Additionally, we are looking forward to expanding our drilling program in 2021, having recently spud a new well in the prolific Haynesville Shale, that we expect to provide valuable revenue,” stated the CEO.

Tellurian produced 3.3 billion cubic feet of natural gas for the quarter in the Haynesville basin in north Louisiana to the end of March compared with 3.9 Bcf for the previous quarter.

Tellurian’s upstream assets include 9,704 net acres and interests in 72 producing wells.

The company said it ended the first quarter of 2021 with around $58.7M of cash and cash equivalents and generated $8.7M in revenues from natural gas sales.

Tellurian added that it still had a strong balance sheet consisting of approximately $270.3M in total assets.

Charif Souki, the Executive Chairman of Tellurian, said in a presentation that the use of the gas-fired power option was growing in Asia and his company hoped to start finalising commercial agreements based on the current “very strong gas market fundamentals” in Asia and Europe.

“There is now a tremendous amount of demand for natural gas on a global basis and it's now demonstrated by the very high prices both in Asia and Europe at $9 per MMBtu in Asia and $8 per MMBtu in Europe,” said Souki.

“You also have to consider that 85 percent of the world is growing their demand for energy at 4 percent a year, while the other 15 percent of the market, the United Sates and Europe, is flat,” he added.

Souki stated that Asian countries only had two choices for electricity, either nuclear power or natural gas.

“You can do nuclear but only if you've done it a long time ago and it’s extremely expensive,” added Souki.

“You can do wind but that will not satisfy all your needs, just to a certain extent,” he said.

Ovintiv Inc., the shale oil and gas company with assets in key basins in North America, has signed an agreement to sell its Eagle Ford resources in south Texas to Validus Energy for $880 million to reduce debts as exploration and production companies in the LNG-exporting region of the US Gulf Coast have been badly hit by the combined oil price and Covid-19 slump since early 2020.