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.

Nov 30 (LNGJ) - Tellurian Inc., the developer of the Driftwood LNG project, announced that there had been a “mutually agreed” departure of President and Chief Executive Meg Gentle who will potentially be paid up to $21 milllion. “In connection with her departure, the company and Ms Gentle agreed, among other things, that Ms Gentle would continue to receive her current base salary through December 31, 2021,” said Tellurian.

   Gentle’s replacement was named as former Sempra LNG and Midstream CEO Octávio Simões. Simões, aged 61, joined Tellurian in April 2019 as Senior Advisor to the CEO. Tellurian added that Gentle had “agreed to certain customary confidentiality, non-disparagement, non-solicitation and non-compete covenants” on her departure, while retaining compensation benefits such as a future lump sum cash payment of $721,000 and 3.25 million shares of restricted Tellurian stock that will vest upon a final investment decision relating to the Driftwood Project.

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.

Tellurian Inc., the developer of the proposed Driftwood LNG export plant in Louisiana, is making new pitches to investors and buyers as it pointed to a likely surge in demand in China and India as well as nations in Southeast Asia as it pledged to have feed-gas at a price lower than the Henry Hub.

In its latest report filed with the US Securities Exchange Commission, Tellurian forecasts that 100 million tonnes per annum of additional construction is needed because of LNG capacity constraints by 2021 as demand increases.

Analysts said the company may be keen to still bring India’s Petronet LNG on board or other potential investor-buyers from Asia or elsewhere.

“Haynesville shale gas production of 46 million cubic feet per day from current assets of 1.2 trillion cubic feet will enable Driftwood to supply LNG at a free-on-board (FOB) price of $3.50 million tonnes per annum,” said Tellurian in its presentation

“Haynesville gas can be supplied at a lower cost than Henry Hub at $2.00 per MMBtu and delivered to the plant regardless of Henry Hub market index prices,” said Tellurian.

“The company’s model for investors ensures interest alignment for joint venture partners who own their share of the LNG at a cost of $3.50 per MMBtu, comprising $2.00 per MMBtu for gas delivery, $0.75 of operating expenses and $0.75 for debt service,” explained the Houston-based company listed on the Nasdaq global exchange.

Tellurian stated that its integrated model would help avoid the effects of price volatility.

“Driftwood LNG will come at a lower cost and will have less price volatility than other LNG price indexes,” the company noted.

Tellurian’s Driftwood facility would provide more than 27 MTPA of supply to meet new demand, particularly in China and India.

“China and India LNG demand is resilient and imports were up 8 percent and 21 percent respectively through July 2020 on a year-on-year basis,” said Tellurian.

The company stated that new Asian markets will also see demand growth of around 41 MTPA by 2025 and these emerging markets could add the equivalent of another South Korean market in the next four years.

Bangladesh, Malaysia, Pakistan and Thailand are facing domestic gas demand increases because of the need for power amid declining indigenous gas production and strong economic growth prospects.

The Philippines, Taiwan, Vietnam and Indonesia so far have only 17 percent gas market penetration and with growing gas demand for power, especially as coal and nuclear options fall out of favour.

Tellurian additionally expressed its confidence in engineering, procurement and construction contractor Bechtel Inc. of the US, which had also invested $50M in the project.

The company said its fully-wrapped EPC contract had already seen 30 percent of engineering completed and the project was shovel-ready.

The presentation stated that the Driftwood project would be brought to fruition by an experienced team, several of whom helped develop Cheniere Energy’s Sabine Pass LNG export plant, the largest in the US.

The executives listed are Executive Chairman and co-founder of Tellurian Charif Souki, who launched Cheniere in 1996 and Meg Gentle, the current President and Chief Executive of Tellurian.

They will be aided by former UK BG Group head of LNG, Martin Houston, who is also a co-founder and Vice Chairman of Tellurian.

Another key member of the management team is named as Keith Teague, Chief Operating Office and another recruit from Cheniere.

Tellurian Inc., developer of the Driftwood LNG in Louisiana, said it was preparing a write-down of resource asset values and project cost cuts as well as a share offering, as its marketing arm sold an LNG cargo amid attempts to bring Indian company Petronet on board as a buyer and an investor.

“Tellurian continues to evaluate, and discuss with potential partners, the scope and other aspects of the Driftwood project in light of the evolving economic environment, investor needs and other factors,” said the company in a statement to the Nasdaq global stock exchange.

“As a result of these discussions, the company is evaluating certain potential changes to the project that, among other things, could significantly reduce the overall cost of Phase 1,” it explained.

“Whether the company implements changes to the project will be based on a variety of factors, including the results of continuing analysis, changing business conditions and investor feedback,” it added.

The Driftwood export facility is proposed for the west bank of the Calcasieu River, south of Lake Charles, and with output of 26 million tonnes per annum.

Tellurian said that to date about 30 percent of the engineering for Phase 1 of the Driftwood LNG terminal has been completed by US engineering, procurement and construction company Bechtel.

The statement to Nasdaq acknowledged that although Tellurian had not completed its financial statement for the second quarter of 2020, its capital resources amounted to about $88.3 million of cash and cash equivalents, of which approximately $40.1M was maintained at a wholly owned subsidiary of Tellurian Production Holdings.

“Subsequently, in early July, the company collected a receivable of approximately $7M from the sale of an LNG cargo to an unrelated third party,” Tellurian explained.

“As disclosed in the company’s proxy statement for the 2020 annual stockholders’ meeting, the company has agreed to reimburse one of its directors for certain expenses associated with a lawsuit with Cheniere Energy,” it said.

“In addition to amounts paid as of June 30, 2020, the company expects to incur related expenses of approximately $4.5M,” it added.

Declines in natural gas prices are also likely to lead to Tellurian incurring “substantial impairment charges” relating to its reserves and the carrying value of its assets.

From its acquisition in 2017 of Rockcliff Energy, Telllurian’s assets include about 3.3 million cubic feet per day of natural gas production, 1.4 trillion cubic feet gas resource.

In total, Tellurian holds 10,300 net acres in the prolific Haynesville Shale gas basin in Louisiana, located north of the proposed liquefaction plant, and with 22 company-operated wells and 32 non-operated wells.

Tellurian additionally announced it had entered into a securities purchase agreement with certain institutional investors for the sale of 35 million common shares at a price of $1.00 per share for total gross proceeds of $35M.

“The offering will generate net cash proceeds of approximately $32.5 million after deducting estimated expenses in connection with the offering,” said Tellurian.

“The registered direct offering is expected to close on or about July 24, subject to the satisfaction of customary closing conditions,” it added.

Roth Capital Partners is acting as the placement agent for the heavily discounted offering.

The latest events saw Tellurian shares drop by almost 20 percent on July 22 to $1.28 per share from $1.58 per share at the previous close.

The Tellurian shares on the Nasdaq had jumped by more than 56 percent on July 21, valuing Tellurian at $422 million from $270M the previous day, July 20, when they were worth $1.10 per share.

This was because of reliable reports that Petronet and Tellurian were again in talks about the Indian company purchasing up to 5 million tonnes of LNG and taking a big equity stake in the company.

Neither Tellurian nor Petronet have commented so far on the reports.

Tellurian Inc. has delayed as expected its scheduled start of construction of the proposed Driftwood LNG export plant on the west bank of the Calcasieu River, south of Lake Charles in Louisiana, until 2021 and will study the economics of its Permian Basin feed-gas pipeline.

Tellurian Chief Executive Meg Gentle said the Houston company is lean, resolved and focused on delivering the Driftwood LNG export project near Lake Charles in Louisiana.

Tellurian Inc., the developer of the US Driftwood project near Lake Chares, has raised some additional institutional investor funds to give it more time to secure offtake deals such as one proposed with Indian company Petronet LNG.

Tellurian Inc., the developer of the Driftwood LNG plant in Louisiana, has made executive team changes after earlier imposing spending reductions to traverse the headwinds of the current financial environment.

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.