U.S. natural gas company Tellurian sells upstream assets, after formalizing a landmark deal with a private investment firm. This agreement involves the sale of its integrated assets and a contract for the supply of LNG from its Driftwood LNG plant.
Tellurian’s project phases
Aethon Energy Management will acquire these assets for US$260 million. In addition, Tellurian agreed to supply two million tons per year (mtpa) of LNG from the Driftwood LNG plant, located near Lake Charles, Louisiana.
The Driftwood plant, on the other hand, is a liquefaction export facility. liquefaction export facility with an estimated total capacity of 27.6 mtpa. The initial phase of this project will include the construction of two LNG plants that together will be able to export up to 11 mtpa.
Likewise, Martin Houston, Tellurian’s CEO, highlighted that these agreements with Aethon represent a breakthrough for the development of the Driftwood LNG project. According to Houston, the purchase agreement secures the necessary foundation to accelerate the project and demonstrates success in aligning commercial offerings with market needs.
Earnings obtained
The proceeds from the sale of the assets will enable Tellurian to pay off senior secured notes and strengthen its long-term balance sheet. This move is considered crucial for the company in its ongoing effort to advance its strategic plan.
Aethon, meanwhile, will expand its presence in the Louisiana, Haynesville and Bossier shale basins, acquiring approximately 31,000 net acres. These include collection and treatment systems with a capacity of up to 100 million cubic feet per day (MMcf/d), which will raise the collection and treatment capacity to more than 3 Bcf/d.
In addition, the heads of agreement provide for the negotiation of a 20-year purchase agreement, indexed to Henry Hub, with a liquefaction tariff and the necessary credit support. This will provide the basis for funding the Driftwood LNG project.
Tellurian sells upstream assets
The transaction is expected to close in the second quarter of 2024. Tellurian will use the proceeds to reduce its borrowings and cover general corporate purposes. For its part, Aethon will continue to explore additional opportunities to bring value to the Driftwood LNG project after the transaction.
Albert Huddleston, CEO of Aethon Energy, emphasized that the expansion of its vertically integrated business continues to deliver capital efficiency and industry-leading margins. He also emphasized the role of natural gas in the global energy transition and the low methane emissions intensity that will characterize this partnership.
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Source: Offshore Energy
Photo: Tellurian
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