Woodside Takes Over Tellurian for $1.2 Billion

Woodside Energy Group Ltd. has assumed control of the U.S. Gulf Coast Driftwood LNG project after completing its acquisition of Tellurian Inc. for about $1.2 billion.

The under-construction project, which has yet to reach a final investment decision, is planned to have a capacity of 27.6 million metric tons per annum (MMtpa). Woodside has now renamed it Woodside Louisiana LNG.

“This is a major growth opportunity that significantly expands our US LNG position, enabling us to better serve global customers and capture further marketing optimization opportunities across both the Atlantic and Pacific Basins”, chief executive Meg O’Neill said in a company statement Wednesday.

The project has completed its front-end engineering design and secured all permits. “Site civil works are well advanced”, O’Neill said.

“Woodside is targeting FID readiness from the first quarter of 2025, with the experienced Tellurian team and engineering, procurement and construction contractor Bechtel having completed substantial work to advance the opportunity to this stage”, O’Neill said.

“We are also pleased with the inbounds received from multiple parties looking to enter the opportunity as a strategic partner”.

The Australian company paid the acquisition, announced July 22, with around $900 million in cash, or $1 per common share, for the stock portion. The enterprise value of approximately $1.2 billion “includes s $50 million for Tellurian’s Series C Convertible Preferred equity shares, ~$65 million of net debt, ~$20 million net working capital adjustment, ~$50 million for management and debt change of control costs and ~$135m of interim funding from signing to close”, Woodside said.

Tellurian also had upstream assets but sold these just before the transaction with oil and gas explorer and producer Woodside. The assets in the Louisiana Haynesville and Bossier shale basins, as well as gathering and treating systems that have an aggregate capacity of 100 million cubic feet a day, went to Aethon Energy Management LLC for $260 million.

The upstream properties are nonetheless expected to supply the LNG project under Woodside. Alongside their sale agreement, Aetheon and Tellurian also signed a heads of agreement to support the development of the liquefaction facility.

“The Heads of Agreement contemplates the parties negotiating a 20-year offtake agreement which would be indexed to Henry Hub plus a liquefaction fee, with appropriate credit support, to provide the basis for project financing of Driftwood LNG”, Tellurian said in a press release May 29.

“Aethon will continue to explore additional opportunities to bring value to Driftwood LNG following the [upstream sale] transaction”.

Earlier Woodside completed another acquisition, taking over OCI Global’s ammonia production project in Beaumont, Texas. The facility, which Woodside bought for $2.35 billion, has a planned capacity of 1.1 MMtpa. It is expected to start producing ammonia next year and lower-carbon ammonia 2026.

“As a global energy provider, Woodside is focused on lower carbon ammonia and its increasingly important role in the world’s energy mix”, O’Neill said in a company statement September 30 announcing the closure of the transaction.

To contact the author, email jov.onsat@rigzone.com