Tellurian looks toward FID announcement

In a video update, Mr Souki discussed the company’s latest natural gas production and resource acquisition, which includes the acquisition of 31,000 acres in the Haynesville, a significant growth from the initial 10,000 acres.

He outlined the Tellurian business plan, which does not rely on specific exit horizons, which he believes adds flexibility in production in light of changing prices. “Our production will vary on prices,” he said.

As such, the company has not been drilling in the past six months due to less than encouraging prices. But this is not an aspect that should cause any worry: the company operates more on track records than drilling results, pointing out an excellent track record in 2022.

The longer term aim is to reach the stable production level it needs – around 80% of required production – for six or seven years organically within the next two to three years.

Production from the Haynesville resource provides natural gas at US$2.50 mmBtu including drilling and completion, operating expenses and production taxes. Transporting the natural gas to the Driftwood LNG facility costs US$0.50 mmBtu and liquefaction at the LNG facility costs US2.00 mmBtu. This produces a free on board price at the Gulf of Mexico of US$5.00 mmBtu.

“The (equivalent) prices on the water vary from US$8-9 mmBtu all the way up to US$25-30 mmBtu, so it becomes an extremely profitable operation,” he said.

“This is why we have been focused on being integrated from day one.”

He said the production company and the LNG company were moving quickly, but the LNG will not come for two or three years, and there is low demand domestically for natural gas.

He closed with a teaser about an announcement of FID in the near future, “We continue to look forward to announcements about the latest final investment decision.”

Tellurian’s Driftwood LNG project was dealt a blow in September with the termination of long-term supply and purchase deals with Shell and Vitol, and cancellation of a bond offering.