Woodside to acquire Tellurian and Driftwood LNG for US$1.2Bn

Australian oil and gas company Woodside Energy has agreed a US$1.2Bn deal with American LNG company Tellurian that will see Woodside acquire Tellurian and its nascent US LNG export facility Driftwood LNG.

The transaction is an all-cash payment of approximately US$900M, or US$1 per share of outstanding Tellurian common stock, with Tellurian’s implied enterprise value, including debt, coming in at US$1.2Bn. 

"The acquisition price represents a 75% premium to Tellurian’s closing price on 19 July 2024, and a 48% premium to Tellurian’s 30-day volume weighted average price, which reflects Driftwood LNG’s premier site, fully permitted status, advanced stage of pre-FID development and strong relationships with [contractors] Bechtel, Baker Hughes, and Chart," a statement from Tellurian said.

Tellurian has been forecasting a final investment decision (FID) slated for 2024 for several months, with its characterful then-chairman Charif Souki saying one could be forthcoming in an investor presentation in August 2023.  

Tellurian saw cancellations of long-term supply and purchse deals from oil and gas majors Shell and Vitol in October 2022 in a financing setback. And Mr Souki, a pioneer of US LNG and founder of US LNG player Cheniere until his exit from the firm amid reported disagreements with investor Carl Icahn, was replaced as Tellurian chairman in December 2023 by co-founder Martin Houston, while remaining on the company’s board.

Notably, current Tellurian chairman Mr Houston has overseen the US$260M sale in early July 2024 of the company’s integrated upstream assets to Aetheon Energy Management Group. The sale allowed Tellurian to close senior secured debt of US$230M. 

Regarding the Woodside acquisition, Mr Houston said, "The attractive offer in hand outweighed the risks and uncertainty associated with going alone".

Driftwood LNG received an extension through 2029 for authorisation of construction from the US Federal Energy Regulatory Commission and permit for development from the US Army Corps of Engineers.

And as Woodside pointed out in its statement on the Tellurian acquisition, the Driftwood LNG facility, which lies along Louisiana’s Calcasieu River, has already had investments totalling US$1Bn. 

"The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse,” said Woodside chief executive Meg O’Neill. “It adds a scalable US LNG development opportunity to our existing approximately 10 mta of equity LNG in Australia. Having a complementary US position would allow us to better serve customers globally."

Ms O’Neill said Woodside intends to use its considerable LNG experience "to unlock this fully permitted development and expand our relationship with Bechtel which is the EPC contractor for both Driftwood LNG and our Pluto Train 2 project in Australia".

Earlier in 2024, Woodside walked away from acquisition talks with Australia-based Santos, with a disagreement over the latter’s valuation speculated as the cause.