US LNG firm Tellurian, the developer of the Driftwood LNG export project in Louisiana, reported a wider net loss in the third quarter of this year, while its gas production rose compared to the same period in 2022.
Tellurian reported a net loss of about $65.4 million, or $0.12 per share, for the quarter ended September 30, 2023, compared to a net loss of about $14.2 million last year.
The company produced 19.5 billion cubic feet (Bcf) of natural gas during the quarter, as compared to 11.4 Bcf for the same period of 2022, it said in a statement.
As of September 30, 2023, Tellurian’s natural gas assets included 31,149 net acres and interests in 159 producing wells.
Tellurian generated about $43.2 million in revenues from natural gas sales in the third quarter of 2023 compared to $81.1 million in the third quarter of 2022, a change driven by decreased realized natural gas prices partially offset by increased production volumes, it said.
Tellurian’s president and CEO Octavio Simoes said in the statement that “Tellurian’s upstream segment continues to provide growing natural gas production, improving significantly over the third quarter of last year, and we see natural gas prices on the rise through year end.”
“We are having a number of discussions with counterparties for both equity partnership and liquefied natural gas (LNG) offtake for the Driftwood project and investment in the Driftwood Line 200/300 pipeline,” he said.
He add that Tellurian has invested over one billion dollars to develop and advance construction of the fully permitted Driftwood project and the firm “remains on target to produce first LNG in 2027.”
Tellurian recently requested more time from the US FERC to complete the construction of its Driftwood LNG project.
The company issued a limited notice to proceed to compatriot engineering and construction giant Bechtel in March last year and Bechtel has driven more than 11,800 piles at the site.
Under the first phase, Tellurian aims to build two LNG plants near Lake Charles with an export capacity of up to 11 mtpa.
However, the company is still working to secure financing for the project.
Tellurian expects the first phase to cost about $14.5 billion with about $6 billion equity investment.
“Substantial doubt” about the company’s ability to continue
The company said in separate filling with the US SEC there is “substantial doubt about our ability to continue as a going concern.”
To date, Tellurian has been meeting its liquidity needs primarily from cash on hand and the combined proceeds generated by debt and equity issuances, upstream operations, and the sale of common stock under the company’s at-the-market equity offering programs.
“As of September 30, 2023, we had approximately $59.3 million in cash and cash equivalents, which we expect will not be sufficient to satisfy our obligations and fund our working capital needs for the next twelve months,” the company said.
The replacement notes contain financial and non-financial covenants, including a minimum cash covenant of $50 million.
Tellurian estimates that its cash and cash equivalents balance was about $83 million as of October 31, 2023.
“Notwithstanding October’s estimated higher cash balance over the prior month, there is substantial doubt about our ability to continue as a going concern,” the firm said.
Tellurian said it continues to evaluate ways to generate additional proceeds from potential financing transactions, including but not limited to issuances of equity, equity-linked and
debt securities or similar transactions to fund its obligations and working capital needs.
This also includes managing certain operating and overhead costs, refinancing the replacement notes, offering equity interests in the Driftwood LNG project and, if necessary, exploring opportunities to monetize all or a portion of the company’s upstream natural gas assets, it said.
“Our ability to implement management’s plans, if we elect to do so, is subject to numerous risks and uncertainties, including risks associated with market demand for our equity and debt securities, commodity prices and other factors affecting natural gas markets,” the firm said.
“As such, there can be no assurance that we will be able to implement management’s plans or otherwise obtain additional liquidity or refinance existing indebtedness on acceptable terms or at all,” Tellurian said.