Tellurian, Aethon wrap up $260 million deal

US LNG firm Tellurian, the developer of the Driftwood LNG export project in Louisiana, has completed the previously reported sale of its integrated upstream assets for $260 million to affiliates of Dallas-based private investment firm Aethon Energy Management.

In May, Aethon agreed to buy Tellurian’s assets to expand its footprint in the Louisiana Haynesville and Bossier shale basins with about 31,000 net acres.

The two firms also agreed to negotiate a 20-year offtake agreement for 2 mtpa of LNG 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 announced the closing of the $260 million deal in a statement on Monday, “fulfilling a key objective outlined in May and substantially strengthening its balance sheet as it advances the Driftwood liquefied natural gas (LNG) project”.

Also, the company utilized proceeds from the sale to retire the $230 million of non-convertible senior secured notes scheduled to mature in 2025.

“This transaction is a significant step in securing our balance sheet and progressing Driftwood,” Tellurian executive chairman Martin Houston said.

“The partnership between Aethon and Tellurian is vital as we continue securing buyers for Driftwood’s remaining capacity and advance its development,” he said.

Houston told shareholders in a letter dated June 5 that the company is in negotiations with multiple buyers to sell volumes from the Driftwood facility.

He said that “negotiations are underway with multiple Tier 1 buyers for the remaining 7 mtpa of LNG”, but he did not reveal the name of the buyers.

There were recent reports claiming that Saudi Arabia’s Aramco and Australia’s Woodside are interested in the Driftwood LNG plant.

Driftwood LNG

Tellurian issued a limited notice to proceed to compatriot engineering and construction giant Bechtel in March 2022.

Under the first phase, Tellurian aims to build two LNG plants near Lake Charles with an export capacity of up to 11 mtpa and worth about $14.5 billion.

Tellurian claims it has invested more than $1 billion in the Driftwood project up to date.

The full project would include five plants with a total capacity of about 27.6 mtpa.

Tellurian said in its March presentation it expects to take a final investment decision in 2024 to build the first two plants at its Driftwood LNG export plant.

Also, the company said it expects to issue a full notice to proceed to Bechtel to begin construction for for the first phase of the plant in the second half of this year.

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