US LNG export player Tellurian is considering changes to its $28.9 billion Driftwood project and has in the meantime sold a cargo of chilled fuel to an undisclosed buyer.
The company has been hitting the media headlines this week as it reportedly renewed talks with India’s Petronet regarding an investment of up to $2.5 billion in its Driftwood development in Louisiana.
Tellurian’s 27.6 mtpa Driftwood project sustained a major setback in May when a preliminary deal with Petronet LNG fell through.
Following the lapse of the deal and due to the effects related to the Covid-19 pandemic, the US LNG developer also delayed a final investment decision on its Driftwood project to 2021.
In a new move, Tellurian said in a regulatory filing on Thursday it was evaluating certain changes to the Driftwood project.
Among others, these could “significantly” reduce the overall cost of the first phase of the LNG export development, it said.
Tellurian did not provide any specific details on the potential cost cuts.
If the company decides to make these changes, they would be based on a variety of factors, including the results of the company’s “continuing analysis, changing business conditions and investor feedback,” it said.
Impairment hit
The effects of the Covid-19 pandemic have destroyed demand all over the globe pushing down oil and gas prices to their record low
This resulted in many energy companies writing down the value of their assests.
Tellurian also warned of potential impairment charges in the second quarter related to the company’s reserves and the carrying value of its assets.
“Declines in natural gas prices are likely to lead to the company incurring substantial impairment charges,” Tellurian said.
To help it cope with the current market, Tellurian on Wednesday also announced a $32.5 million share sale.
Excluding these proceeds, Tellurian’s capital resources consist of about $88.3 million of cash and cash equivalents on a consolidated basis, it said.
LNG cargo sale
Furthermore, the company raked in $7 million from an LNG cargo sale to an unrelated third party in early July.
Tellurian did not reveal any other details of the transaction.
The US company previously said it entered into a deal with an undisclosed LNG trader to buy one cargo on a DES basis per quarter beginning in June 2020 through October 2022.
The volume of each cargo is expected to range from 3.3 to 3.6 million MMBtu while the pricing will be based on the JKM in effect at the time of each purchase.