Woodside Energy of Australia is set to acquire the U.S. LNG company Tellurian for $1.2 billion.
Australia’s Woodside Energy has agreed to purchase U.S. LNG developer Tellurian, including its Driftwood LNG export project in the U.S. Gulf Coast, for $1.2 billion, which includes debt. This deal could enhance the U.S.’s role as the top global producer of liquefied natural gas by ensuring the completion of Tellurian’s 27.6 million metric ton per annum facility in Lake Charles, Louisiana.
The agreement involves a $900 million cash offer for Tellurian’s shares at $1 per share, a 75% premium over the company’s recent closing price. This acquisition provides Woodside with a fully authorized U.S. LNG project amidst challenges other developers face due to the Biden administration’s halt on new LNG export approvals to non-free trade agreement countries. Woodside’s CEO, Meg O’Neill, stated that the deal positions the company as a significant global LNG player and complements its existing 10 million metric tons per year of equity LNG production in Australia.
The transaction is expected to alleviate Tellurian’s financial difficulties. The company has been seeking funding for the Driftwood LNG facility and had previously planned to sell its upstream assets to reduce debt. The project has faced multiple setbacks, including canceled LNG supply agreements due to doubts about its completion.
Tellurian’s Executive Chairman, Martin Houston, recommended the sale to shareholders, highlighting that raising the necessary funds for the project without long-term customer commitments would be challenging. He emphasized that securing immediate cash was preferable to the uncertainties of the project. Woodside aims to make a final investment decision for the first phase of Driftwood LNG by early 2025 and plans to utilize its global LNG expertise and its existing relationship with Bechtel, the contractor for both the Driftwood and Pluto Train 2 projects.
Energy analyst Saul Kavonic noted that Woodside’s acquisition strategy is sound, as it leverages their LNG expertise to acquire financially troubled but valuable assets at a good price. He suggested that Woodside could address the issues Tellurian faced with marketing, funding, and management, and improve the value of the Driftwood project. Earlier this year, Woodside had attempted to merge with Australian firm Santos, but talks collapsed over valuation disagreements.