Tellurian explores sale of upstream business to finance Driftwood LNG (updated)
06/02/2024 22:01
(Adds estimated value of Chevron assets and company did not
comment on valuation in paragraph 13)
Feb 6 (Reuters) - Tellurian TELL.A is exploring the
sale of its Haynesville upstream business in East Texas and
Louisiana, the liquefied natural gas (LNG) firm said on Tuesday,
as it looks to raise capital for its Driftwood LNG project.
The company has been trying to develop a 27.6 million
metric-tons-per-annum LNG plant in Lake Charles, Louisiana, and
earlier said it sought help with balance sheet management and
commercial structures.
"By unlocking the full value of these high-quality assets,
we aim to substantially reduce our debt, further reduce our
general and administrative expenses, and provide additional
cash, enabling us to develop Driftwood LNG," CEO Octávio Simões
said.
Tellurian is one of a few companies that has all of its
approvals for the production and export of LNG from countries
not covered by U.S. free trade deals. It has not been able to
attract the commercial support for the Driftwood project and is
yet to give the financial green light to the project.
The Haynesville asset could be worth $365 million,
investment banker Roth MKM said in a note on Tuesday.
U.S. natural gas prices have fallen significantly from 2022
levels and traded Tuesday at about $2 per thousand cubic feet,
down from an average of $6.50 per thousand cubic feet for 2022.
Tellurian reported third-quarter 2023 production of 19.5
billion cubic feet equivalent, and upstream segment results
generated adjusted earnings before interest, tax, depreciation
and amortisation (EBITDA) of $18.3 million and an annualized
EBITDA of $73.2 million.
Tellurian ousted its chairman and co-founder, Charif Souki,
late last year after auditors raised doubts about the company's
ability to cover future expenses.
At an investor presentation last year, the company had said
it could sell the first six months' worth of its LNG output to
help finance the Driftwood project.
The company said it has asked its financial advisor, Lazard,
to explore opportunities for the sale.
U.S. oil major Chevron CVX.N in recent days separately
launched a sale of around 71,000 net acres concentrated in East
Texas and producing 48 million cubic feet equivalent of natural
gas per day, according to documents seen by Reuters.
The developed portion of Chevron's acreage is valued at $140
million at current commodity prices, one document showed.
Chevron did not comment on the expected valuation from a sale.
Reuters reported in November that Chevron was planning a
sale of these assets.
(Reporting by Tanay Dhumal in Bengaluru; Curtis Williams in
Houston and Shariq Khan in New York
Editing by Shailesh Kuber, Mark Potter and Matthew Lewis)
((Tanay.Dhumal@thomsonreuters.com; Twitter: https://twitter.com/TanayDhumal;))