Tellurian Explores Sale of Haynesville Upstream Business to Finance Driftwood LNG
(Reuters) — Tellurian is exploring the sale of its Haynesville upstream business, the 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, which has suffered multiple delays, 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.
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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 however not been able to attract commercial support for the Driftwood project and is yet to give the financial green light to the project.
Investment banking firm Roth MKM in an analyst note said Tellurian's Haynesville assets could be worth $365 million. However, U.S. natural gas prices have fallen significantly from 2022 levels and traded Monday at about $2.08 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 amortization (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.
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