Tellurian Inc. has agreed to sell the company and its developing 27.6 million metric ton/year (mmty) Driftwood LNG project to an Australian oil and natural gas giant, Woodside Energy Group Ltd.
The Houston-based company has agreed to be acquired by Woodside in a deal valued at $900 million. The deal is expected to be closed by the end of the year, according to Tellurian.
After more than a decade of development for Driftwood, the first phase of the five-train Louisiana export project could also be a step closer to advancing. In its disclosure of the deal, Woodside targeted a final investment decision (FID) on the first phase of Driftwood, which could consist of 11 mmty of capacity, by March of next year.
“Woodside expects to leverage its global LNG expertise to unlock this fully permitted development and expand our relationship with Bechtel, which is the [engineering, procurement and construction] contractor for both Driftwood LNG and our Pluto Train 2 project in Australia,” Woodside CEO Meg O’Neill said.
Along with the sale agreement, Woodside agreed to loan Tellurian up to $230 million until the middle of December, or until the deal is completed, to continue work on Driftwood LNG.
In a letter to shareholders encouraging approval of the deal, Executive Chairman Martin Houston said the sale was the best and quickest way for Tellurian to make good on its goals of moving Driftwood forward and delivering value to shareholders.
“Woodside is a highly credible operator, with better access to financial resources and a greater ability to manage offtake risk, and I am confident it is the right developer to take Driftwood forward,” Houston said.
Without a partner like Woodside, Houston said, the project’s FID would hang on whether Tellurian could net competitive offtake agreements with customers “who may seek greater certainty from brownfield expansions or from project developers with larger balance sheets.” Houston also noted an apparent shift in the credit market, with fewer equity providers willing to risk funding a project that isn’t fully contracted.
Since replacing Tellurian co-founder Charif Souki with Houston as executive chairman last year, Tellurian’s board of directors has shuffled positions within the company and hired a financial advisor to explore ways to shed debt. That advisor, Lazard Ltd., helped broker a sale of Tellurian’s upstream Haynesville assets, which closed earlier in the month.
For Woodside, O’Neill said Tellurian and Driftwood LNG offers the company the “competitively advantaged” opportunity to expand its North American foothold it’s been looking for and “positions Woodside to be a global LNG powerhouse.”
The project received a three-year extension earlier this year from the Federal Energy Regulatory Commission and currently has full export authorization from the Department of Energy (DOE). However, it would need to reapply for a non-free trade agreement permit with the DOE if not in service by May 2026.
Woodside’s LNG portfolio consists of 10 mmty in export capacity mostly concentrated in Australia. The company previously has moved to supplement its volumes from Cheniere Energy Inc.’s Corpus Christi LNG with additional North American supply from Commonwealth LNG and Mexico Pacific Ltd.’s Saguaro LNG. Both projects are pre-FID and face regulatory pressure from the Biden administration’s review of export authorization policies.
