Australian energy company Woodside has agreed to acquire Tellurian, the owner of the Driftwood liquefied natural gas (LNG) project in Louisiana, US, in an all-cash deal worth around $900m.
As per the terms of the deal, shareholders of the New York Stock Exchange (NYSE) American-listed Tellurian will be paid $1 per share. The deal implies an enterprise value of $1.2bn, including net debt, for the Houston-based midstream company.
Located near Lake Charles, Driftwood LNG is a fully permitted development project, currently awaiting a final investment decision (FID).
The project will involve the construction of five LNG trains in four phases, with a total authorised capacity of 27.6 million tons per annum (Mtpa) along with an associated pipeline network.
The initial development includes Phase 1, with a capacity of 11Mtpa, and Phase 2, with 5.5 Mtpa. Woodside aims to reach FID readiness for Phase 1 by Q1 2025.
According to Woodside, the acquisition of Tellurian and its Driftwood LNG project enhances its ability to execute its strategy for thriving in the energy transition. The acquisition is also expected to bolster Woodside’s status as a major independent LNG company and supports its goal of reducing net equity Scope 1 and 2 emissions by the end of this decade.
Woodside CEO Meg O’Neill said: “The Driftwood LNG development opportunity is competitively advantaged.
“Woodside expects to leverage its global LNG expertise to unlock this fully permitted development and expand our relationship with Bechtel which is the EPC contractor for both Driftwood LNG and our Pluto Train 2 project in Australia.”
For Tellurian, the consideration reflects a 75% premium over the company’s closing price on 19 July 2024, and a 48% premium over its 30-day volume-weighted average price.
As part of the binding agreement to acquire Tellurian, Woodside will extend a loan of up to $230m to the US firm. This loan aims to sustain Driftwood LNG site activity and de-risking efforts, ensuring continued progress until the transaction is finalised.
Tellurian board of directors executive chairman Martin Houston said: “This transaction provides substantial and certain value for our shareholders. Following our strategic repositioning in December, our new leadership has strengthened Tellurian’s position and advanced Driftwood LNG. Woodside’s offer reflects this progress, providing a significant premium to our share price.
“After careful consideration of Tellurian’s opportunities and challenges, the Board and senior management weighed an immediate and significant cash return against the risks and costs associated with the timeline to FID and determined that this offer is in our shareholders’ best interest.”
The transaction is anticipated to close in Q4 2024, contingent upon the fulfilment of preceding customary conditions. These include the maintenance of existing authorisations, Tellurian’s shareholder approval, regulatory approval, and other necessary approvals.
PJT Partners is serving as Woodside’s sole financial adviser, with Norton Rose Fulbright providing legal counsel. Tellurian is being advised by Lazard for financial matters and Akin Gump Strauss Hauer & Feld for legal matters.
