Tellurian, which in November raised doubts about its ability to continue as a going concern, said cash from a divestiture would be used to pay off debt and finance the company’s Driftwood LNG project. (Source: Shutterstock.com, Tellurian)
Facing financial concerns, Tellurian is exploring a sale of its upstream assets in the Haynesville Shale, the company said Feb. 6.
Tellurian produced 19.5 Bcf of natural gas in third-quarter 2023. Its assets, primarily in Louisiana’s DeSoto, Bossier, Caddo and Webster parishes, include 31,149 acres, interests in 159 producing wells and more than 400 drilling locations. The company said in August that it holds an average 75% working interest its operated locations.
The company plans use proceeds from any asset sale to reduce debt and expenses as well as provide extra cash on hand to continue developing the Driftwood facility. Otherwise, the company would need to issue equity to fund development in 2024.
Tellurian CEO Octávio Simões said the company, which is developing the Driftwood LNG export terminal south of Lake Charles, had decided that the upstream assets are not needed for the company’s overall strategy and directed its financial advisor, Lazard, to prepare for a sale.
“We have concluded that there are alternative gas supply strategies available to us from various basins, and our ownership of upstream assets is not necessary at this stage of Tellurian’s development,” Simões said. “We have a substantial number of drilling locations that we believe will be highly attractive to oil and gas producers that can develop them more quickly than we would.”
The move is Tellurian’s first since the company announced that the Lazard firm had been hired on Jan. 25. Tellurian downplayed rumors that the company was for sale. Tellurian has had difficulty bringing the Driftwood project, started in 2016, to completion. The project already has Department of Energy approval, meaning it does not fall under the Biden Administration’s pause for LNG projects initiated on Jan. 26.
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