The U.S. LNG export developer Tellurian Inc. intends to buy 15 Tcf of natural gas to feed its Driftwood Holdings LNG project, with most of its prospects in the Haynesville Shale near the Gulf of Mexico.
The planned acquisitions, to be executed by Tellurian subsidiary Driftwood Holdings LLC, would provide supply over the project life and be funded through proceeds of third-party investments in Driftwood Holdings, according to a March 12 news release. Tellurian is in talks with producers but has yet to carry out a transaction to completion.
"Ideally, we would like to time an upstream acquisition with knowing who our [project equity] partners are," Tellurian CEO Meg Gentle said in a Feb. 27 interview. "That would be the ideal timing in terms of the way we would fund it, but we are committed to continuing to build that portfolio and to be opportunistic."
Tellurian still expects to execute deals in the next months and to close funding of the project's first phase for 11 million tonnes in the third and fourth quarters. Goldman Sachs & Co. LLC and SG Americas Securities LLC are serving as financial advisers for Driftwood Holdings, and Tellurian is offering equity interests in Driftwood Holdings for $1,500 per tonne.
The company in late 2017 acquired 1.3 Tcf of gas resources and other assets in northern Louisiana in an $85 million deal. According to media reports, Tellurian is in talks to buy Chesapeake Energy Corp.'s Haynesville Shale gas drilling fields in Louisiana, worth about $2 billion.
"The timing of the acquisition will be somewhat dependent on the pace that producers in the Haynesville want to sell their assets," Gentle said. "Some of them have filed documents with the SEC to start an IPO and go public, so us buying them would be an alternative. They're waiting to see what the market is going to do."
Driftwood Holdings would own and operate the producing assets, along with pipeline and LNG assets. As a stand-alone LNG business, Driftwood Holdings would develop and operate the 27.6 million-tonne-per-annum Driftwood LNG export terminal near Lake Charles, La., to be supplied by the planned Haynesville Global Access Pipeline, Permian Global Access Pipeline and Driftwood Pipeline. The first two pipelines would have gas transportation capacity of 2 Bcf/d each, while the Driftwood Pipeline, which is directly connected to the terminal, would be capable of moving 4 Bcf/d. The pipelines have a combined estimated cost of $7 billion.
