Woodside Energy announces the acquisition of Tellurian and its flagship Driftwood LNG project for $1.2 billion, including debt.
The purchase includes a cash payment of $900 million for Tellurian’s common shares, or $1 per share, a premium of more than 75% over the last closing price.
This transaction gives Woodside access to a fully permitted project in the United States, a significant advantage during the current pause in approvals for new LNG projects by the Biden administration.
The Driftwood LNG project, with an annual capacity of 27.6 million metric tons, becomes a major asset for Woodside.
Financial stability and continuity of operations
Tellurian, in financial difficulty, benefits from a bridging loan from Woodside to ensure the continuity of its operations.
This acquisition also resolves Tellurian’s financial problems, as it had been considering selling its upstream assets to repay part of its debt.
Woodside thus strengthens its position in the global LNG market.
The acquisition enables Woodside to add an LNG development opportunity in the United States to its existing portfolio of 10 million metric tons per year in Australia.
Reactions and outlook
Tellurian reassures its employees that no redundancies are planned, and that a high rate of staff retention is expected after the transaction.
The acquisition comes at a crucial time for the Driftwood LNG project, which has suffered several setbacks, including the cancellation of LNG supply contracts.
Saul Kavonic, analyst at MST Marquee, sees the acquisition as a sound strategy for Woodside, allowing it to capitalize on its LNG expertise to add value to financially troubled but strategically advantageous assets.
Woodside is targeting a final investment decision for Phase 1 of the project in the first quarter of 2025.
Woodside’s acquisition of Tellurian marks a significant milestone in the LNG industry, consolidating the United States’ position as world leader and strengthening Woodside’s strategic portfolio.
