Australia’s Woodside Energy Group Ltd. entered into a definitive agreement to buy Driftwood LNG developer Tellurian Inc. for approximately $900 million, both companies said in July 21 press releases.

For Woodside, the Tellurian deal brings a strong gas and LNG player to the Texas Gulf Coast, something that potentially wouldn’t have happened without a rebranding of Tellurian, which started with the departure of chairman of the board Charif Souki.


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Woodside has a diversified, large-scale, low-risk portfolio. The Perth-based company has operations in Australia, Canada, the Gulf of Mexico, Mexico, Senegal, Timor-Leste and Trinidad and Tobago. In the piped-gas and LNG spaces, Woodside is focused on leveraging infrastructure to monetize undeveloped gas, including optionality for hydrogen.

With Driftwood LNG, Tellurian’s proposed export project in Calcasieu Parish, Louisiana, Woodside gains a project with a potential liquefaction capacity of up to 27.6 million tonnes per annum (mtpa). The development includes five plants, up to 20 liquefaction trains, three full containment LNG storage tanks and three marine berths. The deal with Woodside puts Tellurian’s earlier estimates of producing its first LNG by 2028 back on track, more or less.

Tellurian’s Executive Chairman of the Board Martin Houston discussed the transaction, which he stressed “was the right deal,” with Hart Energy on July 22.

Pietro Donatello Pitts, international editor, Hart Energy: Seems a lot has happened in the last year starting with Chairman Charif Souki’s departure, then the Aethon Energy deal and now this. Do you think that’s what really attracted Woodside?

Martin Houston
Tellurian Executive Chairman of the Board Martin Houston. (Source: Tellurian)

Martin Houston, executive chairman, Tellurian: We had to play the hand we were dealt, and we prosecuted a lot of commercial options. But we feel this was the right deal. I can't stress enough that this was the right deal and the proxy [statement] will tell the story in graphic detail. But, for those that wonder whether what could have been or might have been or should have been, based on my 40-plus years in this industry and the board’s judgement, this is the right call.

PDP: Are you satisfied with the $1 per share offer from Woodside considering the difficulties you’ve had progressing Driftwood and then Tellurian’s stock price before the deal was announced?

MH: We opened the aperture and looked at all of the commercial opportunities. We looked at a much broader range of transaction sites, including those of the company. And over the seven months we prosecuted on lots of discussions and conversations and negotiations, at the same time managing the balance sheets, the permits and a whole bunch of other things.

When the board came to review where we were and the options in front of us, of all of the options that we faced, this was the right one, in our view, for all of our stakeholders. And our stakeholders include our shareholders, employees, contractors, [Bechtel and Baker Hughes and others] and the local communities in Louisiana.

We had a bunch of diverse and differentiated stakeholders, and we took the view that this is the right deal for everyone. We found a great buyer. Woodside is a great company, a great LNG operator, and I think they’ll be a great custodian of the assets going forward.

PDP: Over the course of the first half of 2024 Tellurian was shopping Driftwood to even Aramco and not just Woodside. Was the Woodside offer the only offer, if you can talk to this aspect?

MH: When the proxy statement is published in less than 60 days, it’ll outline everything from what the board considered, who we were talking to and what the options were. It will be a full and very transparent view of what happened and this whole transaction. I don't want to preface it; I want people to see the full story rather than pick one or two aspects of it. Clearly, we did have a lot of discussions on different commercial aspects such as continuing to sell LNG. We were looking at tolling arrangements. We were looking at the sale of the company and a part in Driftwood. And we had great help from [financial adviser] Lazard and other advisers, and we basically didn't leave a stone unturned.

PDP: The transaction will close in the fourth quarter 2024 and Woodside looks to take a final investment decision (FID) in the first quarter 2025. Is there an idea of whether that FID will only be for Phase I?

MH: I think it depends on [Woodside’s] own process of potentially finding investors. I think they have lots of options in front of them. I think they’re determined to meet the FID dates they have published. They are basically funding technical and construction activities from now going forward and putting money into the project in a view to maintain that timeline, honoring the permits, working with the regulators and local officials. I think they're doing the right thing. They’re pressing ahead with speed and determination.

PDP: Where does Driftwood stand in terms of construction progress?

MH: We’ve continued to have Bechtel on site and continued to do small amounts of work, including around another batch of piles to be driven into the ground at the site. Bechtel was [always] working in the background, and I'm pleased for the people of Louisiana, for the stakeholders in the state, for the regulators who supported those and put their faith in those.

PDP: Are there any updates you provide regarding previous and current offtake announcements, one of which includes Aethon Energy, that you can talk about?

MH: We’ve had plenty of FID discussions going on, but going forward this is very much Woodside’s business. There will be a handover process so they understand where we were and what we were doing. My global macro sense, given the additional certainty now with Woodside’s balance sheet connected to the project, I think buyers will appear. They will like the speed of delivery of Driftwood and frankly, I think the pricing is good. I think it’s very attractive. And it’s a new project which gives diversity. My sense is that it's going to look very attractive for LNG buyers, particularly with Woodside as the owner.

PDP: Driftwood will source feedgas mainly from the Haynesville or are there other options?

MH: We clearly saw Haynesville as the principal gas, but we didn’t discount that fact that gas could come from the West as well. I think we saw lots of options and lots of different pricing points, and I think Woodside will see those opportunities and be alive to them too. There's plenty of gas in North America and America will be a long-term energy supplier for a very long time to come.

PDP: How positive was the Biden pause in Tellurian’s ability to turn around its situation and attract a company like Woodside?

MH: I think it was a double-edged sword. It is clearly positive for Woodside because they’re stepping into a fully approved project which is already under construction and moving ahead.

For us the pause caused people to stop and wonder what was going to happen with a potential change of [the presidential] administration and so on. It got people thinking, there's no doubt about it. So, I think it happened at a time when global prices were pretty moderate, I would say, and as people have calmed down after the Ukraine situation. Then we had a globally warm winter, which had a dampening effect on prices. So, it was a good time to be fully approved, and the appetite for the buyers was tempered by external events, and also, a lack of understanding about what the future is likely to hold in U.S. politics.

So, I think in some ways it was an advantage and [in] others ways its wasn’t, but certainly in terms of getting the deal done with Woodside, it was a great advantage.

PDP: The Driftwood location leans itself to LNG exports to Europe and then Asia. Do you see any perceived change in that strategy?

MH: I can’t talk on behalf of Woodside but they have a great global portfolio and this makes them a huge player in North America if you look at the potential 27.6 mtpa with Driftwood. It makes them a very serious player in U.S. LNG. With their very significant and well-established, well-regarded and well-run position in Australia, I think they are a global LNG force to be reckoned with.

PDP: In a deal of this type, there are no synergies to talk about, right?

MH: The synergy is only the synergy of the asset. We have a small employee base of just around 100 people, so it’s not as if they were acquiring a huge corporation.