Magellan Petroleum Corp. (NASDAQ: MPET) said Aug. 3 it entered into the LNG business through a strategic merger.

The Denver company said it entered a definitive merger agreement with Tellurian Investments Inc. to acquire the private company headed by former executives of Cheniere Energy Inc. (NYSE: LNG) and BG Group Plc for an undisclosed amount.

Tellurian is focused on the development of a mid-scale LNG facility on the U.S. Gulf Coast. The company is led by Charif Souki, former founder, chairman and CEO of Cheniere Energy, and Martin Houston, former COO of BG Group.

"Our experienced team leading Driftwood LNG, a 26-millon tonnes liquefaction project in Louisiana, and our deep relationship with Bechtel and its sub-contractors, GE and Chart Industries, are key factors that we believe will drive the successful development of one of the most cost-competitive LNG projects globally," Houston, co-founder of Tellurian, said in a statement.

The transaction should open up access to "more attractive financing" to develop Driftwood LNG, which is expected to come onstream in 2022, he said.

Upon closing, pursuant to the terms of the merger agreement, each share of Tellurian will be converted into the right to receive 1.30 shares of Magellan. Magellan will issue about 122 million shares of common stock to Tellurian shareholders, representing about 95% of Magellan's pro forma outstanding common stock.

Petrie Partners Securities LLC was Magellan's financial adviser and Davis, Graham & Stubbs LLP was the company's legal adviser. Tellurian's legal adviser was Gray Reed & McGraw P.C.

The board of directors of each company has unanimously approved the terms of the agreement and has recommended that its shareholders approve the transaction. Completion of the merger is subject to approval of the Magellan and Tellurian shareholders and certain regulatory approvals and customary conditions.

The transaction is expected to close in the fourth quarter of 2016.