Australia’s Woodside Energy has announced an agreement to purchase U.S. liquefied natural gas (LNG) developer Tellurian. This $1.2 billion deal, which includes Tellurian’s Gulf Coast Driftwood LNG export project, is set to solidify the United States’ standing as the world’s leading producer of superchilled gas.
The transaction involves Woodside Energy acquiring all outstanding common stock of Tellurian for $900 million in cash, at $1 per share. This purchase price represents a 75% premium over Tellurian’s last closing price. The acquisition not only provides Woodside with a fully authorized project in the U.S. but also comes at a time when other LNG developers face challenges due to the Biden administration’s halt on new LNG export approvals to non-free trade agreement countries.
Meg O’Neill, CEO of Woodside Energy, expressed confidence in the acquisition, stating, “This positions Woodside to be a global LNG powerhouse.” With this deal, Woodside enhances its U.S. LNG development capabilities, adding to its existing 10 million metric tons per year of equity LNG in Australia.
For Tellurian, this acquisition brings much-needed financial relief. The U.S.-based company has been actively seeking financial partners to fund the Driftwood LNG facility. Earlier in May, Tellurian had announced plans to sell its upstream assets to alleviate some of its debt burdens. The Driftwood project has encountered multiple setbacks, including the cancellation of LNG supply deals due to doubts about the company’s ability to complete the project.
In a letter to shareholders, Tellurian Executive Chairman Martin Houston emphasized the importance of accepting Woodside’s offer. He pointed out the difficulty in raising the necessary billions to build the plant without long-term customer commitments. Houston explained that equity providers are increasingly hesitant to take risks before projects are fully contracted.
Houston also highlighted the immediate financial benefit of the sale. “Cash in hand is better than the uncertainty of the project,” he said, noting that the Board’s decision to recommend the sale was unanimous. Woodside aims for the Driftwood project to be ready for a final investment decision on phase one by the first quarter of 2025.
Woodside plans to leverage its extensive LNG expertise to unlock the potential of this fully permitted development. The company also intends to expand its relationship with Bechtel, the engineering, procurement, and construction (EPC) contractor for both Driftwood LNG and Woodside’s Pluto Train 2 project in Australia.
Energy analyst Saul Kavonic from MST Marquee praised the acquisition as a strategic move. He noted that this deal leverages Woodside’s LNG expertise to acquire financially distressed but otherwise valuable LNG assets at a favorable price. Kavonic emphasized that Woodside could bring significant improvements to Driftwood, addressing marketing relationships, funding, and operational capabilities that Tellurian struggled with.
Earlier this year, Woodside was in merger talks with Australian firm Santos, but the discussions fell through due to disagreements over valuation. This acquisition of Tellurian marks a shift in Woodside’s strategy, focusing on enhancing its global LNG footprint through strategic acquisitions.
