Woodside (ASX:WDS) has announced its acquisition of the small U.S. LNG company Tellurian for what appears to be a very costly $1.2 billion.
This price is considered high because Woodside states that the implied value is $1.2 billion, translating to a per-share price of $1.00. In contrast, Tellurian’s closing price on Friday was $0.57, with a market value of nearly $479 million. Woodside contends that the proposed purchase would "create a global LNG powerhouse" and offer "an attractive entry into scalable, fully permitted 27.6 million tonnes per annum (Mtpa) U.S. LNG."
Tellurian owns and operates the U.S. Gulf Coast Driftwood LNG development opportunity.
Woodside also mentioned that the deal has "significant cash generation potential to underpin long-term shareholder returns."
"This represents an attractive entry into an opportunity with more than $1 billion of expenditure incurred to date," Woodside stated in its announcement to the ASX before trading began on Monday morning.
"The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to become a global LNG powerhouse," said Woodside CEO Meg O’Neill.
"It adds a scalable U.S. LNG development opportunity to our existing approximately 10 Mtpa of equity LNG in Australia. Having a complementary U.S. position would enable us to better serve customers globally and capture further marketing optimization opportunities across both the Atlantic and Pacific Basins.
"The Driftwood LNG development opportunity is competitively advantaged. Woodside expects to leverage its global LNG expertise to unlock this fully permitted development and expand our relationship with Bechtel, which is the EPC contractor for both Driftwood LNG and our Pluto Train 2 project in Australia.
"Through this acquisition, we are advancing our strategy to thrive through the energy transition. Woodside believes that LNG will play a key role in the energy transition and is well-positioned to deliver the energy the world needs while providing significant value to our shareholders."
Woodside added that Driftwood LNG is a fully permitted, pre-final investment decision (FID) development opportunity located near Lake Charles, Louisiana. The current development plan comprises five LNG trains through four phases, with a total permitted capacity of 27.6 Mtpa.
