Woodside Energy (ASX:WDS) has announced its acquisition of struggling US liquefied natural gas (LNG) developer Tellurian for $1.2 billion. This deal is set to transform the Australian company into a “global LNG powerhouse.”
The agreement, revealed by both companies on Sunday, concludes a long-standing saga for Tellurian, which faced numerous challenges in launching its $25 billion Driftwood export project in Louisiana. The company's chair was ousted in December amid these struggles.
“Despite our recent progress, we’ve been clear that the company’s situation necessitated an exploration of all possible alternatives, including a potential sale,” wrote Tellurian executive chair Martin Houston in a letter to shareholders. “Ultimately, we decided the attractive offer in hand outweighed the risks and uncertainty associated with going it alone.”
Tellurian, founded in 2016 by Houston and US LNG pioneer Charif Souki, aimed to develop the Driftwood project on a 1,200-acre site along the Calcasieu River. If completed, it would become one of the largest export terminals in the country. However, the project faced multiple setbacks, including losing key buyers and struggling to secure funding despite a surge in demand for US gas following Russia’s invasion of Ukraine.
Souki, credited with initiating the US LNG export industry at his former company Cheniere, was removed as executive chair at Tellurian in December as the company’s difficulties escalated.
The company’s struggles led to a significant decline in its market value, dropping from a high of nearly $3 billion in 2017 to under $500 million on Friday. The sale price, including $900 million in cash and the company’s debt, represents a 75 percent premium to its most recent close.
For Woodside, Australia’s largest oil and gas developer, this acquisition provides a stronger position in the thriving US LNG export industry at a time when demand for the super-chilled fuel is expected to grow rapidly.
“The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse,” said Woodside chief executive Meg O’Neill.
