Woodside has agreed to acquire U.S. liquified natural gas (LNG) developer Tellurian for US$900 million (A$1.36 billion) in an all-cash transaction, as it aims to become a global LNG powerhouse.
The Australian energy giant announced on July 22 that the deal for the Houston-based company came at $1 per share, which was a 75 percent premium to its closing stock price on the New York exchange on July 19.
Tellurian faced difficulties securing funds for its Driftwood LNG project in Lake Charles, Louisiana.
Its deals to sell LNG to oil and gas giant Shell and commodity trading company Vitol fell apart in 2022. It then struggled to bring on board an equity investor partner.
Further, in December, Charif Souki, Tellurian’s co-founder and then-CEO, was fired after it was revealed that there was significant doubt on the company’s ability to finance future expenses.
In March, its CEO Octavio Simoes announced he would be stepping down, and the company announced it would begin exploring the option to sell.
Tellurian Executive Chairman Martin Houston said the deal was made after careful consideration, and the board believed it to be in the best interest of shareholders.
“Woodside is a highly credible operator, with better access to financial resources and a greater ability to manage offtake risk. I am confident it is the right developer to take Driftwood forward,” he said.
Woodside CEO Meg O'Neill said the agreement is expected to have a value of US$1.2 billion, including Tellurian’s debt.
“The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse,” she said in an ASX announcement.
She added that having a foothold in the United States would allow Woodside to expand and better seize opportunities available in the Pacific and Atlantic basins.
“Through this acquisition, we are delivering on 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 delivering significant value to our shareholders,” Ms. O'Neill said.
However, Alex Hillman, lead analyst of the Australasian Centre for Corporate Responsibility, called Woodside’s move an “alarming strategic decision.”
“Questions should be raised as to why a super major has not already swooped in on the project. Clearly, these companies do not see Driftwood as the compelling opportunity that Woodside claims it is,” he said.
The acquisition comes after a February collapse of a $80 million merger proposal between Woodside and Australian gas giant Santos.
It would have created the world’s fourth-largest listed LNG producer if successful.
