Woodside Energy has announced a definitive agreement to acquire Tellurian, a US-based LNG company, for $1.2bn (A$1.8bn), including debt.
This move is expected to bolster Woodside’s position as an independent LNG company, adding Driftwood LNG, a fully permitted US LNG development option, to its portfolio.
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The Driftwood LNG project, located near Lake Charles, Louisiana, is a pre-final investment decision (FID) development opportunity.
It has a total permitted capacity of 27.6 million tonnes per annum (mtpa) across five LNG trains to be developed in four phases.
Woodside is targeting FID readiness for Phase 1, which includes 11mtpa, and Phase 2, comprising 5.5mtpa, from the first quarter (Q1) of 2025.
The company has noted that construction has already begun, with progress made on foundational work, which is anticipated to mitigate risks associated with the engineering, procurement and construction timeline and costs.
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By GlobalDataWoodside has highlighted that the acquisition will not only provide geographic diversification and marketing optimisation but also increase the potential for long-term cash flow generation.
The phased development of Driftwood LNG is aligned with Woodside’s capital allocation framework, ensuring a balanced investment approach.
Moreover, Woodside emphasises that this deal supports its carbon competitiveness by potentially reducing the average scope 1 and 2 emissions intensity of its LNG portfolio.
This aligns with the industry’s increasing focus on sustainability and carbon footprint reduction.
Woodside CEO Meg O’Neill said: “The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse.
“It adds a scalable US LNG development opportunity to our existing approximately 10mtpa of equity LNG in Australia. Having a complementary US position would allow us to better serve customers globally and capture further marketing optimisation opportunities across both the Atlantic and Pacific Basins.”
In preparation for the completion of the transaction, Woodside will provide a loan of up to $230m to Tellurian.
This loan will support the ongoing site activity at Driftwood LNG and other de-risking activities.
The board of directors at Tellurian has approved the transaction and recommended shareholder approval.
Woodside expects the deal to be finalised in Q4 2024, subject to customary conditions including regulatory approvals and the maintenance of validity for existing authorisations.
