Tellurian Inc. announces strategic shift with potential sale of upstream business

Tellurian Inc. (NYSE American: TELL), a notable player in the global natural gas market, has announced a strategic shift by engaging its financial advisor, Lazard, to explore potential opportunities for selling its upstream business. This move aligns with Tellurian’s ongoing commercialization efforts for the Driftwood LNG project and reflects a strategic reassessment of its assets in light of the dynamics of the U.S. natural gas market and global LNG demand.

Chief Executive Officer Octávio Simões highlighted the decision stems from an extensive review of Tellurian’s strategy amidst evolving market dynamics. “As we commercialize Driftwood LNG, Tellurian has been reviewing its strategy, including the dynamics of the U.S. natural gas market in the context of global LNG demand. We have concluded that there are alternative gas supply strategies available to us from various basins and our ownership of upstream assets is not necessary at this stage of Tellurian’s development,” Simões said. This strategic pivot is aimed at leveraging external gas supply strategies, reducing reliance on owned upstream assets, and accelerating the development of the Driftwood LNG project.

Tellurian’s decision to explore the sale of its upstream business is aimed at unlocking the full value of its high-quality natural gas assets, which include 31,149 net acres, interests in 159 producing wells, and over 400 drilling locations. By potentially divesting these assets, Tellurian aims to substantially reduce its debt, lower general and administrative expenses, and bolster its cash reserves. This financial restructuring is poised to support the company’s 2024 development activities and working capital needs more effectively than through equity issuance.

Tellurian’s operational and environmental stewardship is underscored by its production of 19.5 billion cubic feet (Bcf) of natural gas for the quarter ended September 30, 2023. The company is committed to reducing its carbon footprint through initiatives such as an active emissions monitoring program, electrification of new production well sites, and green completions.

Based in Houston, Texas, Tellurian Inc. is dedicated to building a low-cost, global natural gas business, aiming to deliver natural gas to customers worldwide profitably. The company’s development portfolio includes the Driftwood LNG export facility, projected to have a capacity of approximately 27.6 million tonnes per annum (mtpa), and an associated pipeline. Tellurian’s commitment to innovation and environmental responsibility positions it as a forward-thinking player in the energy sector.

Tellurian Inc.’s strategic decision to explore the sale of its upstream business marks a significant pivot in its business model, focusing on the lucrative prospects of the Driftwood LNG project. This move not only reflects the company’s adaptive strategy in response to global market demands but also underscores its commitment to financial stability and environmental responsibility. As Tellurian continues to navigate the complexities of the global LNG market, its efforts to optimize asset value and reduce operational costs will likely bolster its position as a key player in the energy sector.