Woodside Energy Acquires Tellurian: A Strategic LNG Expansion

Australia's Woodside Energy has agreed to purchase U.S. LNG developer Tellurian and its Gulf Coast Driftwood LNG export project for $1.2 billion, including debt. This acquisition aims to fortify the U.S. as the leading global producer of LNG and resolve Tellurian's financial struggles, positioning Woodside as a global LNG powerhouse.

Australia's Woodside Energy has announced its acquisition of U.S. liquefied natural gas (LNG) developer Tellurian, including the U.S. Gulf Coast Driftwood LNG export project, in a $1.2 billion deal encompassing debt. This strategic move aims to elevate the United States' standing as the world's largest LNG producer by ensuring the completion of Tellurian's massive 27.6 million metric ton per annum facility in Lake Charles, Louisiana.

The transaction involves a $900 million cash purchase of Tellurian's common stock at $1 per share, a significant 75% premium over Tellurian's last closing price. The acquisition will provide Woodside access to a fully authorized U.S. project amid regulatory challenges faced by other developers under the Biden administration's pause on new LNG export approvals to nations without free trade agreements with the U.S.

Woodside CEO Meg O'Neill emphasized that the deal positions the company as a global LNG powerhouse, topping up its 10 million metric tons per year of equity LNG in Australia. Furthermore, the acquisition resolves Tellurian's financial hurdles as the company struggled to finance its Driftwood facility. The unanimous decision by Tellurian's board underscores the strategic advantage of immediate cash despite project uncertainties.

Woodside eyes a final investment decision on phase 1 of the Driftwood project by Q1 2025, looking to leverage its expertise and partnership with Bechtel, the engineering contractor. Energy analyst Saul Kavonic lauded the acquisition as a financially and strategically sound move, favorably contrasting it to Woodside's previous merger attempts with Santos.

(With inputs from agencies.)