Tellurian Announces Haynesville Shale Acquisition for $125 million
July 13 2022 - 8:44AM
Business Wire
Tellurian Inc. (Tellurian) (NYSE American: TELL) announced today
that its wholly owned subsidiary Tellurian Production LLC (TPC) has
entered into an agreement to purchase natural gas assets from
privately held EnSight IV Energy Partners, LLC and EnSight
Haynesville Partners, LLC (collectively EnSight) located in the
Haynesville Shale.
The purchase price is $125 million, subject to customary closing
adjustments, and a contingent payment of $7.5 million which is
based on the price of natural gas and may be payable in March 2023
under certain conditions. Tellurian will fund the purchase with
cash on hand and anticipates closing on the EnSight assets in the
third quarter of 2022. The effective date of the transaction is
August 1, 2022.
EnSight asset highlights:
- Current net production of ~45 million cubic feet of natural gas
per day (MMcf/d) (100% natural gas) (1)
- Approximately 5,000 net acres in the core of the Haynesville
Shale in DeSoto, Bossier, Caddo, and Webster Parishes,
Louisiana
- 44 producing wells and five wells in progress at transaction
close
- Low-cost, high-margin producing assets generating significant
free cash flow
- Asset-level projected 2023 EBITDA of approximately $90-120
million (2)
- High return, de-risked drilling inventory with over 30 gross
drilling locations (3)
- EnSight is currently operating a one-rig drilling program,
which Tellurian plans to maintain on the acquired assets through
the fourth quarter of 2022
- Proved reserves of approximately 108 billion cubic feet of
natural gas (Bcf) and a $180 million PV-10 projected (3)
Impact on TPC:
- 2022 proforma net production estimated to be ~140 MMcf/d, from
39 MMcf/d in 2021 (4)
- At closing, TPC’s Haynesville Shale acreage increases to
~20,000 net acres, with >275 gross drilling locations and a net
resource expected at >2 trillion cubic feet (Tcf) (5)
- Tellurian anticipates TPC 2023 drilling program to be a two-rig
program with approximately 350 MMcf/d of net production (6)
Tellurian President and CEO Octávio Simões said, “Tellurian
continues to focus on two critical pathways - progressing Driftwood
LNG and continuing to increase our upstream footprint. This
transaction grows our 2023 estimated natural gas production by
~30%, increases upstream asset-level EBITDA by ~25%, and expands
upon our existing platform.”
TPC President John Howie added, “We have been diligently growing
our natural gas production and reserves in the Haynesville. These
assets provide Tellurian with both cash flow and a physical hedge
for Driftwood LNG. The EnSight asset is a great fit with
Tellurian’s existing position in the Haynesville Shale and allows
us to step into an ongoing development program and bring on-line
significant additional natural gas volumes in the fourth quarter of
2022.”
(1) Management estimate of EnSight June 2022 average sales
volumes of target assets.
(2) Asset-level EBITDA excludes corporate general and
administrative expenses. Management estimate for 2023 based on a
capital budget of ~30 million that has not been approved by the
Tellurian board of directors.
(3) Reserves and inventory information as of August 1, 2022
(using June 30, 2022 NYMEX strip pricing and cost information as of
July 6, 2022) as prepared by Netherland, Sewell & Associates in
accordance with the definitions and guidelines set forth in the
2018 Petroleum Resources Management System (PRMS).
(4) Management estimate based on current production levels and
anticipated development activities.
(5) Management estimate of total reserves and contingent
resources as of August 1, 2022 (using June 30, 2022 NYMEX strip
pricing and cost information as of July 6, 2022) in accordance with
the definitions and guidelines set forth in the 2018 PRMS.
(6) Management estimate for 2023 based on a capital budget of
~$330 million that has not been approved by the Tellurian board of
directors.
About Tellurian Inc.
Tellurian intends to create value for shareholders by building a
low-cost, global natural gas business, profitably delivering
natural gas to customers worldwide. Tellurian is developing a
portfolio of natural gas production, LNG marketing and trading, and
infrastructure that includes an ~ 27.6 mtpa LNG export facility and
an associated pipeline. Tellurian is based in Houston, Texas, and
its common stock is listed on the NYSE American under the symbol
“TELL”.
For more information, please visit www.tellurianinc.com. Follow
us on Twitter at twitter.com/TellurianLNG
CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements within
the meaning of U.S. federal securities laws. The words
“anticipate,” “assume,” “believe,” “budget,” “estimate,” “expect,”
“forecast,” “initial,” “intend,” “may,” “plan,” “potential,”
“project,” “proposed,” “should,” “will,” “would,” and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements herein relate to, among other things,
the capacity, timing, and other aspects of the Driftwood LNG
project, the timing and anticipated benefits of the EnSight
acquisition, future production, costs, cash flows, returns and
asset-level EBITDA, and future capital expenditures, wells,
locations and development activities. These statements involve a
number of known and unknown risks, which may cause actual results
to differ materially from expectations expressed or implied in the
forward-looking statements. These risks include the matters
discussed in Item 1A of Part I of the Annual Report on Form 10-K of
Tellurian for the fiscal year ended December 31, 2021 filed by
Tellurian with the Securities and Exchange Commission (the SEC) on
February 23, 2022, and other Tellurian filings with the SEC, all of
which are incorporated by reference herein. The forward-looking
statements in this press release speak as of the date of this
release. Although Tellurian may from time to time voluntarily
update its prior forward-looking statements, it disclaims any
commitment to do so except as required by securities laws. The
Company is unable to present a reconciliation of forward-looking
asset-level EBITDA because certain components of the calculation
are subject to change. Moreover, estimating the most directly
comparable generally accepted accounting principles (GAAP) measure
with the required precision necessary to provide a meaningful
reconciliation is extremely difficult and could not be accomplished
without unreasonable effort. Resource estimates are subject to
substantially greater risk of recovery than proved reserves.
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version on businesswire.com: https://www.businesswire.com/news/home/20220712006148/en/
Media: Joi Lecznar EVP Public and Government Affairs
Phone +1.832.962.4044 joi.lecznar@tellurianinc.com
Investors: Matt Phillips Vice President, Investor
Relations Phone +1.832.320.9331
matthew.phillips@tellurianinc.com
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