- Creates a global LNG powerhouse
- Attractive entry into scalable, fully permitted 27.6 million
tonnes per annum (Mtpa) US LNG development option
- Significant cash generation potential to underpin long-term
shareholder returns
Woodside has entered into a definitive agreement to acquire all
issued and outstanding common stock of Tellurian (NYSE: TELL)
including its owned and operated US Gulf Coast Driftwood LNG
development opportunity (“Driftwood LNG”).
The consideration for the transaction is an all-cash payment of
approximately $900 million, or $1.00 per share of outstanding
Tellurian common stock. The implied enterprise value is
approximately $1,200 million.1 This represents an attractive entry
into an opportunity with more than $1 billion of expenditure
incurred to date.
“The acquisition of Tellurian and its Driftwood LNG development
opportunity positions Woodside to be a global LNG powerhouse,” said
Woodside CEO Meg O’Neill.
“It adds a scalable US LNG development opportunity to our
existing approximately 10 Mtpa 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.
“The Driftwood LNG development opportunity is competitively
advantaged. Woodside expects to leverage its global LNG expertise
to unlock this fully permitted development and expand our
relationship with Bechtel which is the EPC contractor for both
Driftwood LNG and our Pluto Train 2 project in Australia.
“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.”
Strategic rationale
The acquisition of Tellurian and its Driftwood LNG development
opportunity strengthens Woodside’s positioning to deliver on our
strategy to thrive through the energy transition. The expected
benefits of the acquisition include:
- Expanding Woodside’s position as a leading independent LNG
company;
- Adding a high-quality, fully permitted US LNG development
option to Woodside’s portfolio;
- Leveraging Woodside's LNG development, operations and marketing
expertise to unlock the development and create value;
- Enabling value creation from marketing optimisation with
geographic diversification;
- Increasing long-term cashflow generation potential with a
phased development to manage investment decisions aligned with
Woodside’s capital allocation framework; and
- Supporting Woodside’s carbon competitiveness through increased
exposure to LNG and potential to reduce the average Scope 1 and 2
emissions intensity of Woodside’s LNG portfolio.
Woodside’s target of reducing net equity Scope 1 and 2 emissions
by 2030, and aspiration for net zero by 2050, are unchanged.2
Driftwood LNG
Driftwood LNG is a fully permitted, pre-final investment
decision (FID) development opportunity located near Lake Charles,
Louisiana. The current development plan comprises five LNG trains
through four phases, with a total permitted capacity of 27.6
Mtpa.
The foundation development includes Phase 1 (11 Mtpa) and Phase
2 (5.5 Mtpa). Woodside is targeting FID readiness for Phase 1 of
the Driftwood LNG development opportunity from the first quarter of
2025.
The Driftwood LNG development opportunity is competitively
advantaged:
- The development is fully permitted, and has a valid non-free
trade agreement (FTA) export authorisation. The development also
recently received an extension of its Federal Energy Regulatory
Commission (FERC) authorisation;
- The design is cost and carbon competitive. Woodside expects
development costs of ~$900-960/tonne for Phase 1 and 2.3 The
contracting strategy is a lump-sum turnkey contract with LNG
contractor Bechtel; and
- Construction has commenced, with pilings for Trains 1 and 2
complete, foundation work in progress and pilings underway for the
LNG tanks. The progress on ground work reduces the risk to EPC
timeline and cost.
Transaction details
Under the proposed transaction Woodside, or a wholly owned
subsidiary of Woodside, will acquire 100% of the issued and
outstanding shares of common stock of Tellurian Inc.
(“Tellurian”).
Tellurian’s Board of Directors has approved the transaction and
has recommended that its shareholders approve the transaction. The
transaction is targeting completion in the fourth quarter of the
2024 calendar year.
The transaction is subject to satisfaction of customary
conditions precedent, including maintenance of validity for
existing authorisations (e.g. Department of Energy (DOE) and FERC),
Tellurian shareholder approval, regulatory approval and other
approvals.
In connection with entry into a binding agreement to acquire
Tellurian, Woodside will provide a loan to Tellurian of up to $230
million to ensure Driftwood LNG site activity and de-risking
activities maintain momentum prior to completion of the
transaction. The loan is secured by a first priority lien over the
borrower’s assets subject to customary exclusions. The latest
maturity date for the loan is 15 December 2024 or the date of
transaction completion.
Woodside’s sole financial adviser is PJT Partners and its legal
adviser is Norton Rose Fulbright.
About Woodside
Woodside led the development of the LNG industry in Australia.
With a focused portfolio, Woodside is recognised for its
world-class capabilities as an integrated upstream supplier of
energy. Woodside’s proven track record and distinctive capabilities
are underpinned by 70 years of experience.
About Tellurian
Tellurian aims to generate shareholder value by establishing a
competitive LNG enterprise, effectively supplying natural gas to
customers worldwide. Headquartered in Houston, Texas, Tellurian is
developing Driftwood LNG, an approximately 27.6 Mtpa LNG export
facility and associated pipeline.
Teleconference
A conference call providing an overview of the transaction with
a question and answer session will be hosted by Woodside CEO and
Managing Director Meg O’Neill on Monday, 22 July 2024 at 08:00
AWST/10:00 AEST (19:00 CDT Sunday, 21 July 2024).
We recommend participants pre-register five to 10 minutes prior
to the event with one of the following links:
- https://webcast.openbriefing.com/wds-ann-2024/ to listen to a
live stream of the question-and-answer session
- https://s1.c-conf.com/diamondpass/10040740-jh78y6.html to
participate in the question and answer session. Following
pre-registration, participants will receive the teleconference
details and a unique access passcode.
An investor presentation follows this announcement and will be
referred to during the conference call. It will also be made
available on the Woodside website (www.woodside.com) and has today
been submitted to the FCA National Storage Mechanism and will
shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
A copy of the transcript of the conference call will also be
submitted to the National Storage Mechanism and will be available
for inspection at the web address set out above following the
conclusion of the conference call.
This announcement was approved and authorised for release by
Woodside’s Disclosure Committee.
1 Includes $50 million for Tellurian’s
Series C Convertible Preferred equity shares, ~$90 million of net
debt, a ~$90 million net working capital adjustment, ~$65 million
for management and debt change of control costs. Does not include
expected interim funding from signing to close or management
construction incentive payment awards.
2 Woodside’s net emissions reduction
targets are for net equity Scope 1 and 2 greenhouse gas emissions,
with a targeted reduction of 15% by 2025, 30% by 2030, with an
aspiration of net zero by 2050. The net emissions reduction targets
are relative to a starting base representative of the gross annual
average equity Scope 1 and 2 greenhouse gas emissions over
2016-2020 and may be adjusted (up or down) for potential equity
changes in producing or sanctioned assets with a final investment
decision prior to 2021.
3 Includes EPC (engineering, procurement,
construction), owner’s costs and contingency costs. Excludes
pipeline costs.
Announcement contains inside information
This announcement contains inside information. Marcela Louzada,
Vice President Investor Relations is responsible for release of
this announcement.
Forward-looking statements
This presentation contains forward-looking statements with
respect to Woodside’s business and operations, market conditions,
results of operations and financial condition, including, for
example, but not limited to, statements regarding Woodside’s
proposed acquisition of Tellurian, the development, completion and
execution of Woodside’s projects, expectations regarding future
capital expenditures, future results of projects, operating
activities, new energy products, expectations and plans for
renewables production capacity and investments in, and development
of, renewables projects, expectations and guidance with respect to
production, investment expenditure and gas hub exposure for 2024,
and expectations regarding the achievement of Woodside’s net equity
Scope 1 and 2 greenhouse gas emissions targets. All statements,
other than statements of historical or present facts, are
forward-looking statements and generally may be identified by the
use of forward-looking words such as ‘pathway’, ‘guidance’,
‘foresee’, ‘likely’, ‘potential’, ‘anticipate’, ‘believe’, ‘aim’,
‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘target’, ‘plan’,
‘strategy’, ‘forecast’, ‘outlook’, ‘project’, ‘schedule’, ‘will’,
‘should’, ‘seek’ and other similar words or expressions. Similarly,
statements that describe the objectives, plans, goals or
expectations of Woodside are forward-looking statements.
Forward-looking statements in this presentation are not
guidance, forecasts, guarantees or predictions of future events or
performance, but are in the nature of future expectations that are
based on management’s current expectations and assumptions. Those
statements and any assumptions on which they are based are subject
to change without notice and are subject to inherent known and
unknown risks, uncertainties, assumptions and other factors, many
of which are beyond the control of Woodside, its related bodies
corporate and their respective beneficiaries. Important factors
that could cause actual results to differ materially from those in
the forward-looking statements include, but are not limited to, the
occurrence, or failure or certain events to occur, of any event,
change or other circumstances that could give rise to the
termination of the merger agreement with Tellurian; the risk that
the closing conditions for the acquisition of Tellurian will not be
satisfied, including the risk that regulatory approvals will not be
obtained, the risk that Tellurian shareholder approval will not be
obtained, the possibility that the transaction will not be
completed in the expected timeframe or at all, potential adverse
effects to the businesses of Tellurian during the pendency of the
transaction, the risk of security holder litigation relating to the
transaction, including resulting expense or delay, the potential
that the expected benefits and opportunities of the acquisition, if
completed, may not be realised or may take longer to realize than
expected; challenges inherent in the development of LNG facilities,
fluctuations in commodity prices, actual demand for Woodside
products, currency fluctuations, geotechnical factors, drilling and
production results, gas commercialisation, development progress,
operating results, engineering estimates, reserve and resource
estimates, loss of market, industry competition, environmental
risks, climate related risks, physical risks, legislative, fiscal
and regulatory developments, changes in accounting standards,
economic and financial markets conditions in various countries and
regions, political risks, project delay or advancement, regulatory
approvals, the impact of armed conflict and political instability
(such as the ongoing conflict in Ukraine or the Middle East) on
economic activity and oil and gas supply and demand, cost
estimates, and the effect of future regulatory or legislative
actions on Woodside or the industries in which it operates,
including potential changes to tax laws, and the impact of general
economic conditions, inflationary conditions, prevailing exchange
rates and interest rates and conditions in financial markets.
A more detailed summary of the key risks relating to Woodside
and its business can be found in the “Risk” section of Woodside’s
most recent Annual Report released to the Australian Securities
Exchange and the London Stock Exchange and in Woodside’s most
recent Annual Report on Form 20-F filed with the United States
Securities and Exchange Commission (SEC) and available on the
Woodside website at
https://www.woodside.com/investors/reports-investor-briefings. You
should review and have regard to these risks when considering the
information contained in this presentation.
Investors are strongly cautioned not to place undue reliance on
any forward-looking statements. Actual results or performance may
vary materially from those expressed in, or implied by, any
forward-looking statements.
Important additional information and where to find it
This communication may be deemed to be solicitation material in
respect of the proposed acquisition of Tellurian by an affiliate of
Woodside. In connection with the proposed transaction, Tellurian
intends to file relevant materials with the U.S. Securities and
Exchange Commission (“SEC”), including Tellurian’s proxy statement
in preliminary and definitive form. Promptly after filing the
definitive proxy statement, Tellurian will mail the definitive
proxy statement and a proxy card to the stockholders of
Tellurian.
INVESTORS AND SECURITY HOLDERS OF TELLURIAN ARE URGED TO READ
ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING TELLURIAN’S
PROXY STATEMENT (WHEN THEY ARE AVAILABLE), BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION
AND THE PARTIES TO THE PROPOSED TRANSACTION.
Investors and security holders of Tellurian are or will be able
to obtain these documents (when they are available) free of charge
from the SEC’s website at www.sec.gov or free of charge from
Tellurian on Tellurian’s investor relations website at
https://tellurianinc.com/.
Participants in the solicitation
This communication does not constitute a solicitation of proxy,
an offer to purchase or a solicitation of an offer to sell any
securities. Woodside, Tellurian and certain of their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the security holders of
Tellurian in connection with the proposed transaction. Information
regarding the interests of these directors and executive officers
in the proposed transaction will be included in the definitive
proxy statement referred to above. Security holders may also obtain
information regarding the names, affiliations and interests of
Woodside’s directors and executive officers in the Woodside Annual
Report on Form 20-F for the fiscal year ended December 31, 2023,
which was filed with the SEC on February 27, 2024. Security holders
may obtain information regarding the names, affiliations and
interests of Tellurian’s directors and executive officers in
Tellurian’s definitive proxy statement in connection with its 2024
Annual Meeting of Stockholders (the “Tellurian Proxy Statement”),
which was filed with the SEC on April 25, 2024, under “Proposal 1
--Election of Directors to the Company's Board --Background
Information About the Nominees and Other Directors,” “Proposal 1
--Election of Directors to the Company's Board --Executive
Officers,” “Compensation Discussion and Analysis” and “Security
Ownership of Certain Beneficial Owners and Management.” To the
extent that holdings of Tellurian's securities have changed since
the amounts printed in the Tellurian Proxy Statement, such changes
have been or will be reflected on Statements of Change in Ownership
on Form 4 filed with the SEC. Information regarding Tellurian's
transactions with related persons is set forth under the caption
“Certain Relationships and Related Party Transactions” in the
Tellurian Proxy Statement. Additional information regarding the
interests of such individuals in the proposed transaction will be
included in the definitive proxy statement relating to the proposed
transaction when it is filed with the SEC. These documents (when
available) may be obtained free of charge from the SEC’s website at
www.sec.gov, Woodside’s website at www.woodside.com/investors and
Tellurian’s website at https://tellurianinc.com. The contents of
the websites referenced above are not deemed to be incorporated by
reference into the proxy statement.
Climate strategy and emissions data
All greenhouse gas emissions data in this presentation are
estimates, due to the inherent uncertainty and limitations in
measuring or quantifying greenhouse gas emissions, and our
methodologies for measuring or quantifying greenhouse gas emissions
may evolve as best practices continue to develop and data quality
and quantity continue to improve.
Woodside “greenhouse gas” or “emissions” information reported
are net equity Scope 1 greenhouse gas emissions, Scope 2 greenhouse
gas emissions, and/or Scope 3 greenhouse gas emissions, unless
otherwise stated.
For more information on Woodside's climate strategy and
performance, including further details regarding Woodside's
targets, aspirations and goals and the underlying methodology,
judgements, assumptions and contingencies, refer to Woodside's
Climate Transition Action Plan 2023 (CTAP) available on the
Woodside website at
https://www.woodside.com/sustainability/climate-change. The
glossary and footnotes to this presentation provide clarification
regarding the use of terms such as "lower carbon" under Woodside's
climate strategy. A full glossary of terms used in connection with
Woodside's climate strategy is contained in the CTAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240721461354/en/
INVESTORS Marcela Louzada M: +61 456 994 243 E:
investor@woodside.com MEDIA Christine Forster
(Australia) M: +61 484 112 469 E:
christine.forster@woodside.com
Rob Young (United States) M: +1 281 790 2805 E:
robert.young@woodside.com
Woodside Energy (NYSE:WDS)
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