Woodside Completes Acquisition of Tellurian

Rhea-AI Summary

Woodside has completed the acquisition of Tellurian Inc. and its US Gulf Coast Driftwood LNG development opportunity for approximately $900 million cash, or $1.00 per share, with an implied enterprise value of about $1,200 million. The project has been renamed Woodside Louisiana LNG.

The development is an under-construction, pre-final investment decision (FID) LNG production and export terminal in Calcasieu Parish, Louisiana, with a total permitted capacity of 27.6 million tonnes per annum. Woodside CEO Meg O'Neill highlighted this as a major growth opportunity expanding their US LNG position and enabling better service to global customers.

Woodside is targeting FID readiness from the first quarter of 2025. The project is fully permitted, with completed front-end engineering design and advanced site civil works. Woodside aims to leverage its expertise in project execution, operations, and marketing to unlock the development's value.

Positive

• Acquisition expands Woodside's US LNG position significantly
• Woodside Louisiana LNG has a permitted capacity of 27.6 million tonnes per annum
• Project is fully permitted with completed front-end engineering design
• Site civil works are well advanced
• Multiple parties have expressed interest in entering as strategic partners

Negative

• Substantial cash outlay of $900 million for the acquisition
• Final Investment Decision (FID) not yet made, targeted for Q1 2025
• Integration challenges may arise from incorporating Tellurian's team and assets

Insights

Energy Industry Analyst

The acquisition of Tellurian by Woodside for $900 million is a significant move in the LNG sector. This deal gives Woodside control over the Driftwood LNG project, now renamed Woodside Louisiana LNG, with a substantial permitted capacity of 27.6 million tonnes per annum. The strategic importance of this acquisition lies in its potential to enhance Woodside's position in the global LNG market, particularly in serving both Atlantic and Pacific markets.

The project's advanced state, with completed front-end engineering design and ongoing site work, positions Woodside to potentially fast-track its development. The target for FID readiness by Q1 2025 suggests a relatively quick timeline for such a large-scale project. However, investors should note that the LNG market is cyclical and subject to geopolitical influences, which could impact the project's profitability and timing.

While the acquisition price seems reasonable given the project's potential, the success will ultimately depend on Woodside's execution capabilities and future LNG demand. The mention of interest from potential strategic partners is positive, as it could help share costs and risks associated with the project's development.

Financial Analyst

Woodside's $900 million acquisition of Tellurian, with an enterprise value of $1.2 billion, represents a strategic bet on the future of LNG. The deal's structure, at $1.00 per share in cash, provides a clean exit for Tellurian shareholders and a clear entry point for Woodside into a major US Gulf Coast LNG project.

Financially, this acquisition could significantly impact Woodside's future revenue streams and market capitalization, currently at $33.35 billion. The project's 27.6 MTPA capacity, if fully realized, would substantially increase Woodside's LNG output and potentially its market share in the global LNG trade.

However, investors should be cautious about the capital expenditure required to bring the project to fruition. LNG projects are notoriously capital-intensive and while Woodside has the expertise, the financial commitment needed to reach FID and complete construction could be substantial. The company's ability to secure strategic partners and favorable financing terms will be important in determining the project's impact on Woodside's financial health and future profitability.

HOUSTON--(BUSINESS WIRE)-- Woodside has completed the acquisition of Tellurian Inc. (Tellurian) and its US Gulf Coast Driftwood LNG development opportunity. Woodside has acquired all issued and outstanding Tellurian common stock for approximately $900 million cash, or $1.00 per share. The implied enterprise value is approximately $1,200 million.¹

Woodside is pleased to also announce it has renamed the Driftwood LNG development opportunity Woodside Louisiana LNG.

Woodside Louisiana LNG is an under-construction, pre-final investment decision (FID), LNG production and export terminal in Calcasieu Parish, Louisiana. It is a high-quality, scalable development opportunity, with a total permitted capacity of 27.6 million tonnes per annum.

Woodside CEO Meg O’Neill said bringing Woodside Louisiana LNG into the global portfolio represented a significant new chapter for the company.

“This is a major growth opportunity that significantly expands our US LNG position, enabling us to better serve global customers and capture further marketing optimisation opportunities across both the Atlantic and Pacific Basins.

“Our acquisition provides a new strategic direction for this development. Woodside’s world class expertise in project execution, operations and marketing means we are well-positioned to unlock the development and generate value.

“Woodside Louisiana LNG is a competitively advantaged opportunity. It is fully permitted, front-end engineering design is complete, and site civil works are well advanced.

"Woodside is targeting FID readiness from the first quarter of 2025, with the experienced Tellurian team and engineering, procurement and construction contractor Bechtel having completed substantial work to advance the opportunity to this stage.

“We are also pleased with the inbounds received from multiple parties looking to enter the opportunity as a strategic partner.”

This announcement was approved and authorised for release by Woodside’s Disclosure Committee.

Forward-looking statements

This announcement 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 the transaction, the timing of completion of other transactions, the timing of completion of Woodside's projects and expectations regarding future expenditures and future results of projects. 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 'guidance', 'foresee', 'likely', 'potential', 'anticipate', 'believe', 'aim', ‘aspire’, 'estimate', 'expect', 'intend', 'may', 'target', 'plan', '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 announcement 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 officers, directors, employees, advisers or representatives. If any of the assumptions on which a forward-looking statement is based were to change or be found to be incorrect, this would likely cause outcomes to differ from the statements made in this announcement.

A 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 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 announcement.

All information included in this announcement, including any forward-looking statements, reflects Woodside’s views held as at the date of this announcement and, except as required by law or regulation, neither Woodside, its related bodies corporate, nor any of their respective officers, directors, employees, advisers or representatives intends to, undertakes to, or assumes any obligation to, provide any additional information or update or revise any information or forward-looking statements in this announcement after the date of this announcement, either to make them conform to actual results or as a result of new information, future events, changes in Woodside’s expectations or otherwise.

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.

___________________________________
¹ Includes $50 million for Tellurian’s Series C Convertible Preferred equity shares, ~$65 million of net debt, ~$20 million net working capital adjustment, ~$50 million for management and debt change of control costs and ~$135m of interim funding from signing to close. Does not include management construction incentive payment awards. The accounting treatment of the purchase price will be included in Woodside’s 2024 Annual Report and will include share purchase consideration, interim funding and other items.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241008214647/en/

INVESTORS

Marcela Louzada

M: +61 456 994 243

E: investor@woodside.com

MEDIA

Christine Forster

M: +61 484 112 469

E: christine.forster@woodside.com

Source: Woodside Energy Group Ltd

FAQ

What is the value of Woodside's acquisition of Tellurian (WDS)?

Woodside acquired Tellurian for approximately $900 million cash, or $1.00 per share, with an implied enterprise value of about $1,200 million.

What is the new name for the Driftwood LNG project acquired by Woodside (WDS)?

The Driftwood LNG project has been renamed Woodside Louisiana LNG following the acquisition by Woodside.

What is the production capacity of Woodside Louisiana LNG (WDS)?

Woodside Louisiana LNG has a total permitted capacity of 27.6 million tonnes per annum of LNG production and export.

When is Woodside (WDS) targeting Final Investment Decision (FID) readiness for Louisiana LNG?

Woodside is targeting FID readiness for Woodside Louisiana LNG from the first quarter of 2025.