Tellurian completes $260mn Aethon deal

US LNG company Tellurian announced on July 1 that it had closed the sale of its integrated upstream assets for $260mn to affiliates of Aethon Energy.

The deal, initially announced in May, fulfills a key objective outlined at that time and strengthens Tellurian's balance sheet as it advances the Driftwood LNG project. Proceeds from the sale were utilised to retire $230mn of non-convertible senior secured notes scheduled to mature in 2025.

“With the retirement of the senior secured debt, Tellurian is in a much-improved commercial position as we work to advance Driftwood LNG,” said Tellurian president Daniel Belhumeur.

Gordon Huddleston, president of Aethon Energy, stated, “We continue to work with Tellurian on a long-term sale and purchase agreement for 2mn tonnes/year of LNG and believe in the many benefits that low emission exports have for the broader energy transition.”

The 27.5mn tonnes/year Driftwood project secured FERC approval in April 2019. Tellurian got seven years, or until 2026, to complete the project. The first phase of the project will have a capacity of 11mn tonnes/year.

The company has yet to announce a final investment decision (FID) on the project and is actively seeking customers to buy the LNG. It expects to announce the FID and issue a full notice to proceed to Bechtel to begin construction for the first phase of the project this year.

“This transaction is a significant step in securing our balance sheet and progressing Driftwood,” added Tellurian executive chairman Martin Houston. “The partnership between Aethon and Tellurian is vital as we continue securing buyers for Driftwood’s remaining capacity and advance its development.”