Woodside Doubles Down on U.S., LNG With Tellurian Takeover — Update

By David Winning

SYDNEY--Woodside Energy said it intends to acquire Tellurian and its proposed liquefied natural gas development in the southern U.S. for around $900 million, doubling down on demand for a fuel used in power generation as the world pivots away from coal.

Australia-based Woodside said on Monday that it has agreed to buy Tellurian, which owns the planned Driftwood LNG development near Lake Charles, Louisiana, for $1.00 per share in cash. It said Tellurian's directors support the transaction and that it aims to complete a deal in the final three months of this year.

The deal for Tellurian deepens Woodside's commitment to the U.S. where it majority owns the Shenzi oil-and-gas field, about 120 miles off the coast of Louisiana. It also plans to invest $5 billion in new energy projects by 2030, including a proposed hydrogen project in Oklahoma.

"Having a complementary U.S. position would allow us to better serve customers globally and capture further marketing optimization opportunities across both the Atlantic and Pacific Basins," said Woodside Chief Executive Meg O'Neill.

Woodside has signaled a desire to join a global rush for deals in the energy sector, illustrated by Chevron's acquisition of Hess for $53 billion and Exxon Mobil's deal to buy Pioneer Natural Resources for $60 billion. Earlier this year, Woodside abandoned talks to acquire Australian energy company Santos and create a new global giant worth around $52 billion at that time.

For many investors, natural gas holds appeal as a fuel that can help the power sector to bridge the time it will take from ending coal use to relying heavily on renewables.

In a report published last year, the International Energy Agency said the LNG market balance would likely remain precarious in the near term. New LNG projects, however, could add 250 billion cubic meters a year of liquefaction capacity by 2030, equal to almost half of today's global LNG supply, the IEA said.

Tellurian's plans involve the construction of five LNG processing units in four phases. The company had secured permits to produce as much as 27.6 million metric tons of LNG annually.

Woodside said it aims to be in a position to make a final investment decision on the project's first phase--involving construction of units able to produce 11 million tons of LNG--in the first quarter of 2025.

An acquisition of Tellurian would also be good news for Bechtel, which is a key engineering contractor on Woodside's Pluto Train 2 project in Australia. Woodside said it expects to unlock the Driftwood LNG development and expand its relationship with Bechtel if its offer succeeds.

Write to David Winning at david.winning@wsj.com

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July 21, 2024 19:10 ET (23:10 GMT)

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