US Tellurian goes for acquisitions upstream

US gas producer Tellurian is seeking to expand upstream production through organic growth and acquisitions, executive chairman Charif Souki said in his regular video briefing June 30. The company is seeking sufficient throughput to justify its Driftwood LNG terminal and is pursuing an integrated model where owners of upstream production become equity holders of liquefaction capacity.

US gas prices have doubled in the last year, but exposure to international prices would create a lot more value, he said, explaining why a producer might want to be bought. It is a choice between $3.50/mn Btu at the beach or $10/mn Btu (netback from LNG sales) on the water, he said.

Tellurian is growing production both on its own with some wells and with other producers in other wells. It exited last year with monthly revenues of about $3mn and Souki expects these to reach $8mn/month by the end of this year. Production is rising from 30mn ft³/day end-2020 to 80mn ft³/d by the end of this year, he said. Over the past few years, he said the company had learned a lot about the upstream and where the interesting places were.

Tellurian exercised a long-term lease option for the Driftwood site in Louisiana June 29 and earlier in the month it agreed terms for a sales and purchase agreement with commodities trader Vitol, following a sale to competitor Gunvor in May.

Tellurian assessed European benchmark hub, the Dutch Title Transfer Facility, at $12.05/mn Btu and the spot Asian LNG price at $13.10/mn Btu at the close while the US Henry Hub was $3.65/mn Btu, all for August delivery.