Woodside Energy Group Ltd
ACN 004 898 962
Mia Yellagonga
11 Mount Street
Perth WA 6000
Australia
T +61 8 9348 4000
www.woodside.com
ASX: WDS
NYSE: WDS
LSE: WDS
Announcement
Monday, 22 July 2024
WOODSIDE TO ACQUIRE TELLURIAN AND DRIFTWOOD
LNG
§ 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.
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.
