Woodside Energy to Acquire Tellurian for $1.2B – WDS Stock Dips On News

WDS stock is trading down 4% in the pre-market session. In a significant move within the energy sector, Tellurian Inc. (NYSEAMERICAN: TELL) is set to be acquired by Woodside Energy Group Ltd. (NYSE: WDS) in a deal valued at $1.2 billion.

This news spurred a substantial 68% increase in Tellurian’s share price. Investors have responded positively to the acquisition, hinting at a bolstered confidence in Tellurian’s prospects under Woodside.

The transaction will be conducted fully in cash, with Tellurian shareholders receiving $1.00 per share, which represents the premium that has contributed to the jump in share price. Woodside Energy’s strategic purchase values Tellurian at an equity value of $900 million, with the enterprise value reaching the $1.2 billion mark after accounting for net debt and management costs.

Amidst the process of finalising the acquisition, Woodside has also agreed to provide a bridge loan of up to $230 million. This funding will support Tellurian's operations until the sale is completed, ensuring business continuity and stability. Furthermore, Woodside aims to advance the Driftwood LNG export project to FID (Final Investment Decision) readiness by the first quarter of the following year. This initiative aligns with Woodside's expertise and growth strategy in the LNG sector.

Phase 1 of the Driftwood LNG project, once completed, foresees the development of two LNG trains with a capability to produce 11 million tonnes per annum (Mtpa) of LNG. Subsequent expansions through Phase 4 are expected to boost the project’s capacity to 27.6 Mtpa at an estimated cost of $14.5 billion.

Woodside’s longstanding experience in the LNG market is showcased by its operational footprint in the Pacific and its burgeoning activities in the Atlantic. The company's projections suggest potential future LNG outputs upwards of 30 Mtpa, signaling its continued expansion and significant role in global LNG supply.

The acquisition comes at a time when Woodside Energy has reported robust cash flow generation, notwithstanding oscillating energy prices. The company has also been increasing its overall production, reflective of its ambitious growth plans and the strategic positioning of its portfolio.

As the acquisition awaits regulatory approval and customary closing conditions, the energy sector eyes the melding of Tellurian and Woodside Energy. This union is not just a remarkable consolidation within the industry but a testament to the shifting landscapes in energy infrastructure investment, particularly as economies and companies worldwide grapple with the evolving demands and challenges of the energy transition.

The Tellurian acquisition by Woodside Energy represents more than just a windfall for Tellurian shareholders. It embodies Woodside’s bet on the promising future of LNG, as well as its confidence in Tellurian's assets and operations to complement its longstanding legacy and proficiency in the natural gas market. With this merger, Woodside stands to reinforce its foothold in the crucial LNG space, navigating towards a future marked by growth and sustainability in the energy domain.