Wednesday, June 19, 2024

Aethon Energy to Expand Presence in Haynesville Shale with Acquisition of Tellurian’s Upstream Assets

by BIZ Magazine

HOUSTON & DALLAS — Aethon Energy Management LLC (Aethon) has announced a significant acquisition of Tellurian Inc.’s (NYSE American: TELL) integrated upstream assets for $260 million. This strategic move includes a Heads of Agreement for Aethon to purchase two million tons per annum (mtpa) of liquified natural gas (LNG) from Tellurian’s Driftwood LNG plant, marking a major step in enhancing Aethon’s footprint in the Haynesville Shale.

The acquired assets will expand Aethon’s presence in the Louisiana Haynesville and Bossier shale basins, adding approximately 31,000 net acres to its portfolio. These assets are equipped with gathering and treating systems capable of handling up to 100 million cubic feet per day (MMcf/d). This acquisition will bring Aethon’s pro forma gathering and treating capacity to over 3 Bcf/d across its holdings.

The Heads of Agreement outlines a 20-year offtake deal indexed to Henry Hub plus a liquefaction fee, designed to support the financing of the Driftwood LNG project. Aethon intends to explore further opportunities to enhance the value of Driftwood LNG post-transaction.

The deal is expected to close in the second quarter of 2024, with Tellurian planning to use the proceeds to reduce debt and for general corporate purposes.

“Today’s agreements with Aethon bring us closer to advancing the Driftwood LNG project, with Aethon playing a crucial role,” said Martin Houston, Executive Chairman of Tellurian. “The offtake agreement for two mtpa is pivotal in accelerating Driftwood and aligning our commercial offerings to meet market demands. The proceeds from selling our upstream assets will enable us to retire senior secured notes and strengthen our long-term balance sheet.”

Albert Huddleston, CEO of Aethon Energy, emphasized the importance of the Haynesville Shale in this transaction. “This acquisition significantly enhances our integrated business model, offering capital efficiency and leading margins as we push for greater natural gas integration in the energy transition. Our expanded footprint in the Haynesville Shale, with more than 20 years of inventory life, complements our existing operations. Our collaboration with Tellurian will provide our LNG customers with the lowest methane emission intensity in North America.”

Lazard acted as the financial advisor to Tellurian, with Akin Gump providing legal counsel. Aethon received legal counsel from Gibson Dunn.

This acquisition underscores the growing importance of the Haynesville Shale in the broader energy landscape, highlighting its role in Aethon’s strategic growth and the ongoing development of LNG projects like Driftwood.

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