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Tellurian upstream revenues boost cash as LNG terminal commercial talks continue

Increase font size  Decrease font size Date:2021-03-17   Views:232

  Houston—Shale gas drilling revenues have helped Tellurian repay eight months early the $38 million remaining on an $87.5 million term loan, the company said March 15, as it seeks contracts to support its proposed Driftwood LNG export terminal in Louisiana.



  Further upstream cash flow and cash on hand will help it in coming months pay off $21 million in other debt that it still owes, it said in a statement.US Gulf Coast gas producers benefited from Henry Hub cash prices spiking at $24/MMBtu in February as freezing weather across Texas and the Midcontinent led to record demand in places and caused freeze-offs at pipelines and wells alike impacting 20 Bcf/d of production. With the thaw, gas production has quickly recovered to over 92 Bcf/d and prices reverted back to historical levels, S&P Global Platts Analytics data shows.



  Tellurian's position is relatively small compared with larger, more established producers. It owns 9,373 net acres and interests in 72 producing wells located in the Haynesville Shale in northern Louisiana. At one time, it had an ambitious goal of reaching 1.5 Bcf/d of gas output in 2022. It is far from achieving that, having produced an average of about 46 MMcf/d last year.



  In its statement detailing the debt repayments, Tellurian did not address the current status of Driftwood LNG. A spokeswoman declined to comment on the project.



  At full development of 27.6 million mt/year, about half of Driftwood's capacity is expected to be used by equity investment partners Tellurian has been soliciting. The remaining capacity is to be retained by Tellurian to market on its own.



  Tellurian's only firm equity deal on the books is a $500 million commitment from France's Total that was reached in 2019. Total can back out of the agreement if Tellurian does not declare a positive final investment decision by June. Tellurian planned to talk to Total this year to see what the energy major wanted to do, Executive Chairman Charif Souki said Dec. 30.



  Feedgas demandThere are currently six major liquefaction facilities operating in the US. Construction of a seventh, Venture Global's Calcasieu Pass in Louisiana, is ahead of schedule, with startup possibly as early as the fall of this year based on a cargo tender recently issued by the operator.



  More than a dozen other developers, including Tellurian, are actively pursuing LNG export terminal projects in the US. Many have faced challenges reaching long-term contracts with buyers of their planned supplies. In recent months, however, commercial talks have started to pick up due to the volatility in prices in end-user markets in late 2020 and early 2021, according to several developers.



  Feedgas demand at existing US LNG terminals totaled 11.35 Bcf/d on March 15, near the record of 11.58 Bcf/d set on Dec. 13, 2020. Flows could be under pressure in the coming days, with fog causing pilot service to be suspended March 15 along the Louisiana channel serving Cheniere Energy's Sabine Pass, the biggest US liquefaction facility. There was a "high probability" the fog would persist through March 16, according to a shipping advisory.


 
 
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