Tellurian Inc., which has since its inception buoyed its Lower 48 natural gas portfolio to feed its proposed export project in Louisiana, on Wednesday gobbled up more producing wells and infrastructure in the Haynesville Shale.
Subsidiary Tellurian Production LLC (TPC) agreed to purchase a package of assets from privately held EnSight IV Energy Partners LLC and EnSight Haynesville Partners LLC. The deal, set to be completed by the end of September, includes an initial $125 million payment, with a contingent payment of $7.5 million payable next March, based on the price of natural gas.
The assets could help feed the Houston-based operator’s 27.6 million metric ton/year Driftwood LNG project and related infrastructure. Sanctioning the liquefied natural gas export project has been delayed several times.
“Tellurian continues to focus on two critical pathways – progressing Driftwood LNG and continuing to increase our upstream footprint,” CEO Octávio Simões said. “This transaction grows our 2023 estimated natural gas production by 30%…and expands upon our existing platform.”
Current output from the EnSight assets is estimated at 45 MMcf/d, 100% natural gas. EnSight is operating a one-rig drilling program, which Tellurian plans to maintain on the acquired assets through the end of the year.
Around 5,000 net acres being acquired are in Louisiana’s Bossier, Cado, DeSoto and Webster parishes. According to Tellurian, 44 producing wells and five wells would be in progress when the transaction is completed.
Tellurian in 2021 owned about 10,000 net acres in the northern Louisiana portion of the Haynesville, which produced almost 17 Bcf in 2020. According to TPC, proforma net production this year, including EnSight, would be 140 MMcf, versus 31 MMcf/d last year.
“At closing, TPC’s Haynesville Shale acreage increases to 20,000 net acres, with 275 gross drilling locations and a net resource expected at 2 Tcf.”
Tellurian expects that TPC’s 2023 drilling program would be a two-rig program with around 350 MMcf/d net.
“We have been diligently growing our natural gas production and reserves in the Haynesville,” TPC President John Howie said. “These assets provide Tellurian with both cash flow and a physical hedge for Driftwood LNG.
“The EnSight asset is a great fit with Tellurian’s existing position in the Haynesville Shale and allows us to step into an ongoing development program and bring online significant additional natural gas volumes in the fourth quarter of 2022.”
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