Houston-based Tellurian Inc. last week veered into the upstream sector, making a deal to buy gassy Haynesville Shale acreage near its planned natural gas export facility in Louisiana.

A subsidiary of Tellurian last Thursday made an $85.1 million pact with a private, undisclosed seller for some producing assets and undeveloped acreage in northern Louisiana.

“Acquisition of natural gas producing assets is integral to our growing business,” said CEO Meg Gentle. She formerly was a top executive at LNG developer Cheniere Energy Inc., co-founded by Tellurian cofounder Charif Souki.

“We expect our full-cycle cost of production and transport to markets will be approximately $2.25/MMBtu, which represents a significant savings to natural gas we will purchase at Henry Hub and other regional liquidity points,” Gentle said.

Included in the transaction, set to close by the end of November, are 9,200 net acres in Red River, DeSoto and Natchitoches parishes, with 138 operated Haynesville and Bossier sand drilling locations. Tellurian estimated the total resource potential at 1.3 Tcf.

The properties now have 19 producing wells with net output of 4 MMcf/d, along with associated midstream facilities that have additional capacity available.

The acreage is 100% held by production and 92% operated, which would allow Tellurian to control the pace of development for its multi-year drilling inventory.

Tellurian is developing the Driftwood LNG export terminal in Louisiana’s Calcasieu Parish south of Lake Charles, which would be able to export up to 26 million metric tons/year, requiring up to 4 Bcf/d of feed gas. The design for the project, now set to go online in 2022, includes five plants, each composed of one gas pretreatment unit and four liquefaction units.

A 96-mile pipeline would deliver feed gas to the facility from the interstate pipeline grid, according to the filing with FERC [PF16-6]. The Federal Energy Regulatory Commission approved Driftwood’s pre-filing request in June 2016.

In August 2016, Tellurian merged with privately held Magellan Petroleum Corp.to advance the Driftwood project and other ventures. By late 2016, other takers were coming aboard. In November 2016, GE Oil & Gas made a $25 million preferred equity investment in Tellurian. Last December Paris-based oil major Total SA,which works in the Barnett Shale in North Texas, bought a 23% stake in Tellurian for $207 million.

“Actually owning a stake in production, and doing it much closer to the LNG facility, both secures supply and should minimize transportation costs,” said NGI’s Patrick Rau, director of strategy and research. “Tellurian could take that vertical integration one step further by owning a stake in the production.”

Several local distribution companies have tried to vertically integrate in similar ways via a regulated cost-of-service model, but not all public utility commissions are amenable, Rau said. “There’s no such worry with Tellurian.”

Total’s stake in Telluride is not a new concept. BG Group plc, formerly one of the largest global LNG players now owned by Royal Dutch Shell plc, once had a 50-50 joint venture with Exco Resources Inc.in the Haynesville, and BG also held export capacity at Cheniere’s Sabine Pass LNG export facility in Texas.

“Having supply close to the export facility was part of the concept there,” Rau said.