Tellurian Inc. announced that its subsidiary Tellurian Production LLC has entered into an agreement to purchase natural gas assets from privately held EnSight located in the Haynesville Shale.
The purchase price is $125 million, subject to customary closing adjustments, and a contingent payment of $7.5 million which is based on the price of natural gas and may be payable in March 2023 under certain conditions. Tellurian will fund the purchase with cash on hand and anticipates closing on the EnSight assets in the third quarter of 2022. The effective date of the transaction is August 1, 2022.
EnSight asset highlights:
- Current net production of ~45 million cubic feet of natural gas per day (MMcf/d) (100% natural gas)
- Approximately 5,000 net acres in the core of the Haynesville Shale in DeSoto, Bossier, Caddo, and Webster Parishes, Louisiana
- 44 producing wells and five wells in progress at transaction close
- Low-cost, high-margin producing assets generating significant free cash flow
- Asset-level projected 2023 EBITDA of approximately $90-120 million
- High return, de-risked drilling inventory with over 30 gross drilling locations
- EnSight is currently operating a one-rig drilling program, which Tellurian plans to maintain on the acquired assets through the fourth quarter of 2022
- Proved reserves of approximately 108 billion cubic feet of natural gas (Bcf) and a $180 million PV-10 projected
Impact on TPC:
- 2022 proforma net production estimated to be ~140 MMcf/d, from 39 MMcf/d in 2021
- 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 trillion cubic feet (Tcf)
- Tellurian anticipates TPC 2023 drilling program to be a two-rig program with approximately 350 MMcf/d of net production
Tellurian President and CEO Octávio Simões said, “Tellurian continues to focus on two critical pathways - progressing Driftwood LNG and continuing to increase our upstream footprint. This transaction grows our 2023 estimated natural gas production by ~30%, increases upstream asset-level EBITDA by ~25%, and expands upon our existing platform.”
TPC President John Howie added, “We have been diligently growing our natural gas production and reserves in the Haynesville. 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 on-line significant additional natural gas volumes in the fourth quarter of 2022.”
