Australia's biggest oil and gas company announces plans to acquire Tellurian, and the Biden Administration awards $4.3 billion in grants to reduce emissions.
As new golfers, my better half and I enjoyed watching Xander Schauffele win the prestigious title for the British Golf Open in Troon, Scotland—his second major victory in 2024 after winning the PGA Championship in May. A big thank-you again to those who attended our Well Read webinar last week, which analyzed the top deals of 2024 YTD and shared predictions for what may lie ahead. As promised, here's the recording.
Now, let’s get to the energy news this week.
Shangyou Nie
Editor, Well Read
Woodside Will Acquire Tellurian to Grow its LNG Business in the USA
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Australian major Woodside Energy announced it will acquire Tellurian for $900 million. The acquisition will more than double Woodside's LNG liquefaction capacity to more than 40 MTPA, as it will take control of the Driftwood LNG project.
As part of the agreement, Woodside will provide Tellurian with a $230 million loan for interim project funding for continued LNG development.
The deal is still subject to shareholder approval and expected to close in Q4 2024.
About Woodside:
The largest Australian oil and gas company, Woodside has a market cap of $35 billion. Its stock price is down 28.7 percent in the past year, and down 14.4 percent YTD.
Woodside plans to build its LNG portfolio in the Pacific and Atlantic basins to increase value creation through arbitrage.
Current Woodside projects:
In Australia, Woodside has 1.2 MTPA equity interest in the producing Wheatstone LNG project, and two future LNG projects in Browse and Sunrise. It is also the operator for two producing projects (NWS LNG, 5.6 MTPA and Pluto LNG 4.4 MTPA) and one under construction (Scarborough 6 MTPA with first LNG in 2026).
It signed offtake agreements in 2022 for two pre-FID projects, totaling 3.8 MTPA off-take rights: one with Commonwealth LNG in Louisiana, the other with Mexico Pacific LNG in Mexico.
Woodside plans to invest $5 billion in new energy projects by 2030, including a proposed hydrogen project in Oklahoma.
About Tellurian:
Tellurian’s stock was $9 per share in 2022. It traded at $0.96 per share Monday after the acquisition announcement, up 48 percent from $0.58 per share from last Friday.
Tellurian’s market cap more than doubled to $790 million after the deal was announced.
The Driftwood LNG project:
Tellurian has struggled to secure funding and LNG offtake agreements to deliver the Driftwood LNG terminal in Louisiana. It has sunk more than $1 billion into the project and debated developing the project alone or selling it to a bigger LNG operator.
The Driftwood LNG project has a phased development plan with five trains in four phases, with a total of 27.6 MTPA capacity. Phase 1 will have two trains and 11 MTPA capacity.
Woodside will leverage its 35 years of LNG experience to help unlock the full value of Driftwood LNG, targeting FID for Phase 1 Driftwood LNG for Q1 2025.
Woodside hopes that the lower CO2 footprint in Driftwood LNG would help reduce the average emission of its global LNG portfolio.
What to watch:
The deal is a potential employment opportunity for geoscientists and LNG specialists who want to help deliver Woodside’s growth ambition in the USA.
It could be an LNG equity buying opportunity for other companies for up to 50 percent of Driftwood LNG, which Woodside plans to divest after closing.
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Biden Administration Awards $4.3 Billion to Help Reduce Emissions
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On Monday, the Biden Administration announced it would award $4.3 billion in grants across 25 projects aimed at reducing methane and emissions. Grants were given by the EPA and range from $3 million to $5oo million.
Key highlights:
The EPA announced on Monday that the selected recipients and programs of these awards would “tackle climate change, improve air quality, and advance environmental justice.”
The 23 grants will help implement community-driven solutions to the climate crisis, including programs led by states (13), cities (11), and a tribe (1).
The grants will be funded through the Climate Pollution Reduction Grants program under the IRA.
The EPA estimates that these programs will collectively help reduce greenhouse gas emission by 148 million tons CO2 equivalent before 2030, and 971 million tons before 2050.
Here are a few examples of recipients and their projects:
The largest grant amount is $500 million awarded to South Coast Air Quality Management District in California, to 1) provide incentives for electric charging equipment, 2) increase zero-emission freight vehicles, and 3) replace or convert equipment and diesel locomotives.
The smallest grant, $3 million, was awarded to New York City for Mid-Hudson municipal landfill emissions mitigation.
North Carolina, Maryland, South Carolina, and Virginia will receive $421 million to fund efforts to leverage the carbon sequestration power of natural and working lands, such as coastal wetlands, peatlands, forests, and urban forestry via the “The Atlantic Conservation Coalition.”
The Nez Perce Tribe located in Idaho and Oregon will receive $37 million to fund residential energy efficiency and weatherization retrofits, wood stove replacements, and renewable energy infrastructure on the tribe’s facilities.
Dive deeper: For more details for these programs and awards, visit the EPA site.
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