Tellurian Announces Agreement for Debt Amendment to Support Upstream Asset Sale

Rhea-AI Summary

Tellurian Inc. (NYSE American: TELL) announced an agreement to amend certain debt instruments to enhance liquidity and flexibility. The amendment includes a reduced cash balance requirement and the option to make interest payments in-kind, supporting the sale of upstream assets and the Driftwood LNG project.

Financial Analyst

The amendment of debt terms for Tellurian Inc. reflects a strategic maneuver to enhance the company's financial flexibility. By reducing the minimum cash balance requirement, Tellurian can allocate more resources towards critical operations without the constraint of maintaining a higher liquidity reserve. This adjustment could signal to investors that the company is actively managing its cash flow to support ongoing projects, such as the Driftwood LNG initiative. Furthermore, the option to make interest payments in-kind rather than in cash is a liquidity-preserving measure, which can be beneficial during periods of capital-intensive development but may increase long-term obligations due to the accrual of additional debt.

Investors should consider the implications of this amendment on Tellurian's leverage ratios and interest coverage metrics, as the increased debt from in-kind payments could impact future financial statements. Additionally, the successful sale of upstream assets is crucial for the company's strategy to reduce debt and fund the Driftwood LNG project. The timing and valuation of these asset sales will be key factors in assessing Tellurian's financial health and operational efficiency.

Energy Sector Analyst

The focus on Driftwood LNG by Tellurian underscores the significance of liquefied natural gas (LNG) in the current energy market. Driftwood LNG represents a substantial investment in the infrastructure needed to export natural gas, positioning Tellurian to capitalize on the growing global demand for cleaner energy sources. The amendment to the debt agreement can be seen as a commitment to expedite the commercialization of this project, which is critical for Tellurian's long-term growth and market positioning.

The sale of upstream assets, typically involving exploration and production operations, suggests a strategic shift to concentrate on midstream and downstream operations, particularly LNG exportation. This strategic pivot aligns with broader industry trends where companies are streamlining operations to focus on core competencies and high-growth areas. Stakeholders should monitor the progress of Driftwood LNG's commercial negotiations, as successful deals could lead to increased investor confidence and a stronger competitive stance in the LNG market.

Market Research Analyst

The amendment's impact on Tellurian's stock performance will depend on market perception of the company's ability to navigate its current financial challenges while advancing its strategic initiatives. The reduced cash balance requirement might be viewed positively by investors seeking reassurance that Tellurian is taking proactive steps to manage liquidity. However, the potential dilution effect of in-kind interest payments could be a concern, as it may lead to shareholder value erosion over time.

Market sentiment towards Tellurian will also be influenced by the outcome of the upstream asset sales. If the sales are executed at favorable valuations, it could lead to a positive reevaluation of the stock. Conversely, suboptimal sales outcomes may reinforce concerns about the company's financial stability. It's essential for investors to balance these considerations with the broader energy market dynamics and the progress of the Driftwood LNG project.

HOUSTON--(BUSINESS WIRE)-- Tellurian Inc. (Tellurian) (NYSE American: TELL) announced today an agreement for an amendment to the terms of certain debt instruments. The amendment is expected to enhance near-term liquidity and provide the company with flexibility to successfully complete the sale of its upstream assets. Among other items, the amendment provisions include a reduction in Tellurian’s minimum cash balance requirement and the ability for the company to make its upcoming interest payments in-kind.

Chief Executive Officer Octávio Simões said, “This amendment to our debt agreement is pivotal towards establishing a sustainable capital structure and accelerating our strategic priority, Driftwood LNG. It also provides us the time and flexibility to complete the sale of our upstream assets in a manner that maximizes value for our shareholders while we maintain our focus on the intensive negotiations associated with the commercialization of Driftwood LNG.”

About Tellurian Inc.

Tellurian intends to create value for shareholders by building a low-cost, global natural gas business, profitably delivering natural gas to customers worldwide. Tellurian is developing a portfolio of LNG marketing and trading, infrastructure that includes an ~ 27.6 mtpa LNG export facility and an associated pipeline. Tellurian is based in Houston, Texas, and its common stock is listed on the NYSE American under the symbol “TELL.”

For more information, please visit www.tellurianinc.com. Follow us on Twitter at twitter.com/TellurianLNG.

CAUTIONARY INFORMATION ABOUT FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of U.S. federal securities laws. The words “anticipate,” “assume,” “believe,” “budget,” “estimate,” “expect,” “forecast,” “initial,” “intend,” “may,” “plan,” “potential,” “project,” “proposed,” “should,” “will,” “would,” and similar expressions are intended to identify forward- looking statements. Forward-looking statements herein relate to, among other things, the capacity, timing, and other aspects of the Driftwood LNG project, capital structure, liquidity, commercial and strategic matters and the potential sale of the company’s upstream assets. These statements involve a number of known and unknown risks, which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements. These risks include the matters discussed in Item 1A of Part I of the Annual Report on Form 10-K of Tellurian for the fiscal year ended December 31, 2022, filed by Tellurian with the Securities and Exchange Commission (the SEC) on February 22, 2023, and other Tellurian filings with the SEC, all of which are incorporated by reference herein. The forward-looking statements in this press release speak as of the date of this release. Although Tellurian may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so except as required by securities laws. The closing of the transaction described herein is subject to certain customary conditions.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240221625906/en/

Media:

Joi Lecznar

EVP Public and Government Affairs

Phone +1.832.962.4044

joi.lecznar@tellurianinc.com

Investors:

Matt Phillips

Vice President, Investor Relations

Phone +1.832.320.9331

matthew.phillips@tellurianinc.com

Source: Tellurian Inc.

FAQ

What did Tellurian announce?

Tellurian announced an agreement to amend certain debt instruments.

What is the ticker symbol of Tellurian Inc.?

The ticker symbol of Tellurian Inc. is TELL.

What are the key components of the debt instrument amendment?

The amendment includes a reduced cash balance requirement and the option to make interest payments in-kind.

What project is Tellurian focusing on?

Tellurian is focusing on the Driftwood LNG project.

Who is the Chief Executive Officer of Tellurian?

The Chief Executive Officer of Tellurian is Octávio Simões.