On Wednesday, US liquefied natural gas (LNG) producer Tellurian Inc. said that it is considering some adjustments to its 27.6 mtpa Driftwood LNG export project in Louisiana, expected to significantly cut the overall costs of Phase 1.
The Driftwood project, including pipelines, is estimated to cost USD27.5 billion, where around USD15.4 billion of the amount is for a contract with Bechtel Oil, Gas and Chemicals Inc to construct the export plant.
The company did not disclose any more details on the cost cuts.
Analysts from Scotiabank expected that the reduction could mean the possible removal of the Permian pipeline, which could save the company USD4.2 billion.
Tellurian also revealed plans to issue 35 million shares at a 37% discount at USD1/share to Tuesday’s close. Reacting to the statement, the company’s stock slumped by 27%. This move could spur liquidity to around USD123 million on a pro forma basis.
Scotiabank predicted the offering could provide Tellurian a sufficient runway until July 2021, based on a USD6 million monthly cash burn.
Additionally, Tellurian also said that if gas prices maintained on the low, the company might require substantial impairment changes related to its reserves and the carrying value of its assets. It did not elaborate on the estimation for the impairment.
