Tellurian Inc. (Tellurian) announced that its wholly owned subsidiary Tellurian Production LLC (TPC) has entered into an agreement to purchase natural gas assets from privately held EnSight IV Energy Partners, LLC and EnSight Haynesville Partners, LLC (collectively 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) (1)
   - 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 (2)
   - High return, de-risked drilling inventory with over 30 gross drilling locations (3)
   - 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 (3)

Impact on TPC:

2022 proforma net production estimated to be ~140 MMcf/d, from 39 MMcf/d in 2021 (4)
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) (5)

Tellurian anticipates TPC 2023 drilling program to be a two-rig program with approximately 350 MMcf/d of net production (6)
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.”

(1) Management estimate of EnSight June 2022 average sales volumes of target assets.
(2) Asset-level EBITDA excludes corporate general and administrative expenses. Management estimate for 2023 based on a capital budget of ~30 million that has not been approved by the Tellurian board of directors.
(3) Reserves and inventory information as of August 1, 2022 (using June 30, 2022 NYMEX strip pricing and cost information as of July 6, 2022) as prepared by Netherland, Sewell & Associates in accordance with the definitions and guidelines set forth in the 2018 Petroleum Resources Management System (PRMS).
(4) Management estimate based on current production levels and anticipated development activities.
(5) Management estimate of total reserves and contingent resources as of August 1, 2022 (using June 30, 2022 NYMEX strip pricing and cost information as of July 6, 2022) in accordance with the definitions and guidelines set forth in the 2018 PRMS.
(6) Management estimate for 2023 based on a capital budget of ~$330 million that has not been approved by the Tellurian board of directors.

About Tellurian Inc.

Tellurian (NYSE American: TELL) 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 natural gas production, LNG marketing and trading, and 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”.