Tellurian Plans To Sell Driftwood LNG Land for $1 Billion

If the sale closes, the company will lease back the parcel under a 40-year term.

Part of the land that will be home to the Driftwood LNG terminal is being sold to an unnamed investor.

Tellurian, the company behind the Driftwood LNG project in Louisiana, has signed a letter of intent to sell 800 acres of the land to be used for the facility to an undisclosed institutional investor for $1 billion.

The company revealed in a regulatory filing this week that if the deal is completed, it would then lease back the land under a 40-year term at a capitalization rate of 8.75% and a letter of credit equal to 12 months of rent, among other requirements.

The Driftwood LNG terminal is planned for a 1,200-acre site on the west bank of the Calcasieu River, south of Lake Charles, Louisiana. Tellurian and US-based Bechtel signed four fixed-price, lump-sum, turnkey agreements totaling $15.2 billion for engineering, procurement, and construction services related to Driftwood back in November 2017. The project received regulatory approvals in January to begin construction and is expected to produce 27.6 mtpa of LNG at full capacity.

The land sale is contingent on several factors, including Driftwood LNG securing financing commitments for Phase 1 of the project on terms satisfactory to the buyer. The initial phase—which will support 11 mtpa of capacity—is under construction after Tellurian issued a limited notice to Bechtel to proceed.

Driftwood LNG has suffered its share of setbacks over the years. The project currently has only one supply agreement in place, that with Guvnor Group, after both Shell and Vitol terminated their deals. Tellurian has been looking for equity partners to help finance the project.