Tellurian increases upstream footprint with Haynesville acquisition

Tellurian Inc. subsidiary Tellurian Production LLC (TPC) has agreed to acquire natural gas assets in the Haynesville shale from privately held EnSight IV Energy Partners LLC and EnSight Haynesville Partners LLC for $125 million.

The assets include about 5,000 net Haynesville acres in DeSoto, Bossier, Caddo, and Webster Parishes, La. with current net production of about 45 MMcfd of natural gas (100% natural gas) from 44 producing wells. At closing, expected in this year’s third quarter, five wells are expected to be in progress, Tellurian said in a July 13 release. EnSight is currently operating a one-rig drilling program, which Tellurian plans to maintain on the assets through fourth-quarter 2022.

Additionally, the assets include a de-risked drilling inventory of over 30 gross drilling locations and proved reserves of about 108 bcf of natural gas, the company continued.

Proforma 2022 net production for TPC is estimated to be 140 MMcfd from 39 MMcfd in 2021. At closing, TPC’s Haynesville shale acreage will increase to about 20,000 net acres, with some 275 gross drilling locations and a net resource of over 2 tcf expected.

Based on a capital budget of $300 million (not yet board approved), TPC plans a two-rig drilling program in 2023 with about 350 MMcfd of net production.

Tellurian has been growing its natural gas production and reserves in the Haynesville, providing both cash flow and a physical hedge for Driftwood LNG, said John Howie, TPC president.

“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 fourth-quarter 2022,” he said.

The purchase price is $125 million, subject to closing adjustments, and a contingent payment of $7.5 million based on the price of natural gas and may be payable in March 2023 under certain conditions.