Magellan to merge with Tellurian, enters LNG business
Magellan Petroleum, an independent oil and gas exploration and production company, said it has entered into a definitive merger agreement with Tellurian Investments, a recently formed private company focused on the development of a mid-scale LNG facility on the U.S. Gulf Coast.
Tellurian is led by Charif Souki, former founder and CEO of LNG export player Cheniere Energy and Martin Houston, former COO of BG Group, now owned by Shell.
“The board of directors of each company has unanimously approved the terms of the agreement and has recommended that its shareholders approve the transaction,” the two companies said in a joint statement on Wednesday.
Completion of the merger is subject to approval of the Magellan and Tellurian shareholders and certain regulatory approvals and customary conditions.
The transaction is expected to close in the fourth quarter of 2016. Upon closing, pursuant to the terms of the merger agreement, each share of Tellurian will be converted into the right to receive 1.30 shares of Magellan, the statement reads.
Magellan will issue approximately 122 million shares of common stock to Tellurian shareholders, representing approximately 95% of Magellan’s pro forma outstanding common stock.
J. Thomas Wilson, President and CEO of Magellan, commented, “This transaction concludes our strategic alternatives review process and we believe offers a unique opportunity for Magellan’s shareholders to participate at an early stage in an investment potentially similar to Cheniere Energy’s remarkable success, under the leadership of Charif Souki. He and Martin Houston are proven leaders in the LNG industry.”
Martin Houston, co-founder of Tellurian, said, “Our experienced team leading Driftwood LNG, a 26-millon tonnes liquefaction project in Louisiana, and our deep relationship with Bechtel and its sub-contractors, GE and Chart Industries, are key factors that we believe will drive the successful development of one of the most cost-competitive LNG projects globally. With this transaction, we will be able to access more attractive financing in order to develop Driftwood LNG, which should come on stream in 2022, just as the markets for new LNG open up.”