tell-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-5507

Tellurian Inc.

(Exact name of registrant as specified in its charter)

Delaware

06-0842255

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

1201 Louisiana Street,

Suite 3100,

Houston,

77002

(Address of principal executive offices)

(Zip Code)

(832) 962-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common stock, par value $0.01 per share

TELL

NASDAQ

Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

As of July 31, 2020, there were 322,489,957 shares of common stock, $0.01 par value, issued and outstanding.

Tellurian Inc.

TABLE OF CONTENTS

Page

Part I — Financial Information (Unaudited)

Item 1.

Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Operations

Condensed Consolidated Statement of Changes in Stockholders’ Equity

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

Part II — Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 5.

Other Information

Item 6.

Exhibits

Signatures

Cautionary Information About Forward-Looking Statements

The information in this report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts, that address activity, events, or developments with respect to our financial condition, results of operations, or economic performance that we expect, believe or anticipate will or may occur in the future, or that address plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “budget,” “continue,” “estimate,” “expect,” “forecast,” “initial,” “intend,” “likely,” “may,” “plan,” “potential,” “project,” “proposed,” “should,” “will,” “would” and similar expressions are intended to identify forward-looking statements. These forward-looking statements relate to, among other things:

•our businesses and prospects and our overall strategy;

•planned or estimated capital expenditures;

•availability of liquidity and capital resources;

•our ability to obtain additional financing as needed and the terms of financing transactions, including at Driftwood Holdings LP;

•revenues and expenses;

•progress in developing our projects and the timing of that progress;

•future values of the Company’s projects or other interests, operations or rights; and

•government regulations, including our ability to obtain, and the timing of, necessary governmental permits and approvals.

Our forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. These statements are subject to a number of known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from any future results or performance expressed or implied by the forward-looking statements. Factors that could cause actual results and performance to differ materially from any future results or performance expressed or implied by the forward-looking statements include, but are not limited to, the following:

•the uncertain nature of demand for and price of natural gas and LNG;

•risks related to shortages of LNG vessels worldwide;

•technological innovation which may render our anticipated competitive advantage obsolete;

•risks related to a terrorist or military incident involving an LNG carrier;

•changes in legislation and regulations relating to the LNG industry, including environmental laws and regulations that impose significant compliance costs and liabilities;

•governmental interventions in the LNG industry, including increases in barriers to international trade;

•uncertainties regarding our ability to maintain sufficient liquidity and attract sufficient capital resources to implement our projects;

•our limited operating history;

•our ability to attract and retain key personnel;

•risks related to doing business in, and having counterparties in, foreign countries;

•our reliance on the skill and expertise of third-party service providers;

•the ability of our vendors to meet their contractual obligations;

•risks and uncertainties inherent in management estimates of future operating results and cash flows;

•our ability to maintain compliance with our debt arrangements and other agreements;

•the potential discontinuation of the London Inter-Bank Offered Rate;

•changes in competitive factors, including the development or expansion of LNG, pipeline and other projects that are competitive with ours;

•development risks, operational hazards and regulatory approvals;

•our ability to enter into and consummate planned financing and other transactions;

•risks related to pandemics or disease outbreaks;

•risks of potential impairment charges and reductions in our reserves; and

•risks and uncertainties associated with litigation matters.

The forward-looking statements in this report speak as of the date hereof. Although we may from time to time voluntarily update our prior forward-looking statements, we disclaim any commitment to do so except as required by securities laws.

DEFINITIONS

To the extent applicable, and as used in this quarterly report, the terms listed below have the following meanings:


ASU						Accounting Standards Update
Bcf						Billion cubic feet of natural gas
Bcf/d						Bcf per day
DD&A						Depreciation, depletion and amortization
DES						Delivered ex-ship
DFC						Deferred financing costs
EPC						Engineering, procurement and construction
FASB						Financial Accounting Standards Board
FID						Final investment decision as it pertains to the Driftwood Project
GAAP						Generally accepted accounting principles in the U.S.
JKM						Platts Japan Korea Marker index price for LNG
LNG						Liquefied natural gas
LSTK						Lump sum turnkey
MMBtu						Million British thermal units
Mtpa						Million tonnes per annum
Nasdaq						Nasdaq Capital Market
SEC						U.S. Securities and Exchange Commission
Train						An industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
U.S.						United States
USACE						U.S. Army Corps of Engineers

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts, unaudited)

	June 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	88,314	$	64,615
Accounts receivable	2,675		5,006
Accounts receivable due from related parties	1,316		1,316
Prepaid expenses and other current assets	10,456		11,298
Total current assets	102,761		82,235
Property, plant and equipment, net	66,486		153,040
Deferred engineering costs	109,940		106,425
Non-current restricted cash	3,467		3,867
Other non-current assets	33,246		36,755
Total assets	$	315,900	$	382,322

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	29,136	$	21,048
Accounts payable due to related parties (Note 7)	2,300		—
Accrued and other liabilities	41,195		33,003
Borrowings	33,892		78,528
Total current liabilities	106,523		132,579
Long-term liabilities:
Borrowings	106,144		58,121
Other non-current liabilities	27,320		25,337
Total long-term liabilities	133,464		83,458

Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 authorized: 6,123,782 and 6,123,782 shares outstanding, respectively	61		61
Common stock, $0.01 par value, 800,000,000 and 400,000,000 authorized, respectively: 284,292,876 and 242,207,522 shares outstanding, respectively	2,627		2,211
Additional paid-in capital	848,431		769,639
Accumulated deficit	(775,206)		(605,626)
Total stockholders’ equity	75,913		166,285
Total liabilities and stockholders’ equity	$	315,900	$	382,322

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)

	Three Months Ended June 30,									Six Months Ended June 30,
	2020			2019			2020			2019
Natural gas sales		$	6,329		$	5,333		$	14,546		$	10,293

Operating costs and expenses:
Cost of sales		2,409			1,240			5,288			2,353
Development expenses		9,123			18,678			20,306			30,553
Depreciation, depletion and amortization		4,995			4,048			10,827			6,579
General and administrative expenses		15,369			23,403			32,608			45,456
Impairment charges		81,065			—			81,065			—
Severance and reorganization charges		854			—			6,359			—
Related party charges (Note 7)		7,357			—			7,357			—
Total operating costs and expenses		121,172			47,369			163,810			84,941
Loss from operations		(114,843)			(42,036)			(149,264)			(74,648)
Interest expense, net		(11,195)			(3,399)			(17,591)			(3,986)
Other income (expense), net		(2,808)			4,942			(2,725)			4,015
Loss before income taxes		(128,846)			(40,493)			(169,580)			(74,619)
Income tax		—			—			—			—
Net loss		$	(128,846)		$	(40,493)		$	(169,580)		$	(74,619)
Net loss per common share⁽¹⁾:
Basic and diluted		$	(0.53)		$	(0.19)		$	(0.73)		$	(0.34)
Weighted-average shares outstanding:
Basic and diluted		245,364			218,742			233,321			218,293


(1) The numerator for both basic and diluted loss per share is net loss. The denominator for both basic and diluted loss per share is the weighted-average shares outstanding during the period.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, unaudited)

	Three Months Ended June 30,									Six Months Ended June 30,
	2020			2019			2020			2019
Total shareholders’ equity, beginning balance		$	146,644		$	277,611		$	166,285		$	297,934

Preferred stock		61			61			61			61

Common stock:
Beginning balance		2,344			2,209			2,211			2,195
Common stock issuance		173			—			196			—
Share-based compensation, net⁽¹⁾		10			1			10			15
Severance and reorganization charges		7			—			7			—
Settlement of Final Payment Fee (Note 9)		—			—			110			—
Borrowings principal repayment (Note 9)		93			—			93			—
Ending balance		2,627			2,210			2,627			2,210

Additional paid-in capital:
Beginning balance		790,599			763,326			769,639			749,537
Common stock issuance		22,606						35,844			—
Share-based compensation, net⁽¹⁾		1,636			741			2,320			14,481
Severance and reorganization charges		777			—			777			—
Share-based payments		113			496			224			545
Settlement of Final Payment Fee (Note 9)		—			—			9,036			—
Warrants issued in connection with Borrowings (Note 11)		19,005			3,300			16,896			3,300
Borrowings principal repayment (Note 9)		13,695			—			13,695			—
Ending balance		848,431			767,863			848,431			767,863

Accumulated deficit:
Beginning balance		(646,360)			(487,985)			(605,626)			(453,859)
Net loss		(128,846)			(40,493)			(169,580)			(74,619)
Ending balance		(775,206)			(528,478)			(775,206)			(528,478)

Total shareholders’ equity, ending balance		$	75,913		$	241,656		$	75,913		$	241,656


⁽¹⁾ Includes settlement of 2019 and 2018 bonuses that were accrued for in 2019 and 2018, respectively.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities:
Net loss	$	(169,580)	$	(74,619)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization	10,827		6,981
Amortization of debt issuance costs, discounts and fees	10,330		2,687
Share-based compensation	1,244		2,785
Severance and reorganization charges	784		—
Share-based payments	224		545
Interest elected to be paid-in-kind	1,338		—
Gain on financial instruments not designated as hedges	1,696		(3,491)
Impairment charges	81,065		—
Other	993		(1,826)
Net changes in working capital (Note 15)	13,487		5,864
Net cash used in operating activities	(47,592)		(61,074)

Cash flows from investing activities:
Development of natural gas properties	(386)		(31,332)
Deferred engineering costs	—		(17,591)
Purchase of property, plant and equipment	—		(2,733)
Net cash used in investing activities	(386)		(51,656)

Cash flows from financing activities:
Proceeds from common stock issuances	36,815		—
Equity issuances cost	(775)		—
Borrowing proceeds	50,000		60,000
Borrowing issuance costs	(2,387)		(2,200)
Borrowing principal repayments	(10,600)		—
Tax payments for net share settlement of equity awards (Note 15)	—		(6,686)
Payments of finance lease principal	(1,776)		—
Net cash provided by financing activities	71,277		51,114

Net (decrease) increase in cash, cash equivalents and restricted cash	23,299		(61,616)
Cash, cash equivalents and restricted cash, beginning of period	68,482		183,589
Cash, cash equivalents and restricted cash, end of period	$	91,781	$	121,973
Supplementary disclosure of cash flow information:
Interest paid	$	5,397	$	2,816

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 1 — GENERAL

The terms “we,” “our,” “us,” “Tellurian” and the “Company” as used in this report refer collectively to Tellurian Inc. and its subsidiaries unless the context suggests otherwise. These terms are used for convenience only and are not intended as a precise description of any separate legal entity associated with Tellurian Inc.

Nature of Operations

We plan to develop, own and operate a global natural gas business and to deliver natural gas to customers worldwide. Tellurian is developing a portfolio of natural gas production, LNG marketing, and infrastructure assets, including an LNG terminal facility (the “Driftwood terminal”) and an associated pipeline (the “Driftwood pipeline”) in southwest Louisiana. Tellurian intends to develop the Driftwood pipeline as part of what we refer to as the “Pipeline Network.” In addition to the Driftwood pipeline, the Pipeline Network is expected to include two pipelines, the Haynesville Global Access Pipeline and the Permian Global Access Pipeline, both of which are currently in the early stages of development. The Driftwood terminal, the Pipeline Network and certain natural gas production assets are collectively referred to as the “Driftwood Project”.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain notes and other information have been condensed or omitted. The accompanying interim financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of our Condensed Consolidated Financial Statements. These interim financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2019.

Liquidity

Our Condensed Consolidated Financial Statements were prepared in accordance with GAAP, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business as well as the Company’s ability to continue as a going concern. As of the date of the Condensed Consolidated Financial Statements, we have generated losses from operations, negative cash flows from operations, and have an accumulated deficit. We have not yet established an ongoing source of revenues or other sources of liquidity that are sufficient to cover our future operating costs as they become due during the twelve months following the issuance of the financial statements.

We are planning to generate proceeds from various potential financing transactions, such as issuances of equity, including our at-the-market program, equity-linked and debt securities or similar transactions, and have determined that it is probable that such proceeds will satisfy our obligations and fund our working capital needs for at least twelve months following the issuance of the financial statements. However, there can be no assurance that we will be able to generate adequate proceeds to satisfy our obligations and accomplish our business objectives.

Use of Estimates

To conform with GAAP, we make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and the accompanying notes. Although these estimates and assumptions are based on our best available knowledge at the time, actual results may differ.

Recently Adopted Accounting Standards

Credit Losses

On January 1, 2020, we adopted ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, as issued by the FASB. This standard established the current expected credit loss model, a new impairment model for certain financial instruments, based on expected rather than incurred losses. Adoption of this standard had no impact on our financial statements.

NOTE 2 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

The components of prepaid expenses and other current assets consist of the following (in thousands):

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)


	June 30, 2020		December 31, 2019
Prepaid expenses	$	1,232	$	1,234
Advances and deposits	7,122		364
Tradable equity securities	—		5,069
Derivative asset (Note 6)	1,884		3,121
Other current assets	218		1,510
Total prepaid expenses and other current assets	$	10,456	$	11,298

Advances and Deposits

We advanced approximately $6.9 million to an unrelated third-party in connection with the purchase of an LNG cargo. See Note 10, Commitments and Contingencies, for further information regarding this purchase.

NOTE 3 — PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of fixed assets, proved oil and natural gas properties and finance leases, as shown below (in thousands):


	June 30, 2020		December 31, 2019
Land	$	13,808	$	13,808
Proved properties	61,382		142,494
Wells in progress	—		57
Corporate and other	3,477		5,285
Total property, plant and equipment at cost	78,667		161,644
Accumulated DD&A	(32,400)		(22,041)
Right of use asset — finance leases (Note 14)	20,219		13,437
Total property, plant and equipment, net	$	66,486	$	153,040

Land

We own land in Louisiana for the purpose of constructing the Driftwood Project.

Proved Properties Impairment

The carrying values of our proved natural gas properties are reviewed for impairment when events or circumstances indicate that the remaining carrying value may not be recoverable. During the second quarter of 2020, there were indicators that the carrying values of certain of our properties may be impaired as a result of depressed natural gas prices. We determined that these adverse market conditions represented a triggering event to perform an impairment assessment of our proved natural gas properties.

To determine whether impairment had occurred, we compared the estimated expected undiscounted future cash flows from our natural gas properties to the carrying values of those properties. The estimated future cash flows used in the recoverability test are based on proved and, if determined reasonable by management, risk-adjusted probable and possible reserves and assumptions generally consistent with those used by us for internal planning and budgeting purposes. These include, among other things, the intended use of the asset, anticipated production from reserves, future market prices for natural gas adjusted for basis differentials, and future operating costs. Proved properties that have carrying amounts in excess of estimated future undiscounted cash flows are written down to fair value.

As of June 30, 2020, we recognized a total impairment charge of approximately $81.1 million primarily associated with our assets located in northern Louisiana. The impairment was recorded as a reduction to the assets’ carrying values to their estimated fair values of approximately $28.7 million. The estimated fair value of the impaired assets, as determined as of June 30, 2020, was based on significant inputs that are not observable in the market and, as such, are considered a Level 3 fair value measurement. Key assumptions included in the calculation of the fair value included values for the following: (i) reserves; (ii) future commodity prices and (iii) future operating and development costs.

NOTE 4 — DEFERRED ENGINEERING COSTS

As of June 30, 2020, the deferred engineering balance of approximately $109.9 million represents detailed engineering services related to the planned construction of the Driftwood terminal. This balance will be transferred to construction in progress upon reaching FID.

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 5 — OTHER NON-CURRENT ASSETS

Other non-current assets consist of the following (in thousands):


	June 30, 2020		December 31, 2019
Land lease and purchase options	$	3,506	$	4,320
Permitting costs	13,092		12,838
Right of use asset — operating leases (Note 14)	12,687		15,832
Other	3,961		3,765
Total other non-current assets	$	33,246	$	36,755

Land Lease and Purchase Options

We hold lease and purchase option agreements (the “Options”) for certain tracts of land and associated river frontage. Upon exercise of the Options, the leases are subject to maximum terms of 50 years, inclusive of various renewals which are at our sole discretion. Costs of the Options will be amortized over the life of the lease once obtained, or capitalized into the land if purchased.

Permitting Costs

Permitting costs primarily represent the purchase of wetland credits in connection with our permit application to the USACE in 2017 and 2018. These wetland credits will be applied to our permit in accordance with the Clean Water Act and the Rivers and Harbors Act, which require us to mitigate the impact to Louisiana wetlands caused by the construction of the Driftwood Project. In May 2019, we received the USACE permit. The permitting costs will be transferred to construction in progress upon reaching FID.

NOTE 6 — FINANCIAL INSTRUMENTS

As discussed in Note 9, Borrowings, as part of entering into the senior secured term loan credit agreement in 2018, we are required to enter into and maintain certain hedging transactions. As a result, we use derivative financial instruments, namely over the counter (“OTC”) commodity swap instruments (“commodity swaps”), to maintain compliance with this covenant. We do not hold or issue derivative financial instruments for trading purposes.

Commodity swap agreements involve payments to or receipts from counterparties based on the differential between two prices for the commodity, and include basis swaps to protect earnings from undue exposure to the risk of geographic disparities in commodity prices, as required by the negative covenant of the senior secured term loan credit agreement. The fair value of our commodity swaps is classified as Level 2 in the fair value hierarchy and is based on standard industry income approach models that use significant observable inputs, including but not limited to New York Mercantile Exchange (NYMEX) natural gas forward curves and basis forward curves, all of which are validated against external sources at least monthly.

The Company recognizes all derivative instruments as either assets or liabilities at fair value on a net basis as they are with a single counterparty and subject to a master netting arrangement. The Company can net settle its derivative instruments at any time. As of June 30, 2020, we had a current asset of $1.9 million, net, with respect to the fair value of the current portion of our commodity swaps. The current asset is classified within Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. Gross current asset and current liability amounts as of June 30, 2020 are $2.2 million and $0.3 million, respectively.

We do not apply hedge accounting for our commodity swaps; therefore, all changes in fair value of the Company’s derivative instruments are recognized within Other income, net, in the Condensed Consolidated Statements of Operations. For the three and six months ended June 30, 2020, we recognized a realized gain of $1.5 million and $3.9 million, respectively, as well as an unrealized loss of $1.8 million and $1.7 million, respectively, related to the changes in fair value of the commodity swaps in our Condensed Consolidated Statements of Operations. Derivative contracts which result in physical delivery of a commodity expected to be used or sold by the Company in the normal course of business are designated as normal purchases and sales and are exempt from derivative accounting. OTC arrangements require settlement in cash. Settlements of commodity derivative instruments are reported as a component of cash flows from operations in the Condensed Consolidated Statements of Cash Flows.

With respect to the commodity swaps, the Company hedged 6.7 Bcf of its fixed price and basis exposure which represents a portion of its expected sales of equity production as of June 30, 2020. The open positions at June 30, 2020 had maturities extending through September 2021. For additional details, refer to Note 9, Borrowings.

NOTE 7 — RELATED PARTY TRANSACTIONS

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

In conjunction with the dismissal of the litigation disclosed in Part I, Item 3, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, we agreed to reimburse Martin Houston for reasonable attorneys’ fees and expenses he incurred during the litigation with Cheniere Energy, Inc. As of June 30, 2020, we have paid $2.5 million to third parties to settle outstanding amounts incurred by Mr. Houston for reasonable attorneys’ fees and expenses. We estimate that we will pay an additional $2.6 million for reasonable attorneys’ fees and expenses which has been classified with Accounts payable on the Condensed Consolidated Balance Sheets. We have also agreed to reimburse Mr. Houston approximately $2.3 million for other expenses he incurred in connection with the lawsuit. This amount has been classified within Accounts payable due to related parties on the Condensed Consolidated Balance Sheets.

NOTE 8 — ACCRUED AND OTHER LIABILITIES

The components of accrued and other liabilities consist of the following (in thousands):


	June 30, 2020		December 31, 2019
Project development activities	$	2,971	$	3,851
Payroll and compensation	23,066		18,773
Severance and reorganization	1,906		—
Accrued taxes	1,147		1,018
Professional services (e.g., legal, audit)	1,314		2,906
Warrant liabilities (Note 11)	7,193		—
Lease liabilities (Note 14)	1,855		3,729
Other	1,743		2,726
Total accrued and other liabilities	$	41,195	$	33,003

Severance and Reorganization

We implemented a cost reduction and reorganization plan (the “Reorganization Plan”) during the first quarter of 2020, and have incurred approximately $0.9 million and $6.4 million as of the three and six months ended June 30, 2020, respectively, of severance and reorganization charges due to reductions in workforce. The Reorganization Plan was implemented due to the sharp decline in oil and natural gas prices as well as the growing negative economic effects of the COVID-19 pandemic. The charges are presented within the caption Severance and reorganization charges on our Condensed Consolidated Statement of Operations. We expect to settle the remaining termination benefits by September 30, 2020. The severance and reorganization cash amounts provided to former employees have been settled and the remaining $1.9 million will be settled with the continued transfer of 1.6 million restricted stock units to former employees that may be settled, at our election, with either cash, stock or a combination thereof. We have settled $4.5 million of the severance and reorganization charges as of June 30, 2020.

NOTE 9 — BORROWINGS

The following tables summarize the Company’s borrowings as of June 30, 2020, and December 31, 2019 (in thousands):

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)


	June 30, 2020
	Principal repayment obligation ⁽¹⁾			Unamortized DFC and discounts			Carrying value
2020 Unsecured Note		$	52,500		$	(18,608)		$	33,892
2019 Term Loan, due November 2021 ⁽²⁾		54,238			(6,752)			47,486
2018 Term Loan, due September 2021		60,000			(1,342)			58,658
Total borrowings		$	166,738		$	(26,702)		$	140,036

	December 31, 2019
	Principal repayment obligation and  other fees ⁽³⁾			Unamortized DFC and discounts			Carrying value
2019 Term Loan, due May 2020 ⁽²⁾		$	84,955		$	(6,427)		$	78,528
2018 Term Loan, due September 2021		60,000			(1,879)			58,121
Total borrowings		$	144,955		$	(8,306)		$	136,649


(1)Includes paid-in-kind interest on the 2019 Term loan of $1.3 million.
(2) Maturity date amended as part of the Second Amendment to the 2019 Term Loan.
(3) Includes paid-in-kind interest on the 2019 Term loan of $1.8 million as well as a final payment fee equal to 20% of the principal amount less financing costs and cash interest amounts paid.

2020 Unsecured Note

On April 29, 2020, we issued a zero coupon $56.0 million face amount senior unsecured note (the “2020 Unsecured Note”) to an unrelated third party. Net proceeds raised from the 2020 Unsecured Note were approximately $47.4 million, after deducting approximately $2.6 million in fees and $6.0 million in original issue discount. The 2020 Unsecured Note will be repaid in installments on the first day of every month as follows (in thousands):


Period	Periodic Amount		Total Amount
June 1, 2020	$	3,500	$	3,500
July 1, 2020 – October 1, 2020	5,000		20,000
November 1, 2020	4,500		4,500
December 1, 2020 – June 1, 2021	4,000		28,000
Face amount of 2020 Unsecured Note					$	56,000

In conjunction with the 2020 Unsecured Note, we issued the lender a warrant to purchase 20.0 million shares of our common stock (the “Unsecured Warrant”). The fair value of the Unsecured Warrant of approximately $16.1 million has been recognized as an original issue discount to the 2020 Unsecured Note. For more information about the Unsecured Warrant, see Note 11, Stockholders’ Equity.

The 2020 Unsecured Note contains certain cash sweep provisions requiring that a portion of the proceeds from certain of our equity offerings and convertible securities offerings be used to repay the outstanding principal balance through additional amortization payments not to exceed $8.0 million in total, subject to certain conditions. See Note 16, Subsequent Events, for further information.

The lender may require us to repurchase the 2020 Unsecured Note upon a Fundamental Change (as defined in the 2020 Unsecured Note) or an event of default at 105% and 115%, respectively, of the remaining outstanding principal balance. If an event of default occurs which cannot be cured within certain time periods, we have the right to pay cash, but to the extent that we do not pay in cash, the lender will have the right to convert the outstanding face amount into shares of our common stock based on a calculation defined in the 2020 Unsecured Note. We may prepay the 2020 Unsecured Note in whole or in part from time to time without premium or penalty.

2019 Term Loan

On May 23, 2019, Driftwood Holdings LP, a wholly owned subsidiary of the Company (“Driftwood Holdings”), entered into a senior secured term loan agreement (the “2019 Term Loan”) to borrow an aggregate principal amount of $60.0 million. Fees associated with entering into the 2019 Term Loan of approximately $2.2 million have been capitalized as deferred

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

financing costs. The 2019 Term Loan agreement provided Driftwood Holdings the right to borrow an additional $15.0 million, which it did on July 16, 2019. The 2019 Term Loan bore a fixed annual interest rate of 12%, of which 4% Driftwood Holdings could add to the outstanding principal as paid-in-kind interest at the end of each reporting period. In addition to the fixed annual interest rate, upon maturity or early repayment of the 2019 Term Loan, Driftwood Holdings was also obligated to pay a final fee equal to 20% of the principal amount borrowed less financing costs and cash interest paid (the “Final Payment Fee”) to the lender. On February 28, 2020, Driftwood Holdings entered into an amendment (the “First Amendment”) to the 2019 Term Loan which allowed us to enter into a land lease for the Driftwood Project. The First Amendment had no financial statement impact in regard to accounting for our Borrowings.

On March 23, 2020, Driftwood Holdings entered into a second amendment (the “Second Amendment”) to the 2019 Term Loan. The outstanding principal balance as of the Second Amendment date was $75.0 million. The Second Amendment, among other things, made the following changes to the 2019 Term Loan:

•Extended the maturity date from May 23, 2020 to November 23, 2021;

•Modified the frequency of interest payments from quarterly to monthly;

•Modified the interest rate from 12% per annum, with the ability to defer 4% per annum as paid-in-kind, to 16% per annum, with the ability to defer 8% per annum as paid-in-kind;

•Required a principal payment of $3.0 million by April 22, 2020; and

•Reduced the required month-end collateral amount from $30.0 million to $12.0 million.

Upon entering into the Second Amendment, we repaid $2.0 million of the outstanding principal balance and issued 11,019,298 shares of our common stock in exchange for cancellation of the Final Payment Fee (as defined in the Credit Agreement) and all accrued paid-in-kind interest through March 22, 2020.

The Second Amendment was accounted for as a debt modification with no gain or loss recognized and any differences in fair value for amounts settled or paid being capitalized as part of the 2019 Term Loan debt issuance discount. The Second Amendment resulted in a $0.9 million increase in the debt issuance discount associated with the 2019 Term Loan.

Also, in conjunction with the Second Amendment, the Common Stock Purchase Warrant (the “Original Warrant”) previously issued as part of the 2019 Term Loan was replaced with a new warrant (the “Replacement Warrant”). The difference in fair value between the Original Warrant and the Replacement Warrant was an increase of approximately $0.3 million and has been recognized as a debt issuance discount to the 2019 Term Loan. Refer to Note 11, Stockholders’ Equity, for further details.

On April 28, 2020, Driftwood Holdings entered into a third amendment (the “Third Amendment”) to the 2019 Term Loan, which became effective on April 29, 2020. In conjunction with the Third Amendment, we repaid $17.1 million of the outstanding principal balance. This principal repayment was made with the issuance of 9,348,706 shares of our common stock as well as a cash payment of $2.1 million.

In conjunction with the Third Amendment, we issued a common stock purchase warrant (the “Third Amendment Warrant”) to the lender. The fair value of the Third Amendment Warrant of approximately $5.7 million has been recognized as an original issue discount to the 2019 Term Loan.

We may prepay the 2019 Term Loan in whole or in part from time to time without premium or penalty. Borrowings under the 2019 Term Loan are guaranteed by Tellurian Inc. and certain of its subsidiaries and are secured by substantially all of the assets of Tellurian Inc. and certain of its subsidiaries, other than Tellurian Production Holdings LLC (“Production Holdings”) and its subsidiaries, under one or more security agreements and pledge agreements.

2018 Term Loan

On September 28, 2018 (the “Closing Date”), Production Holdings entered into a three-year senior secured term loan credit agreement (the “2018 Term Loan”) in an aggregate principal amount of $60.0 million.

Our use of proceeds from the 2018 Term Loan is predominantly restricted to capital expenditures associated with certain development and drilling activities and fees related to the transaction itself and is presented within Non-current restricted cash on our Condensed Consolidated Balance Sheets. At June 30, 2020, unused proceeds from the 2018 Term Loan totaled $3.5 million and were classified as Non-current restricted cash.

We have the right, but not the obligation, to make voluntary principal repayments starting six months following the Closing Date in a minimum amount of $5 million or any integral multiples of $1 million in excess thereof. If no voluntary principal repayments are made, the principal amount, together with any accrued interest, is payable at the maturity date of September 28, 2021. The 2018 Term Loan can be terminated without penalty, with an early termination payment equal to the outstanding principal plus accrued interest.

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Amounts borrowed under the 2018 Term Loan are guaranteed by Tellurian Inc. and each of Production Holdings’ subsidiaries. The 2018 Term Loan is collateralized by a first priority lien on all assets of Production Holdings and its subsidiaries, including our proved natural gas properties.

Covenant Compliance

As of June 30, 2020, the Company was in compliance with all covenants under its credit agreements. Refer to Note 6, Financial Instruments, for details of hedging transactions, as of and for the period ended June 30, 2020, entered into as required by the 2018 Term Loan described above.

Fair Value

As of June 30, 2020, the fair value of the 2020 Unsecured Note, on a discounted cash flow basis, was approximately $50.0 million as the 2020 Unsecured Note effective interest rate was higher than current market levels. As of June 30, 2020, the fair value of the 2019 Term Loan, on a discounted cash flow basis, was approximately $55.6 million as the 2019 Term Loan effective interest rate was higher than current market levels. As of June 30, 2020, the fair value of the 2018 Term Loan, on a discounted cash flow basis, was approximately $56.2 million as the 2018 Term Loan effective interest rate was higher than current market levels. The 2020 Unsecured Note, 2019 Term Loan and 2018 Term Loan represent Level 3 instruments in the fair value hierarchy.

NOTE 10 — COMMITMENTS AND CONTINGENCIES

On April 23, 2019, we entered into a master LNG sale and purchase agreement and related confirmation notices (collectively, the “SPA”) with an unrelated third-party LNG merchant. Pursuant to the SPA, we committed to purchase one cargo of LNG per quarter through October 2022. The volume of each cargo is expected to range from 3.3 to 3.6 million MMBtu, and each cargo will be purchased under DES terms. The price of each cargo will be based on the JKM price in effect at the time of each purchase.

NOTE 11 — STOCKHOLDERS' EQUITY

Common Stock Issuance

On February 11, 2020, we sold 2,114,591 shares of our common stock in a registered direct offering at a price of $6.36 per share. Net proceeds from this offering, after deducting fees and expenses, were approximately $13.1 million.

At-the-Market Program

We maintain an at-the-market equity offering program pursuant to which we may sell shares of our common stock from time to time on Nasdaq. For the six months ended June 30, 2020, we issued 17,512,604 shares of our common stock under our at-the-market program for net proceeds of approximately $22.9 million. As of June 30, 2020, we have remaining availability under the at-the-market program to raise aggregate gross sales proceeds of up to approximately $365.7 million. See Note 16, Subsequent Events, for further information.

Common Stock Purchase Warrants

2020 Unsecured Note

As discussed in Note 9, Borrowings, on April 29, 2020 (the “Issuance Date”), in conjunction with the issuance of the 2020 Unsecured Note, we issued a warrant providing the lender with the right to purchase up to 20.0 million shares of our common stock at $1.542 per share. The Unsecured Warrant, which vested on the Issuance Date, may not be exercised until October 29, 2020 and will expire five years after it becomes exercisable. The Unsecured Warrant was valued using a Black-Scholes option pricing model that resulted in a relative fair value of approximately $16.1 million on the Issuance Date and is not subject to subsequent remeasurement. The Unsecured Warrant has been classified as equity and is recognized within Additional paid-in capital on our Condensed Consolidated Balance Sheets.

2019 Term Loan

As discussed in Note 9, Borrowings, we have entered into three amendments to the 2019 Term Loan. Pursuant to the Second Amendment, we replaced the previously issued Original Warrant, which provided the lender with the right to purchase up to 1.5 million shares of our common stock at $10.00 per share with the Replacement Warrant, which provides the lender with the right to purchase 9.0 million shares of our common stock at $1.00 per share. Pursuant to the Third Amendment, we issued the Third Amendment Warrant which provides the lender with the right to purchase approximately 4.7 million shares of our common stock at $1.542 per share. The Third Amendment Warrant expires five years after the date of the Third Amendment. Half of the Third Amendment Warrant vested immediately, but may not be exercised until October 29, 2020, and the remaining half will vest, and become exercisable, on October 29, 2020.

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

The aggregate number of unvested shares of our common stock provided to the lender under the Replacement Warrant and the Third Amendment Warrant will be reduced proportionately as a result of any partial repayment of the 2019 Term Loan principal and, in the event the outstanding balance of the 2019 Term Loan is repaid in full, any unvested tranches will be canceled as of the date of such repayment. As of June 30, 2020, the aggregate number of unvested shares of our common stock provided to the lender under the Replacement Warrant and the Third Amendment Warrant has been reduced by 0.2 million shares due to partial repayments of the outstanding principal balance.

The Replacement Warrant expires five years after the date of the Second Amendment and vests as follows (in thousands):


Vesting						Number of Shares
Immediately						3,000
September 23, 2020						1,924
March 23, 2021						1,924
June 23, 2021						1,924
Total						8,772

The Replacement Warrant was valued using a Black-Scholes option pricing model that resulted in a fair value of approximately $3.6 million on the date of the Second Amendment. The difference between the fair values of the Original Warrant and the Replacement Warrant was an increase of approximately $0.3 million and has been classified as equity and recognized within Additional paid-in capital on our Condensed Consolidated Balance Sheets. However, as the total amount of warrants is no longer fixed, approximately $2.4 million has been recognized within Accrued and other liabilities on our Condensed Consolidated Balance Sheets and will be remeasured every period end until it vests. If the vesting event occurs, the applicable portion of the liability will be reclassified to equity and remeasured on said vesting date.

The Third Amendment Warrant was valued using a Black-Scholes option pricing model that resulted in a fair value of approximately $5.7 million on the date of the Third Amendment. As only half of the Third Amendment Warrant has vested, and is therefore fixed, approximately $2.9 million has been classified as equity and recognized within Additional paid-in capital on our Condensed Consolidated Balance Sheets. The remaining approximately $2.8 million does not meet the fixed for fixed criteria for equity classification, and has been recognized within Accrued and other liabilities on our Condensed Consolidated Balance Sheets and will be remeasured every period end unit it vests. If the vesting event occurs, a portion of the liability will be reclassified to equity and remeasured on said vesting date.

As of June 30, 2020, we have recognized an unrealized loss of approximately $2.0 million within Other income, net, on our Condensed Consolidated Income Statement due to the remeasurement of the unvested portion of the Replacement Warrant and the Third Amendment Warrant.

Preferred Stock

In March 2018, we entered into a preferred stock purchase agreement with BDC Oil and Gas Holdings, LLC (“Bechtel Holdings”), a Delaware limited liability company and an affiliate of Bechtel Oil, Gas and Chemicals, Inc., a Delaware corporation (“Bechtel”), pursuant to which we sold to Bechtel Holdings approximately 6.1 million shares of our Series C convertible preferred stock (the “Preferred Stock”).

The holders of the Preferred Stock do not have dividend rights but do have a liquidation preference over holders of our common stock. The holders of the Preferred Stock may convert all or any portion of their shares into shares of our common stock on a one-for-one basis. At any time after “Substantial Completion” of “Project 1,” each as defined in and pursuant to the LSTK EPC Agreement for the Driftwood LNG Phase 1 Liquefaction Facility, dated as of November 10, 2017, or at any time after March 21, 2028, we have the right to cause all of the Preferred Stock to be converted into shares of our common stock on a one-for-one basis. The Preferred Stock has been excluded from the computation of diluted loss per share because including it in the computation would have been antidilutive for the periods presented.

NOTE 12 — SHARE-BASED COMPENSATION

We have granted restricted stock, restricted stock units and phantom units (collectively, “Restricted Stock”), as well as unrestricted stock and stock options, to employees, directors and outside consultants (collectively, the “grantees”) under the Tellurian Inc. 2016 Omnibus Incentive Compensation Plan, as amended (the “2016 Plan”), and the Amended and Restated Tellurian Investments Inc. 2016 Omnibus Incentive Plan (the “Legacy Plan”). The maximum number of shares of Tellurian common stock authorized for issuance under the 2016 Plan is 40 million shares of common stock, and no further awards can be granted under the Legacy Plan.

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Upon the vesting of restricted stock, shares of common stock will be released to the grantee. Upon the vesting of restricted stock units, the units will be converted into shares of common stock and released to the grantee. In March 2018, we began issuing phantom units that may be settled in either cash, stock, or a combination thereof. As of June 30, 2020, there was no Restricted Stock that would be required to be settled in cash.

As of June 30, 2020, we had granted approximately 24.8 million shares of performance-based Restricted Stock, of which approximately 19.4 million shares will vest entirely based upon FID, as defined in the award agreements, and approximately 4.8 million shares will vest in one-third increments at FID and the first and second anniversaries of FID. The remaining shares of performance-based Restricted Stock, totaling approximately 0.6 million shares, will vest based on other criteria. As of June 30, 2020, no expense had been recognized in connection with performance-based Restricted Stock.

As of June 30, 2020, we had granted approximately 12.2 million shares of time-based Restricted Stock. Of the total time-based grants, approximately 9.9 million shares have not yet vested and represent the settlement of the 2019 employee bonuses, which were included in our accrued liabilities balance as of December 31, 2019, and will vest in their entirety by May 31, 2021. The majority of the remaining shares were granted in connection with the Reorganization Plan we undertook and approximately 1.6 million have not yet vested and will vest in their entirety by September 30, 2020. For further information about the Reorganization Plan, see Note 8, Accrued and Other Liabilities.

For the three and six months ended June 30, 2020, the recognized share-based compensation expense related to all share-based awards totaled approximately $0.6 million and $1.2 million, respectively. As of June 30, 2020, unrecognized compensation expense, based on the grant date fair value, for all share-based awards totaled approximately $193.4 million. Further, the approximately 37.0 million shares of performance-based and time-based Restricted Stock, as well as approximately 1.4 million stock options outstanding, have been excluded from the computation of diluted loss per share because including them in the computation would have been antidilutive for the periods presented.

NOTE 13 — INCOME TAXES

Due to our cumulative loss position, historical net operating losses (“NOLs”), and other available evidence related to our ability to generate taxable income, we have recorded a full valuation allowance against our net deferred tax assets as of June 30, 2020 and December 31, 2019. Accordingly, we have not recorded a provision for federal, state or foreign income taxes during the three and six months ended June 30, 2020.

We experienced ownership changes as defined by Internal Revenue Code (“IRC”) Section 382 in 2017, and an analysis of the annual limitation on the utilization of our NOLs was performed at that time. It was determined that IRC Section 382 will not limit the use of our NOLs over the carryover period. We will continue to monitor trading activity in our shares that may cause an additional ownership change, which may ultimately affect our ability to fully utilize our existing NOL carryforwards.

NOTE 14 — LEASES

Finance Leases

Our land leases are classified as financing leases and include one or more options to extend the lease term up to 40 years, as well as to terminate the lease within five years, at our sole discretion. We are reasonably certain that those options will be exercised, and that our termination rights will not be exercised, and we have therefore included those assumptions within our right of use assets and corresponding lease liabilities. As of June 30, 2020, our weighted-average remaining lease term for our financing leases was approximately fifty-one years. As none of our finance leases provide an implicit rate, we have determined our own discount rate, which, on a weighted-average basis at June 30, 2020, was approximately 13%.

As of June 30, 2020, our financing leases had a corresponding right of use asset of approximately $20.2 million recognized within Property, plant and equipment, net, and a total lease liability of approximately $13.5 million which is recognized in Other non-current liabilities, approximately $13.5 million. For the three and six months ended June 30, 2020, our finance lease costs, which are associated with the interest on our lease liabilities, were approximately $0.5 million and $0.8 million, respectively. For the three and six months ended June 30, 2020, we paid approximately $1.8 million and $1.8 million, respectively, in cash for amounts included in the measurement of operating lease liabilities, all of which are presented within the finance section of our cash flows.

Operating Leases

Our office space leases are classified as operating leases and include one or more options to extend the lease term up to 10 years, at our sole discretion. As we are not reasonably certain that those options will be exercised, none are recognized as part of our right of use assets and lease liabilities. As of June 30, 2020, our weighted-average remaining lease term for our operating leases was approximately six years. As none of our operating leases provide an implicit rate, we have determined our own discount rate, which, on a weighted-average basis at June 30, 2020, was approximately 8%.

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

As of June 30, 2020, our operating leases had a corresponding right of use asset of approximately $12.7 million recognized within Other non-current assets and a total lease liability of approximately $14.6 million which is recognized between Accrued and other liabilities, approximately $1.9 million, and Other non-current liabilities, approximately $12.7 million. For the three and six months ended June 30, 2020 and 2019, our operating lease costs were $0.7 million and $0.9 million, respectively, and $1.4 million and $1.8 million, respectively. For the three and six months ended June 30, 2020 and 2019, we paid approximately $0.7 million and $0.8 million, respectively, and $1.4 million, and $1.4 million, respectively, in cash for amounts included in the measurement of operating lease liabilities, all of which are presented within operating cash flows.

The table below presents a maturity analysis of our lease liability on an undiscounted basis and reconciles those amounts to the present value of the lease liability as of June 30, 2020 (in thousands):


Maturity of lease liability	Operating		Finance
2020	$	1,471	$	913
2021	2,969		1,826
2022	3,006		1,826
2023	3,044		1,826
2024	3,081		1,826
After 2024	4,980		84,193
Total lease payments	$	18,551	$	92,410
Less: discount	3,992		78,899
Present value of lease liability	$	14,559	$	13,511

NOTE 15 — ADDITIONAL CASH FLOW INFORMATION

The following table provides information regarding the net changes in working capital (in thousands):


	Six Months Ended June 30,
	2020		2019
Accounts receivable	$	2,331	$	(1,847)
Prepaid expenses and other current assets	(396)		(137)
Accounts payable	4,494		(5,249)
Accounts payable due to related parties (Note 7)	2,300		—
Accrued liabilities	6,375		13,867
Other, net	(1,617)		(770)
Net changes in working capital	$	13,487	$	5,864

The following table provides supplemental disclosure of cash flow information (in thousands):


	Six Months Ended June 30,
	2020		2019
Non-cash accruals of property, plant and equipment and other non-current assets	$	7,955	$	415
Non-cash settlement of Final Payment Fee (Note 9)	8,539		—
Non-cash settlement of withholding taxes associated with the 2018 bonus and vesting of certain awards, respectively	—		6,686
Non-cash settlement of the 2019 and 2018 bonus, respectively	1,086		18,396

The statement of cash flows for the six months ended June 30, 2020, reflects approximately $78.5 million and $2.1 million in non-cash movements related to the 2019 Term Loan and the Replacement Warrant, respectively.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)


	Six Months Ended June 30,
	2020		2019
Cash and cash equivalents	$	88,314	$	104,005
Non-current restricted cash	3,467		17,968
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	91,781	$	121,973

NOTE 16 — SUBSEQUENT EVENTS

Equity Offering

On July 24, 2020, we completed a registered direct offering pursuant to which we sold 35,000,000 shares of our common stock at an offering price of $1.00 per share. Net proceeds from this transaction were approximately $32.5 million.

2020 Unsecured Note

As discussed in Note 9, Borrowings, the 2020 Unsecured Note is subject to certain cash sweep provisions. Due to the amount of proceeds generated from the sale of our common stock under our at-the-market program in June, as well as the equity offering completed on July 24, 2020, these cash sweep provisions were triggered on July 1, 2020 and August 3, 2020 requiring us to make a total of $8.0 million in additional repayments of the outstanding principal balance. As a result of these additional repayments, the final pa