GENERAL |
6 Months Ended |
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Jun. 30, 2024 | |
| Accounting Policies [Abstract] | |
| GENERAL |
NOTE 1 — GENERAL
Tellurian Inc. (“Tellurian,” “we,” “us,” “our,” or the “Company”), a Delaware corporation, is a Houston-based company that is developing a portfolio of LNG marketing and infrastructure assets that includes an LNG terminal facility (the “Driftwood terminal”) and related pipelines. The Driftwood terminal and related pipelines are collectively referred to as the “Driftwood Project.” We refer to the Driftwood Project as the “Business.” 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.
Upstream Sale
On May 28, 2024, Tellurian Production LLC (“Tellurian Production Company”) and Tellurian Operating LLC (together with Tellurian Production Company, “Seller”), each an indirect wholly owned subsidiary of Tellurian, entered into a purchase and sale agreement (the “PSA”) with Aethon United BR LP and Aethon III BR LLC (collectively, “Buyer”), pursuant to which Seller agreed to sell its upstream and related midstream assets in the Louisiana region of the Haynesville Shale to Buyer for an aggregate purchase price of $260.0 million, subject to certain customary adjustments (the “Upstream Sale”). The Upstream Sale closed on June 28, 2024. The accompanying Condensed Consolidated Financial Statements have been revised to reflect the effect of the Upstream Sale. The Upstream Sale was disclosed in prior periods as part of Management’s plans to alleviate substantial doubt about the Company’s ability to continue as a going concern. See Note 4, Discontinued Operations, for further information.
Merger Agreement
On July 21, 2024, Tellurian entered into a Merger Agreement with Woodside. Refer to Note 17, Subsequent Events.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and 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, 2023.
The Condensed Consolidated Financial Statements, in the opinion of management, reflect all adjustments necessary for the fair presentation of the results for the periods presented. All adjustments are of a normal recurring nature unless otherwise disclosed. 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.
There has been no change to our significant accounting policies as included in our Annual Report on Form 10-K for the year ended December 31, 2023 and our Quarterly Report on Form 10-Q for the three-month period ended March 31, 2024, except as follows:
Discontinued Operations
The divestiture of a disposal group which represents a strategic shift to the Company’s operations and financial results is presented as discontinued operations in the Condensed Consolidated Statements of Operations. The gain or loss recognized is recognized as the consideration received from the sale less its net carrying value, and direct costs incurred to sell. Adjustments to amounts reported in discontinued operations are presented in subsequent periods. Interest costs associated with debt required to be repaid as a result of the transaction are allocated to the discontinued operations. The assets and liabilities of the disposal group related to discontinued operations in the Condensed Consolidated Balance Sheets are reclassified to conform to the current period presentation. Working capital that is not part of the disposal group is retained by the Company and presented as continuing operations. Cash flows from discontinued and continuing operations are presented on a consolidated basis within the Condensed Consolidated Statements of Cash Flows.
Segments
Following the Upstream Sale, the Company conducts its operations as a single operating and reportable segment. Our chief operating decision maker allocates resources and assesses financial performance on a consolidated basis in our strategy to manage the Company.
We are not required to disclose the information prescribed by ASC 280, Segment Reporting, for a reportable segment that qualifies for discontinued operations reporting. In addition, segment information for periods prior to the sale of a reportable segment is not required to be restated in the comparative periods.
Going Concern
Our Condensed Consolidated Financial Statements have been 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. In accordance with ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205”), the Company evaluates whether conditions and/or events raise substantial doubt about its ability to meet its obligations as they become due within one year after the date that the financial statements are issued. As of June 30, 2024, the Company has generated losses and cash outflows from operations. The Company has not yet established an ongoing source of revenues that is sufficient to satisfy our obligations and fund working capital needs as they become due during the twelve months following the issuance of the financial statements. These conditions raise substantial doubt about our ability to continue as a going concern.
To date, the Company has been meeting its liquidity needs primarily from cash on hand and the combined proceeds generated by debt and equity issuances, the discontinued upstream operations, and the sale of common stock under its at-the-market equity offering programs. Our evaluation does not take into consideration the potential mitigating effect of activities that have not been fully implemented or are not within the Company’s direct control. Through the date of this filing, the Company has undertaken the following actions to improve its available cash balances and liquidity:
•From January 1, 2024 to June 30, 2024, raised net proceeds of approximately $66.9 million from the sale of common stock under our at-the-market equity offering programs; and
•On June 28, 2024, we closed the Upstream Sale and used approximately $229.9 million of the net proceeds to retire the then-outstanding principal obligations under the Company’s 10% Senior Secured Notes.
On July 21, 2024, Tellurian entered into a Merger Agreement with Woodside. In connection with the Merger Agreement, Woodside Energy (USA), Inc. agreed to provide the Company with a bridge loan to continue Driftwood Project construction activities and fund working capital needs. See Note 17, Subsequent Events, for defined terms and additional information. Management is planning to alleviate substantial doubt by closing the Merger with Woodside during the fourth quarter of 2024. However, completing the Merger is subject to customary closing conditions, including Tellurian shareholder approval and regulatory approvals, which are not within the Company’s control and, therefore, cannot be deemed probable in accordance with ASC 205. As a result, there remains substantial doubt about the Company’s ability to continue as a going concern through the date of this filing.
The Condensed Consolidated Financial Statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.
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