GENERAL |
3 Months Ended |
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Mar. 31, 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 and plans to own and operate 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 also own upstream natural gas assets. We refer to the Driftwood Project and our upstream assets collectively 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.
Potential Sale of Upstream Assets
In December 2023, management engaged a strategic advisor in connection with the exploration of a potential sale of our upstream assets. In February 2024, the Board of Directors approved a plan to initiate a process to sell the Company’s upstream assets. We continue to advance the process to market the upstream assets to potential buyers.
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. Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our consolidated financial position, results of operations or cash flows.
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, except as follows:
Assets Held for Sale
We evaluate the classification of long-lived asset disposal groups (each, a “Disposal Group”) each reporting period. We consider the held for sale criteria to be met when (i) management commits to a plan to sell the Disposal Group in its present condition subject to approval by the Board of Directors and customary terms, (ii) management initiates an active program to identify buyers and the Disposal Group is marketed at a reasonable price in relation to its current fair value, (iii) the sale of the Disposal Group is probable and expected to be recognized as a completed sale within one year of the balance sheet, and (iv) it is unlikely that the plan will be withdrawn or significantly modified. Disposal Groups that meet all the held for sale criteria as of the balance sheet date are measured at the lower of their current carrying value or their fair value less direct costs to sell. The classification of a Disposal Group component as held for sale, which represents a strategic shift to the Company’s operations and financial results, is reported as discontinued operations. As of March 31, 2024, the upstream assets Disposal Group did not meet the held for sale criteria.
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, 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 March 31, 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 its future liquidity thresholds and 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, 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 March 31, 2024, raised net proceeds of approximately $17.8 million from the sale of common stock under our at-the-market equity offering programs;
•Subsequent to March 31, 2024, raised net proceeds of approximately $17.2 million from the sale of common stock under our new at-the-market equity offering program (See Note 17, Subsequent Events);
•Executed amendments to the Replacement Notes indentures (See Note 8, Borrowings);
•Initiated a process to sell our upstream assets; and
•Reduced the Company’s general and administrative expenses by approximately $17.5 million during the first quarter of 2024, as compared to the same period of 2023.
Despite these actions, the Company will need to take further measures to generate additional proceeds from various other potential transactions, such as the potential sale of our upstream assets, issuances of equity, equity-linked and debt securities, or similar transactions, managing costs, amending or refinancing the Replacement Notes and offering equity interests in the Driftwood Project (collectively “Management’s Plans”). The Company's ability to effectively implement Management’s Plans is subject to numerous risks and uncertainties such as the inability to consummate the potential sale of our upstream assets, market demand for our equity and debt securities, commodity prices and other factors affecting natural gas markets. As of the date of this filing, Management’s Plans have not been finalized and are not within the Company’s control and, therefore, cannot be deemed probable. As a result, there remains substantial doubt about the Company’s ability to continue as a going concern.
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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