Aethon Energy Management has signed an agreement to acquire integrated upstream assets from Tellurian for $260m.

The acquisition is expected to significantly expand Aethon’s presence in the Louisiana Haynesville and Bossier shale basins.

Under the deal, Aethon will acquire Tellurian’s assets encompassing approximately 31,000 net acres, including systems capable of gathering and treating up to 100 million cubic feet per day.

These assets are expected to enhance pro forma gathering and treating capacity of Aethon to more than three billion cubic feet per day across its portfolio.

Aethon Energy CEO Albert Huddleston said: “The expanding scale of our vertically integrated business continues to deliver capital efficiency and industry-leading margins as we work to accelerate the role of natural gas in the broader energy transition.

“Our partnership with Tellurian will provide our downstream LNG customers with the lowest methane emission intensity in North America.”

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The deal is scheduled to close in the second quarter of 2024.

Proceeds from the sale will be used by Tellurian to reduce debt and allocate funds for general corporate purposes.

Tellurian executive chairman Martin Houston said: “Today’s agreements with Aethon take us several steps closer to developing the Driftwood LNG project, for which Aethon is a vital partner.

“The offtake agreement for two million tonnes per annum (mmtpa) provides the foundation to accelerate Driftwood and demonstrates that we have successfully aligned our commercial offerings to meet the needs of potential customers.

“For Tellurian, the proceeds from the sale of our upstream assets allow us to retire senior secured notes and strengthen our balance sheet for the long term.”

Furthermore, the two companies signed a heads of agreement whereby Aethon could purchase 2mmtpa of liquified natural gas (LNG) from Tellurian’s Driftwood LNG plant.

The heads of agreement sets the stage for negotiation between the parties to sign a 20-year offtake agreement, indexed to the Henry Hub plus a liquefaction fee, with the intent to facilitate project financing for the Driftwood LNG.

Aethon is committed to furthering opportunities to add value to the Driftwood LNG project post-transaction.

In 2023, Reuters reported that Tellurian was in talks with potential equity partners for its Driftwood LNG project.