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Permalink Reply by Skip Peel - Mineral Consultant on September 11, 2018 at 7:44

What field? Tellurian has been using the $2.25/mcf cost figure for over a year now and I have not seen any energy reporter challenge the statement. Of course, when the time comes to pay out royalty on new wells, their lessors will be looking closely at the price per mcf they are paid on. If it is not a defensible fair market price prior to post production deductions, I expect there will be litigation on the matter. Until then Tellurian will continue to promote their concept as the low cost leader in LNG export.

If Tellurian deducts say 50 to 75 cents per mcf for treating and transportation, the net price per mcf on a royalty statement will be in the $1.50 to $1.75 range and it will make many Tellurian lessors unhappy.

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Permalink Reply by MJC on September 11, 2018 at 18:25

Bracky Branch Field, Red River Parish

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Permalink Reply by Skip Peel - Mineral Consultant on September 12, 2018 at 2:56

Then that would be the sixth application for alternate unit wells since February.  There are five additional in Red River-Bull Bayou and Chemard Lake fields.  It makes little sense for Tellurian to begin an aggressive drilling program since they are not in a position to utilize the natural gas produced.  They do need to maintain some minimal cash flow to cover field operations and might need to drill a new well in any section where the original unit well is nearing depletion.  Tellurian does have one well permit but no drilling rig deployed.  That initial permit is for a year so it doesn't expire until February 2019.  I think this is all set up for future development and does not signal any intention to start drilling any time soon.

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Permalink Reply by MJC on September 17, 2018 at 7:58

Yes, future developement. Driftwood LNG not set to go operational until sometime in 2022.   

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Permalink Reply by Skip Peel - Mineral Consultant on September 18, 2018 at 5:23

Now the company is saying 2023.  In the latest quote I have read, the company is claiming $3/Btu delivered at the plant.  We'll see if they stick with that but it still ignores the potential for fair market NG prices to be higher Than $3 in 2023.

“There are a lot of LNG terminals out there, Sabine Pass being one of them,” Howie said. “But the integrated model is a little unique. We think that it is going to drive a lower-cost option for our investor customers and our goal is to deliver this LNG on the beach at $3/Btu.”

John Howie, president of Tellurian Production LLC

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