The Woodside Energy Group Ltd (ASX: WDS) share price is in the red today.
Shares in the S&P/ASX 200 Index (ASX: XJO) oil and gas stock closed on Friday trading for $29.21. In morning trade on Monday, shares are swapping hands for $28.63 apiece, down 1.9%.
For some context, the ASX 200 is down 0.8% at this same time.
Here's what investors are considering.
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Woodside share price slipping on Monday
Investors have yet to reward the Woodside share price after the company announced it has entered into a definitive agreement to acquire Tellurian Inc (NYSE: TELL), including its owned and operated US Gulf Coast Driftwood LNG development opportunity.
The agreement would see Woodside acquire all the issued and outstanding shares in Tellurian for an all-cash payment of around US$900 million. That works out to about US$1.00 per share. The implied enterprise value is about US$1.2 billion (approximately AU$1.8 billion).
"The acquisition of Tellurian and its Driftwood LNG development opportunity positions Woodside to be a global LNG powerhouse," said Woodside CEO Meg O'Neill.
Driftwood LNG is a fully permitted, pre-final investment decision (FID) development opportunity located in the US state of Louisiana. According to the release, the current development plan comprises five LNG trains through four phases, with a total permitted capacity of 27.6 Mtpa.
The Woodside share price could benefit longer-term from the acquisition of Tellurian and its Driftwood LNG development opportunity by expanding the ASX 200 energy company's position as a leading independent LNG company.
Woodside noted the acquisition should increase its long-term cashflow generation potential, with a phased development to manage investment decisions aligned with its capital allocation framework.
Management commentary
Commenting on the benefits of the deal, O'Neill said:
It adds a scalable US LNG development opportunity to our existing approximately 10 Mtpa of equity LNG in Australia. Having a complementary US position would allow us to better serve customers globally and capture further marketing optimisation opportunities across both the Atlantic and Pacific Basins.
The Driftwood LNG development opportunity is competitively advantaged. Woodside expects to leverage its global LNG expertise to unlock this fully permitted development and expand our relationship with Bechtel which is the EPC contractor for both Driftwood LNG and our Pluto Train 2 project in Australia.
O'Neill also pointed to the important role LNG was expected to play in the ongoing global energy transition.
"Through this acquisition, we are delivering on our strategy to thrive through the energy transition," she said.
"Woodside believes that LNG will play a key role in the energy transition and is well positioned to deliver the energy the world needs while delivering significant value to our shareholders."
Tellurian's board has approved the acquisition and recommends shareholders vote in favour. The companies are hoping to complete the transaction in the fourth quarter of 2024.
With today's intraday moves factored in, the Woodside share price is down almost 9% so far in 2024.
