After slightly more than a year of exploring strategic alternatives, Magellan Petroleum Corporation (NASDAQ: MPET) has announced plans to merge with a privately-held LNG company called Tellurian Investments. The companies are hoping to complete the merge process before the end of this year and the combined entity is expected to take on a new name.
Although the name of the combined company has not yet been decided, the company will be headquartered in Houston.
Tellurian is a new company just formed this year and it is focused on developing a liquefied natural gas facility (LNG) on the U.S. Gulf Coast. The founders of the company are a former CEO of Cheniere Energy called Charif Souki and a former COO of BG Group called Martin Houston.
Tellurian has raised about $37.11 million in capital funding since its founding. The management said that the LNG project they are working on would see them raise capital of between $20 and $30 billion over the coming five years.
Before the agreement to merge with Magellan Petroleum Corporation (NASDAQ: MPET) came, the founders of Tellurian had hinted at IPO plans. But they won’t have to travel that path as the company is set to automatically become public after combination with Magellan.
Souki will become the chairman of the combined company, while Houston will become the president when the merger closes. That means that J. Thomas Wilson, the current president and CEO of Magellan Petroleum Corporation (NASDAQ: MPET), will likely continue leading the combined company as CEO.
What’s changing hands at Magellan Petroleum Corporation (NASDAQ: MPET)?
The merger is an all-stock transaction. For every share they hold, shareholders of Tellurian will receive 1.3 shares of Magellan Petroleum Corporation (NASDAQ: MPET). As such, Magellan is set to issue 122 million new shares of its common stock in favor of Tellurian shareholders. With that, you see that the owners of Tellurian are set to grab 95% of the pro forma outstanding common stock of Magellan.
The merger parties did not reveal what amount of revenue or profit they expect the combined company to generate and starting when. But Tellurian’s LNG facility was widely expected to kick off operations in 2022 and it will be selling LNG to overseas markets.