Houston-based Tellurian slashes staff to save LNG project

HOUSTON (Bloomberg) - U.S. natural gas terminal developer Tellurian Inc. has cut roughly 40% of its workforce in a massive restructuring effort aimed at slashing costs and rescuing a struggling, $29 billion export project.

The Houston-based company founded by shale gas pioneer Charif Souki laid off as many as 70 workers and is planning to announce a new chief financial officer to replace Antoine Lafargue on Monday, according to people familiar with the situation. The company could also put off a final decision on whether to build the Driftwood liquefied natural gas export terminal in Louisiana by 12 to 18 months, said one of the people, who asked to not be identified because the information isn’t yet public.

Tellurian has emerged as one of the hardest-hit energy stocks in America amid the ongoing coronavirus-driven rout in commodities markets. The company was already reeling from a warm winter that sapped global demand for LNG and record low prices for the heating fuel. It also failed to finalize a deal with a major Indian customer for the Driftwood project last month. Souki and Tellurian co-founder Martin Houston were forced to sell shares in what was essentially a margin call.

Shares have plunged more than 80% over the past two weeks, and the company is in talks with a lender to renegotiate terms.

Tellurian didn’t immediately respond to a request for comment.

Souki has meanwhile spent little time at the company’s offices in recent days, according to the people familiar with the situation.

In an interview last week from his home in Aspen, Souki said his role has been more that of an “elder statesmen” offering advice when needed to the people actually running the company. He said he was forced to sell shares due to the terms of a financing agreement. He continues to be Tellurian’s second-largest shareholder after Total SA.

As part of the latest restructuring, Souki’s son, Tarek Souki, will no longer be senior vice president of LNG marketing and trading and will instead shift his focus to trading only, according to one of the people familiar with the situation.

The layoffs began late last week and hit multiple departments, including Tellurian’s upstream gas-producing team, terminal operations and analysts and marketers in between, the people said. Lafargue is expected to remain with the company to focus on marketing, one person said.