REFILE-UPDATE 3-U.S. LNG developer Tellurian ousts co-founder Souki as chairman
HOUSTON, Dec 8 (Reuters) -Tellurian ousted its chairman and co-founder CharifSouki as an executive officer, the U.S. liquefied natural gas(LNG) developer said on Friday, weeks after auditors raiseddoubts about the company's ability to cover future expenses.
Souki helped create the U.S. LNG export market in 1996after seizing on discoveries of vast amounts of shale gas. Heturned Cheniere Energy from an LNG importer into a majorexporter, but has been unable to repeat the same success atTellurian.
Souki was pushed out of Cheniere Energy and co-foundedTellurian in 2016 with Martin Houston, who will replace him aschairman. Souki will remain on the company's board, Telluriansaid.
Shares of company rose 4% in extended trading to 78 cents.The stock had traded as high as $11.19 in 2019 but fell afterinitial backers of its crucial Driftwood export project,including LNG traders Vitol and Shell, withdrew as potentialcustomers.
Tellurian has changed its Driftwood strategy several timesover the years, never attracting enough potential clients forthe first, $14.5 billion phase of the 27.6 million metric tonper annum facility.
Last month, auditors put a going concern warning on itsfinancial statements. It had begun construction on the firstphase using cash from selling equity and from a smallgas-production unit.
The management change is "an indication of change indirection and arguably a sign of greater discipline in thecompany and greater focus on profitability," said Ben Dell,managing partner at Kimmeridge, a private equity firm. Dell hasbeen critical of Souki's spending and strategic flip-flops.
Tellurian has lost potential customers for Driftwoodover the years. In August, Tellurian revealed that trader GunvorSingapore Pte Ltd terminated its contract to take cargoes.
Souki's ouster shows Tellurian needed to do something big tosalvage the company's prospects, with so much tied to thesuccess or failure of its Driftwood LNG project, said AlexMunton, director of global gas and LNG research at consultingfirm Rapidan Group.
"The company is still very focused on executing on itsplan to complete construction of Driftwood LNG, and Soukirecently said it had all but resorted to the tried and testedmethod of U.S. LNG projects, which he, Souki, was never in favorof," said Munton.(Reporting by Arunima Kumar in Bengaluru, Curtis Williams andGary McWilliams in Houston; Editing by Shailesh Kuber andRichard Chang)