Co rpo rate pre se ntatio n August 2018 Cautio nar y state me nts - - PowerPoint PPT Presentation

SLIDE 1

Co rpo rate pre se ntatio n

August 2018

SLIDE 2

Cautio nar y state me nts

T he info rma tio n in this pre se nta tio n inc lude s “fo rwa rd-lo o king sta te me nts” within the me a ning o f Se c tio n 27A o f the Se c uritie s Ac t o f 1933, a s a me nde d, a nd Se c tio n 21E

• f the Se c uritie s E

xc ha ng e Ac t o f 1934, a s a me nde d. All sta te me nts o the r tha n sta te me nts o f histo ric a l fa c t a re fo rwa rd-lo o king sta te me nts. T he wo rds “a ntic ipa te ,” “a ssume ,” “b e lie ve ,” “b udg e t,” “e stima te ,” “e xpe c t,” “fo re c a st,” “initia l,” “inte nd,” “ma y,” “mo de l,” “pla n,” “po te ntia l,” “pro je c t,” “sho uld,” “will,” “wo uld,” a nd simila r e xpre ssio ns a re inte nde d to ide ntify fo rwa rd-lo o king sta te me nts. T he fo rwa rd- lo o king sta te me nts in this pre se nta tio n re la te to , a mo ng o the r thing s, future c o ntra c ts a nd c o ntra c t te rms, ma rg ins, re turns a nd pa yb a c k pe rio ds, future c a sh flo ws a nd pro duc tio n, e stima te d ultima te re c o ve rie s, we ll pe rfo rma nc e a nd de live ry o f L NG, future c o sts, pric e s, fina nc ia l re sults, ne t a sse t va lue s, ra te s o f re turn, liq uidity a nd fina nc ing , re g ula to ry a nd pe rmitting de ve lo pme nts, c o nstruc tio n a nd pe rmitting o f pipe line s a nd o the r fa c ilitie s, future de ma nd a nd supply a ffe c ting L NG a nd g e ne ra l e ne rg y ma rke ts a nd o the r a spe c ts o f o ur b usine ss a nd o ur pro spe c ts a nd tho se o f o the r industry pa rtic ipa nts. Our fo rwa rd-lo o king sta te me nts a re b a se d o n a ssumptio ns a nd a na lyse s ma de b y us in lig ht o f o ur e xpe rie nc e a nd o ur pe rc e ptio n o f histo ric a l tre nds, c urre nt c o nditio ns, e xpe c te d future de ve lo pme nts, a nd o the r fa c to rs tha t we b e lie ve a re a ppro pria te unde r the c irc umsta nc e s. T he se sta te me nts a re sub je c t to nume ro us kno wn a nd unkno wn risks a nd unc e rta intie s whic h ma y c a use a c tua l re sults to b e ma te ria lly diffe re nt fro m a ny future re sults o r pe rfo rma nc e e xpre sse d o r implie d b y the fo rwa rd-lo o king sta te me nts. T he se risks a nd unc e rta intie s inc lude tho se de sc rib e d in the “Risk F a c to rs” se c tio n o f o ur Annua l Re po rt o n F

• rm 10-K

fo r the fisc a l ye a r e nde d De c e mb e r 31, 2017 file d with the Se c uritie s a nd E xc ha ng e Co mmissio n (the “SE C”) o n Ma rc h 15, 2018 a nd o the r filing s with the SE C, whic h a re inc o rpo ra te d b y re fe re nc e in this pre se nta tio n. Ma ny o f the fo rwa rd-lo o king sta te me nts in this pre se nta tio n re la te to e ve nts o r de ve lo pme nts a ntic ipa te d to o c c ur nume ro us ye a rs in the future , whic h inc re a se s the like liho o d tha t a c tua l re sults will diffe r ma te ria lly fro m tho se indic a te d in suc h fo rwa rd-lo o king sta te me nts. Pla ns fo r the Pe rmia n Glo b a l Ac c e ss Pipe line a nd Ha yne sville Glo b a l Ac c e ss Pipe line pro je c ts disc usse d he re in a re in the e a rly sta g e s o f de ve lo pme nt a nd nume ro us a spe c ts o f the pro je c ts, suc h a s de ta ile d e ng ine e ring a nd pe rmitting , ha ve no t c o mme nc e d. Ac c o rding ly, the na ture , timing , sc o pe a nd b e ne fits o f tho se pro je c ts ma y va ry sig nific a ntly fro m o ur c urre nt pla ns due to a wide va rie ty o f fa c to rs, inc luding future c ha ng e s to the pro po sa ls. Altho ug h the Driftwo o d pipe line pro je c t is sig nific a ntly mo re a dva nc e d in te rms o f e ng ine e ring , pe rmitting a nd o the r fa c to rs, its c o nstruc tio n, b udg e t a nd timing a re a lso sub je c t to sig nific a nt risks a nd unc e rta intie s. Pro je c te d future c a sh flo ws a s se t fo rth he re in ma y diffe r fro m c a sh flo ws de te rmine d in a c c o rda nc e with GAAP. T he info rma tio n o n slide s 7, 12, 13, 14, 15 a nd 16 is me a nt fo r illustra tive purpo se s o nly a nd do e s no t purpo rt to sho w e stima te s o f a c tua l future fina nc ia l pe rfo rma nc e . T he info rma tio n o n tho se slide s a ssume s the c o mple tio n o f c e rta in a c q uisitio n, fina nc ing a nd o the r tra nsa c tio ns. Suc h tra nsa c tio ns ma y no t b e c o mple te d o n the a ssume d te rms o r a t a ll. NAV a nd o the r e stima te s o f future e q uity va lue s a re pre se nte d fo r illustra tive purpo se s a nd do no t purpo rt to sho w future tra ding va lue s o f a ny se c uritie s. T he fo rwa rd-lo o king sta te me nts ma de in o r in c o nne c tio n with this pre se nta tio n spe a k o nly a s o f the da te he re o f. Altho ug h we ma y fro m time to time vo lunta rily upda te o ur prio r fo rwa rd-lo o king sta te me nts, we disc la im a ny c o mmitme nt to do so e xc e pt a s re q uire d b y se c uritie s la ws.

Re se rve s a nd re so urc e s

E stima te s o f no n-pro ve d re se rve s a nd re so urc e s a re b a se d o n mo re limite d info rma tio n, a nd a re sub je c t to sig nific a ntly g re a te r risk o f no t b e ing pro duc e d, tha n a re e stima te s o f pro ve d re se rve s.

F

• rwa rd-lo o king sta te me nts

2 Disc la ime r

SLIDE 3

344 49 46 565 127

2017 2025 Ne w c a pa c ity

49 382 532 101

2017 2025 Gro wth

Glo bal c all o n U.S. natur al gas

F und a me nta ls

U.S. supply push… … and global de mand pull

So urc e : Wo o d Ma c ke nzie , T e lluria n Re se a rc h. No te s: (1) Inc lude s the Pe rmia n, Ha yne sville , Utic a , Ma rc e llus, Ana da rko , E a g le F

• rd.

(2) Ba se d o n a de ma nd g ro wth e stima te o f 4.5% po st-2020. (3) Ca pa c ity re q uire d to me e t de ma nd g ro wth po st-2020.

3

51 71 20 46 75 Bc f/ d

Output fro m se le c te d sha le b a sins(1) mtpa Glo b a l L NG pro duc tio n c a pa c ity mtpa

T ake away infr astr uc tur e

Re q uire d Unde r c o nstruc tio n Othe r U.S.

Supply infr astr uc tur e

Re q uire d (3)

29

(2)

150

Unde r c o nstruc tio n

221 Bc f/ d

SLIDE 4 So urc e s: Kple r, Ma ra n Ga s, IHS, Wo o d Ma c ke nzie . No te s: L NG sto ra g e a ssume s ha lf o f fle e t is in b a lla st, 2.9 Bc f c a pa c ity pe r ve sse l. Ave ra g e c a rg o size ~2.9 Bc f, a ssuming 150,000 m 3 ship. In 2017, a ppro xima te ly a third o f a ll L NG c a rg o e s a re e stima te d to b e spo t vo lume s. Ba se d o n line o f sig ht supply thro ug h 2020.

Glo bal c o mmo dity r e quir e s lo w-c o st so lutio ns

4 F und a me nta ls

Bc f o f L NG sto ra g e # o f L NG ve sse ls # o f c a rg o e s lo a de d pe r da y

L e ge nd

L NG c a rrie r – la d e n L NG c a rrie r – unla d e n

L NG Stor age - 2017

Ja pa n + K

• re a te rmina ls: 633 Bc f

L NG ve sse ls: 751 Bc f

13 17

2017 2020

507 609

751 902

2017 2020

SLIDE 5

Managing thr e e r isks

Busine ss mo d e l 5

Ba sin Ba sis Co nstruc tio n

Ade q ua te na tura l g a s supply Re lia b le a c c e ss to pipe line s Site se le c tio n a nd e xe c utio n Suc c e ssful pr

• je c ts r

e quir e a sophistic ate d str ate gy to manage c omple x r isks

SLIDE 6

Building a lo w-c o st glo bal gas busine ss

6

Pipe line L iq ue fa c tio n Ma rke ting Upstre a m 11,620 a c re s in the Ha yne sville with 1.4 T c f re so urc e ~$7 b illio n(1) o f pipe line infra struc ture pro je c ts in de ve lo pme nt ~$15 b illio n o f liq ue fa c tio n infra struc ture in de ve lo pme nt I nte rna tio na l de live ry o f L NG c a rg o e s sta rte d in 2017 Dr iftwood Holdings par tne r ship – inte gr ate d, low- c ost

No te : (1) HGAP a nd PGAP pro je c ts a re in e a rly sta g e s a nd re ma in unde r re vie w.

Busine ss mo d e l Busine ss mo d e l

SLIDE 7

• T

e lluria n will o ffe r e q uity inte re sts in Driftwo o d Ho lding s

• Driftwo o d Ho lding s will c o nsist o f a Pro duc tio n

Co mpa ny, a Pipe line Ne two rk a nd a n L NG T e rmina l (~27.6 mtpa )

• E

quity will c ost ~$1,500 pe r tonne

• Custo me r/ Pa rtne r will re c e ive e q uity L

NG a t ta ilg a te o f Driftwo o d L NG te rmina l a t c o st

• Va ria ble a nd ope ra ting c osts e xpe c te d to b e

~$3.00/ mmBtu F OB (inc luding ma inte na nc e )

Busine ss mo de l

7

T e lluria n Ma rke ting Pipe line Ne twork Produc tion Compa ny

E quity owne r ship

~40% ~16 mtpa ~12 mtpa

Custome r/ Pa rtne r

~60%

Custome rs

100%

Busine ss mo d e l

Na sda q : T E L L

L NG T e rmina l

• T

e lluria n will re ta in ~12 mtpa a nd ~40% of the a sse ts

• E

stima te d ~$2 billion a nnua l c a sh flow to T e lluria n(1) Driftwood Holding s

No te : (1) Se e slide 16 fo r le ve l o f a nnua l T e lluria n c a sh flo w a t va rio us a ssume d U.S. Gulf Co a st ne tb a c k pric e s a nd ma rg in le ve ls.

SLIDE 8

T e llur ian’s diffe r e ntiating fac to r s

Busine ss mo d e l 8

• Ma na g e me nt

tra c k re c o rd a t Che nie re a nd BG Gro up

• 43% o f T

e lluria n

• wne d b y

fo unde rs a nd ma na g e me nt

• Gua ra nte e d

lump sum turnke y c o ntra c t with Be c hte l

• $15.2 b illio n fo r

27.6 mtpa c a pa c ity

• F

E RC sc he duling no tic e indic a te s pe rmits will b e re c e ive d b y Ja nua ry 2019

• I

nte g ra te d:

― Upstre a m re se rve s ― Pipe line ne two rk ― L

NG te rmina l

• L

NG de live re d F OB U.S. Gulf Co a st a t $3.00/ mmBtu

Wor ld c lass par tne r s F ixe d c ost E PC c ontr ac t Re gulator y c e r tainty E xpe r ie nc e d manage me nt Unique busine ss mode l

SLIDE 9

Dr iftwo o d L NG te r minal

No te : (1) E ng ine e ring , pro c ure me nt a nd c o nstruc tio n c o sts b e fo re o wne rs’ c o sts, fina nc ing c o sts a nd c o nting e nc ie s.

9

Driftwood L NG te rmina l L a nd

• ~1,000 a c re s ne a r L

a ke Cha rle s, L A

Ca pa c ity

• ~27.6 mtpa

T ra ins

• Up to 20 tra ins o f ~1.38 mtpa e a c h
• Cha rt he a t e xc ha ng e rs
• GE

L M6000 PF + c o mpre sso rs

Stora g e

• 3 sto ra g e ta nks
• 235,000 m 3 e a c h

Ma rine

• 3 ma rine b e rths

E PC Cost

• ~$550 pe r to nne
• ~$15.2 b illio n(1)

Ar tist r e ndition

Driftwo o d L NG

SLIDE 10

L NG pr

• je c ts r

e quir e supply o ptio nality

Ba sin

So urc e : IHS, Drilling Info , E IA, T e lluria n a na lysis.

10

26.6 8.3 8.2 5.2 3.2 2.8 2.2 0.7 1.5

5 10 15 20 25 30 Appa la c hia Pe rmia n Ha yne sville E a g le F

• rd

Sc o o p/ Sta c k Ba rne tt Wo o dfo rd F a ye tte ville L NG fe e dg a s re q uire d Bc f/ d

Dry na tura l g a s pro duc tio n b y b a sin, July 2018 ye a r-to -da te

10 mtpa pla nt with 1.5 b c f/ d fe e dg a s re q uire me nt stre sse s b a sin supply

SLIDE 11

Pipe line ne two r k

No te s: (1) Inc lude d in Driftwo o d Ho lding s a t full de ve lo pme nt; c o mme rc ia l a nd re g ula to ry pro c e sse s in pro g re ss a nd fina nc ia l struc turing unde r re vie w.

11 Pipe line ne two rk

Dr iftwood Pipe line (1)

Ca pa c ity (Bc f/ d) 4.0 Co st ($ b illio ns) $2.2 L e ng th (mile s) 96 Dia me te r (inc he s) 48 Co mpre ssio n (HP) 274,000 Sta tus F E RC a ppro va l pe nding

Hayne sville Global Ac c e ss Pipe line (1)

Ca pa c ity (Bc f/ d) 2.0 Co st ($ b illio ns) $1.4 L e ng th (mile s) 200 Dia me te r (inc he s) 42 Co mpre ssio n (HP) 23,000

Pe r mian Global Ac c e ss Pipe line (1)

Ca pa c ity (Bc f/ d) 2.0 Co st ($ b illio ns) $3.7 L e ng th (mile s) 625 Dia me te r (inc he s) 42 Co mpre ssio n (HP) 258,000

Br inging low- c ost gas to Southwe st L

• uisiana

1 2 3 1 2 3

Ope n se a so n c o mple te d (o ve r-sub sc rib e d) a nd fina nc ia l struc ture unde r re vie w Ope n se a so n c o mple te d (o ve r-sub sc rib e d) a nd fina nc ia l struc ture unde r re vie w

SLIDE 12

Dr iftwo o d Ho ldings’ financ ing

Busine ss mo d e l

No te s: (1) Ba se d o n e ng ine e ring , pro c ure me nt, a nd c o nstruc tio n a g re e me nts e xe c ute d with Be c hte l. (2) Appro xima te ly ha lf o f o wne rs’ c o sts re pre se nt c o nting e nc y; the re ma ining a mo unts c o nsist o f c o st e stima te s re la te d to sta ffing prio r to c o mmissio ning , e stima te d impa c t o f infla tio n a nd fo re ig n e xc ha ng e ra te s, spa re pa rts a nd o the r e stima te d c o sts. (3) Re pre se nts the full le ng th o f Driftwo o d pipe line , inc luding e stima te d c o mpre ssio n re q uire me nt. (4) Pre limina ry e stima te o f c e rta in c o sts a sso c ia te d with po te ntia l ma na g e me nt fe e to b e pa id b y Driftwo o d Ho lding s to T e lluria n a nd c e rta in tra nsa c tio n c o sts. (5) Po te ntia l de b t fa c ilitie s to b e b o rro we d b y HGAP a nd PGAP, sub je c t to third-pa rty a g re e me nts o f e a c h pipe line , o r b y Driftwo o d Ho lding s.

12

F ull de ve lopme nt

Ca pa c ity (mtpa ) 27.6 Ca pita l inve stme nt ($ billions)

― L

iq ue fa c tio n te rmina l(1) $ 15.2

― Owne rs’ c o st(2)

$ 1.9

― Driftwo o d pipe line (3)

$ 2.2

― HGAP (Hayne sville & SCOOP/ST

ACK) $ 1.4

― PGAP (Pe rmian)

$ 3.7

― Upstre a m (15 T

c f o f Hayne sville re se rve s) $ 2.2

― T

e lluria n c o sts(4) $ 0.9

T

• ta l c a pita l

$ 27.5

― De b t fina nc ing (5)

$ (3.5)

Ne t Pa rtne rs’ c a pita l $ 24.0 T ra nsa c tion pric e ($ pe r tonne ) $1,500 Ca pa c ity split Mtpa %

─ Pa rtne r

16.0 58%

─ T

e lluria n 11.6 42%

SLIDE 13

Dr iftwo o d Ho ldings’ o pe r ating c o sts

Busine ss mo d e l

T

• tal cost of ~$3/ mmB

tu locks i n low cost of supply

$0.88 $0.36 $0.79 $0.22

$2.25

$0.75

$3.00

Drilling a nd c o mple tio n(1) Ope ra ting Ga the ring , pro c e ssing a nd tra nspo rta tio n(2) Co nting e nc y De live re d c o st L iq ue fa c tio n c o st T

• ta l

So urc e s: Wo o d Ma c ke nzie , T e lluria n Re se a rc h. No te s: (1) Drilling a nd c o mple tio n b a se d o n we ll c o st o f $10.2 millio n, 15.5 Bc f E UR, a nd 75.00% ne t re ve nue inte re st (“NRI”) (8/ 8ths). (2) Ga the ring , pro c e ssing a nd tra nspo rta tio n inc lude s tra nspo rta tio n c o st to Driftwo o d pipe line o r to ma rke t.

13

Upstr e am c ost

$/ mmBtu

L ique fac tion c ost

(1) (2)

SLIDE 14

$- $5 $10 $15 $20 $25 Ja n Jul Ja n Jul Ja n Jul Ja n Jul Ja n Jul Ja n Jul $5 $6 $7 $8 $9 $10 $11 $/ mmBtu Jul-18 Ma r-18 No v-17

Mar gins and pr ic e signals

Busine ss mo d e l

Netback pr i ces to the Gulf Coast

(1)

So urc e s: Pla tts, CME , T e lluria n Re se a rc h. No te s: (1) F

• rwa rd pric e s fo r 2018 a ssuming $2.00/ mmBtu shipping c o st fro m USGC to E

a st Asia using Pla tts JKM. (2) Pla tts Gulf Co a st Ma rke r.

14

2018 J K M for war d pr i ces up $2.33 si nce November 2017

• Avg. 2018

JKM pr ic e up 32% sinc e Nov- 17 Se p 2018 GCM(2) 6 Aug 2018: $8.85/ mmBtu 2013 2014 2015 2016 2017 2018 Q1 Q2 Q3 Q4 2018

$/ mmBtu

$3.00/ mmBtu

SLIDE 15

Re tur ns to Dr iftwo o d Ho ldings’ par tne r s(1)

Busine ss mo d e l 15

U.S. Gulf Coa st ne tba c k pric e ($/ mmBtu) $6.00 $10.00 $15.00 Driftwood L NG, F OB U.S. Gulf Coa st

$(3.00) $(3.00) $(3.00)

Ma rg in ($/ mmBtu)

3.00 7.00 12.00

Annua l pa rtne r c a sh flow ($ millions)(2)

156 364 624

Ca sh on c a sh re turn

10% 24% 42%

Pa yba c k (ye a rs)(3)

10 4 2

No te s: (1) Ba se d o n 1 mtpa o f c a pa c ity in Driftwo o d Ho lding s; a ll e stima te s b e fo re fe de ra l inc o me ta x; do e s no t re fle c t po te ntia l impa c t o f ma na g e me nt fe e s pa id to T e lluria n. (2) Annua l pa rtne r c a sh flo w e q ua ls the ma rg in multiplie d b y 52 mmBtu pe r to nne . (3) Pa yb a c k pe rio d b e g ins a t sub sta ntia l c o mple tio n o f Driftwo o d L NG te rmina l.

SLIDE 16

Value to T e llur ian I nc .

Busine ss mo d e l 16

No te s: (1) $3.00/ mmBtu c o st o f L NG F OB Gulf Co a st. (2) Annua l c a sh flo w e q ua ls the ma rg in multiplie d b y 52 mmBtu pe r to nne ; do e s no t re fle c t po te ntia l impa c t o f ma na g e me nt fe e s pa id to T e lluria n no r G&A. (3) Inc lude s Se a po rt Glo b a l, Stife l, Co we n a nd T uo hy Bro the rs e stima te s a ssuming Q2 2018 g uida nc e . (4) Ca lc ula te d b y multiplying to ta l c a pa c ity re ta ine d b y T e lluria n in e a c h pha se b y $1,500 pe r to nne , disc o unting a t a ra te o f 10% fo r o ne ye a r a nd dividing b y to ta l numb e r o f sha re s o utsta nding (241 millio n sha re s). (5) As o f July 26, 2018.

USGC ne tba c k

($/ mmBtu)

Ma rg in(1)

($/ mmBtu)

Pha se 1(2) F ull de ve lopme nt(2) Annua l c a sh flows

($ millio ns) $ 6.00 $10.00 $15.00 $ 3.00 $ 7.00 $12.00 $ 470 $1,090 $1,870 $1,810 $4,220 $7,240 Analyst e stimate s, NAV and tr ading r ange Cash flow analysis

$0 $10 $20 $30 $40 $50 $60 $70 $80 E q uity a na lyst ta rg e t pric e NAV 52-we e k tra ding ra ng e (5)

(4) (3)

Pha se 1 F ull de ve lo pme nt

$ pe r sha re

SLIDE 17

Mar ke ting pr

• c e ss – Dr

iftwo o d Ho ldings

Busine ss mo d e l

Ac tivity 2018 Q1 Q2 Q3 Q4 L aunc h mar ke ting Nar r

• w c andidate s

Ne gotiate agr e e me nts

17

~25 c usto me r/partne rs in data ro o m F e b 15 Comme r c ialize Phase 1 by Q3 or Q4 2018

SLIDE 18

• A g lo b a l L

NG de mand pull has c oinc ide d with a supply push fro m the U.S., sig na ling the ne e d fo r a dditio na l liq ue fa c tio n c a pa c ity

• Suc c e ssful pro je c ts ma na g e risks re la te d to c onstr

uc tion o f infra struc ture , supply basin o ptio na lity,

a nd tra nspo rta tio n basis

• T

e lluria n’ s b usine ss mo de l pro vide s inve sto rs with a c c e ss to the U.S. inte g ra te d g a s va lue c ha in, de live ring low- c ost, fle xible L

NG globally

• E

xpe r ie nc e d manage me nt a nd str ate gic par tne r s

• Co nsiste ntly e xe c uting on time line o f de ve lo pme nt
• Sig nific a nt ne a r-te rm e quity upside
• 43% of T

e llur ian o wne d b y founde r s and manage me nt

Co nc lusio ns

18 Co nc lusio ns

SLIDE 19

Co ntac t us

• Amit Mar

waha

Dire c to r, I nve sto r Re la tio ns & F ina nc e +1 832 485 2004 a mit.ma rwa ha @ te lluria ninc .c o m

• Joi L

e c znar

SVP, Pub lic Affa irs & Co mmunic a tio n +1 832 962 4044 jo i.le c zna r@ te lluria ninc .c o m @ T e lluria nL NG

19 Co nta c ts

SLIDE 20

2017

Additio nal de tail

SLIDE 21

Site c har ac te r istic s de te r mine lo ng -r un c o sts

Ad d itio na l d e ta il 21

Ac c e ss to powe r a nd wa te r

Be r th o ve r 45’ de pth with

a c c e ss to hig h se a s Suppo rt fro m loc al

c ommunitie s

Ac c e ss to pipe line

infr astr uc tur e Site size o ve r 1,000 a c re s Insulate d fro m surg e , wind,

a nd lo c a l po pula tio ns

SLIDE 22

E quipme nt and mate r ials Dir e c t labor Ove r he ad (mostly labor ) Continge nc y and pr

• visional

sums Owne r s' c osts

Co nstr uc tio n budge t br e akdo wn(1)

Ad d itio na l d e ta il

No te s: (1) Ba se d o n Driftwo o d L NG full de ve lo pme nt. (2) Inc lude s a dditio na l c o nting e nc y b y de ve lo pe r a nd sta ffing prio r to c o mme nc e me nt o f o pe ra tio ns. (3) Pro visio na l sum inc lude s e sc a la tio n fa c to r fo r infla tio n, insura nc e , fo re ig n e xc ha ng e , a nd o the r c o sts.

22

24% 24% 24% 12% 17%

(3) (2)

SLIDE 23

Owning pipe line infr astr uc tur e mitigate s basis r isk

Ad d itio na l d e ta il 23

Can you r eac h your sel ec ted basin? F

• r

how l

• ng?

T

• lling mode l

SPA mode l E quity mode l

Custo me r inc urs risk

Compe tition be twe e n c ustome r s

fo r pipe line a c c e ss le a ds to

hidde n c osts a nd hig he r c o st o f

L NG o n the wa te r

De ve lo pe r inc urs risk

De ve lo pe r c o nso lida te s pipe line tra nspo rt, b ut still a pr

ic e take r fo r

tra nspo rta tio n se rvic e s; de ve lo pe r

• nly ha s 5% o f He nry Hub pric e to pa y

fo r tra nspo rt

Own the infra struc ture

T rue c ost c ontr

• l a nd

tr anspar e nc y fro m o wning a nd

ma na g ing pipe line tra nspo rta tio n

SLIDE 24

L

• w-c o st L

NG is built be fo r e the fe nc e line

Ad d itio na l d e ta il 24

Pipe line a c c e ss a nd c o ntro l

• f infra struc ture is ke y

Ade q ua c y a nd re lia b ility

• f supply is c ritic a l

All-in c o st is pre dic ta b le , b ut e xe c utio n a nd sc a le ma tte r

Ba sin Ba sis Co nstruc tio n

Illustr ative c ost inflation

+$1-$2/ mmBtu in c o sts fro m lo ng -te rm c o st e sc a la tio n a s le g a c y a g re e me nts ro ll o ff +$1-$2/ mmBtu in lo ng -te rm c o st e sc a la tio n fro m e xha usting lo we st-c o st drilling lo c a tio ns in o ne b a sin +$200-$300 pe r to nne o r $0.40-$0.60/ mmBtu c o st infla tio n due to po o r e xe c utio n

SLIDE 25

Co r pus Chr isti L NG and Dr iftwo o d L NG e xample s

Ad d itio na l d e ta il

So urc e : Che nie re Ana lyst Da y pre se nta tio n (2018) a nd T e lluria n a na lysis. No te s: (1) Inc lude s a ppro xima te ly $0.4 b illio n in c o sts fo r a dditio na l c o mpre ssio n o n Driftwo o d pipe line in 3-pla nt c a se . (2) F

• r Co rpus Christi L

NG, c o mb ine d o wne rs’ c o sts a nd c o nting e nc y fro m pa g e 18 o f Che nie re Ana lyst Da y pre se nta tio n. F

• r Driftwo o d L

NG, inc lude s o wne rs’ c o sts a nd T e lluria n c o sts pre se nte d o n slide 26.

25

($ billions) Corpus Christi L NG Driftwood L NG T 1- 2 T 3 T 1- 3 Pla nts 1- 3

Ca pa c ity (mtpa ) 9.0 4.5 13.5 16.5

― E

PC $7.8 $2.4 $ 10.2 $ 10.3

― Pipe line

$0.4 $0.0 $ 0.4 $ 1.5(1)

― Owne rs’ c o st & c o nting e nc y(2)

$1.4 $0.5 $ 1.9 $ 2.4

T

• ta l c ost

$9.6 $2.9 $12.5 $ 14.2 Unle ve re d c ost ($ pe r tonne ) $1,070 $645 $925 $860

• Doe s not inc lude G&A to ma na g e the proje c t
• Cost of fina nc ing is ~$300- $400 pe r tonne
• De la ys c ost $150 pe r tonne pe r ye a r

SLIDE 26

Dr iftwo o d Ho ldings’ financ ing

Ad d itio na l d e ta il

No te s: (1) Ba se d o n e ng ine e ring , pro c ure me nt, a nd c o nstruc tio n a g re e me nts e xe c ute d with Be c hte l. (2) Appro xima te ly ha lf o f o wne rs’ c o sts re pre se nt c o nting e nc y; the re ma ining a mo unts c o nsist o f c o st e stima te s re la te d to sta ffing prio r to c o mmissio ning , e stima te d impa c t o f infla tio n a nd fo re ig n e xc ha ng e ra te s, spa re pa rts a nd o the r e stima te d c o sts. (3) Re pre se nts e stima te d c o sts o f de ve lo ping Driftwo o d pipe line b a se d o n g a s fe e dsto c k re q uire me nts o f the po te ntia l pha se d de ve lo pme nt

• f Driftwo o d L

NG te rmina l, inc luding e stima te d c o mpre ssio n re q uire me nt. (4) Pre limina ry e stima te o f c e rta in c o sts a sso c ia te d with po te ntia l ma na g e me nt fe e to b e pa id b y Driftwo o d Ho lding s to T e lluria n a nd c e rta in tra nsa c tio n c o sts. (5) Po te ntia l de b t fa c ilitie s to b e b o rro we d b y HGAP a nd PGAP, sub je c t to third-pa rty a g re e me nts o f e a c h pipe line , o r b y Driftwo o d Ho lding s.

26

2- Plant Case 3- Plant Case F ull de ve lopme nt Capac ity (mtpa) 11.0 16.6 27.6 Capital inve stme nt ($ billions)

―

L iq ue fa c tio n te rmina l(1) $ 7.6 $ 10.3 $ 15.2

―

Owne rs’ c o st(2) $ 1.1 $ 1.5 $ 1.9

―

Driftwo o d pipe line (3) $ 1.1 $ 1.5 $ 2.2

―

HGAP (Hayne sville & SCOOP/ST ACK)

• $ 1.4

$ 1.4

―

PGAP (Pe rmian)

• $ 3.7

$ 3.7

―

Upstre a m (15 T c f o f Hayne sville re se rve s) $ 2.2 $ 2.2 $ 2.2

―

T e lluria n c o sts(4)

• $ 0.9

$ 0.9

T

• tal c apital

$ 12.0 $ 21.5 $ 27.5

―

De b t fina nc ing (5)

• $ (3.5)

$(3.5)

Ne t Par tne r s’ c apital $ 12.0 $ 18.0 $ 24.0 T r ansac tion pr ic e ($ pe r tonne ) $1,500 $1,500 $1,500 Capac ity split Mtpa % Mtpa % Mtpa %

─

Pa rtne r 8 72% 12 72% 16.0 58%

─

T e lluria n 3 28% 4.6 28% 11.6 42%

SLIDE 27

Re gulato r y and c o st c e r tainty

Ad d itio na l d e ta il

Re gulator y sc he dule c lar ity Guar ante e d lump sum tur nke y c ontr ac t with Be c hte l

27

Ca ta lyst E stima te d time line

F ina l E nviro nme nta l I mpa c t Sta te me nt 12 Oc to b e r 2018 F E RC o rde r a nd F e de ra l Autho riza tio n De a dline 10 Ja nua ry 2019 Driftwo o d fina l inve stme nt de c isio n 1H 2019 Be g in c o nstruc tio n 1H 2019 Be g in o pe ra tio ns 2023

11.0 27.6 $700 $550

Pha se 1 F ull de ve lo pme nt

$ pe r tonne mtpa

SLIDE 28

Pr

• duc tio n Co mpany str

ate gy

• Ac q uire a nd de ve lo p long - life , low- c ost na tura l g a s

re sourc e s

― L

• w g e o lo g ic a l risk

― Sc a la b le po sitio n ― Pro duc tio n o f ~1.5 Bc f/ d sta rting in 2022 ― T

• ta l re so urc e s o f ~15 T

c f fo r Pha se 1

― Ope ra to rship ― L

• w o pe ra ting c o sts

― F

le xib le de ve lo pme nt

• I

nitia lly fo c use d o n Ha yne sville b a sin; in c lo se pro ximity to sig nific a nt de ma nd g ro wth, lo w de ve lo pme nt risk, a nd fa vo ra b le e c o no mic s

• T

a rg e t is to de live r g a s fo r $2.25/ mmBtu

• T

e lluria n a c q uire d 11,620 ne t a c re s in the Ha yne sville sha le fo r $87.8 million in Q4 2017

• Prima rily lo c a te d in De So to a nd Re d Rive r pa rishe s
• 80% HBP
• 94% o pe ra te d
• 100% g a s
• Curre nt ne t pro duc tio n – 4 mmc f/ d
• Ope ra te d pro duc ing we lls – 19
• I

de ntifie d de ve lo pme nt lo c a tio ns – ~178

• T
• ta l ne t re so urc e – ~1.4 T

c f o r ~10% o f to ta l re so urc e

re q uire d fo r Pha se 1

Ad d itio na l d e ta il

Obje c tive s Cur r e nt asse ts

28

SLIDE 29

<~9 T c f ~9 to ~15 T c f >~15 T c f

>100 T c f available r e so ur c e s in Hayne sville

Ad d itio na l d e ta il

So urc e s: IHS E ne rde q ; 1De rric k; inve sto r pre se nta tio ns; T e lluria n re se a rc h. No te : (1) E stima te d re so urc e s b a se d o n a c re a g e .

29

Dr iftwood Holdings plans to fund and pur c hase 15 T c f

Pote ntia l a c quisition ta rg e ts: Ra ng e of re sourc e s pe r ta rg e t (T c f)(1): T a rg e t size : L a rg e Me dium Sma ll

15 15 9 9

SLIDE 30

100 200 300 400 500 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

De mand pull

Ad d itio na l d e ta il

De mand outlook

So urc e s: Wo o d Ma c ke nzie , T e lluria n Re se a rc h. No te s: (1) Assume s 85% utiliza tio n ra te . (2) Ba se d o n a ssumptio n tha t L NG de ma nd g ro ws a t 4.5% p.a . po st-2020.

30

127 mtpa of ne w lique fa c tion c a pa c ity re quire d by 2025(1)

mtpa Unde r c o nstruc tio n I n o pe ra tio n De ma nd (2) 107 mtpa

SLIDE 31

13 Bc f/ d

6 1 8 1 4

U.S. natur al gas ne e ds glo bal mar ke t ac c e ss

Ad d itio na l d e ta il 31

13 B cf/ d of i ncr emental pr

• ducti
• n; associ

ated gas at r i sk of flar i ng wi thout i nfr astr uct ur e i nvestment

So urc e s: E IA; ARI; T e lluria n a na lysis. No te : (1) $1,000 pe r to nne a ve ra g e .

• L

NG e xpo rt c a pa c ity re q uire d:

―At le a st 100 mtpa : 13 Bc f/ d (20

Bc f/ d le ss ~7 unde r c o nstruc tio n)

― ~$100 b illio n(1)

• Pipe line c a pa c ity re q uire d:

―Aro und 20 Bc f/ d ―~$70 b illio n

L NG lique fac tion te r minal

Ope ra ting / und e r c o nstruc tio n F uture E xpo rt c a pa c ity

20

T

• tal e stimate d 2017- 2025

pr

• duc tion gr
• wth, Bc f/ d

Re quir e d futur e inve stme nt:

• ~$170 b illio n
• Up to 13 Bc f/ d e xpo rt c a pa c ity

SLIDE 32

$25 millio n

2018

Pipe line

• pe n

se a so ns $50 millio n $207 millio n Me rg e r $100 millio n Upstre a m a c q uisitio n L ST K

Apr il/ De c e mbe r Januar y F e br uar y June Nove mbe r De c e mbe r F e b/ Mar c h Mar c h June

Ma na g e me nt, frie nds a nd fa mily inve st $60 millio n in T e lluria n in April/ GE inve sts $25 millio n in T e lluria n T OT AL inve sts $207 millio n in T e lluria n Me rg e with Ma g e lla n Pe tro le um, g a ining a c c e ss to pub lic ma rke ts Be c hte l, Cha rt I ndustrie s a nd GE c o mple te the fro nt-e nd e ng ine e ring a nd de sig n (F E E D) study fo r Driftwo o d L NG Ac q uire Ha yne sville a c re a g e , pro duc tio n a nd ~1.4 T c f E xe c ute L ST K E PC c o ntra c t with Be c hte l fo r ~$15 b illio n Ra ise a ppro xima te ly $100 millio n pub lic e q uity Anno unc e

• pe n se a so ns

fo r Ha yne sville Glo b a l Ac c e ss Pipe line a nd Pe rmia n Glo b a l Ac c e ss Pipe line Be c hte l inve sts $50 millio n in T e lluria n Ra ise a ppro xima te ly $115 millio n pub lic e q uity

2017 2016

Building a lo w-c o st glo bal gas busine ss

32

$115 millio n $60 millio n

Ad d itio na l d e ta il

SLIDE 33

T

• ta l

19%

• C. So uki

23%

• M. Ho usto n

10%

• M. Ge ntle

5% E mplo ye e s a nd Dire c to rs 5% F re e F lo a t 38%

F unding and o wne r ship

Mg mt, fa mily a nd frie nds, $60 GE inve stme nt, $25 T

• ta l

inve stme nt, $207 Pub lic e q uity

• ffe ring s,

$224 AT M pro g ra m, $10 Be c hte l inve stme nt, $50

S

• ur

c es(1) ($ mil l i

• n)

No te s: (1) As o f July 31, 2018. (2) E xc lude s 6.1 millio n pre fe rre d sha re s o utsta nding .

33

Owner ship(1)(2) (%)

$576 million 241 million shar e s

Ad d itio na l d e ta il

SLIDE 34

Dr iftwo o d vs. c o mpe tito r s – c o st pe r to nne

So urc e s: Wo o d Ma c ke nzie , T he Wo rld Ba nk, T e lluria n Re se a rc h. No te : (1) T he Wo rld Ba nk b a se s the L

• g istic s Pe rfo rma nc e Inde x (L

PI) o n surve ys o f o pe ra to rs to me a sure lo g istic s “frie ndline ss” in re spe c tive c o untrie s whic h is supple me nte d b y q ua ntita tive da ta o n the pe rfo rma nc e o f c o mpo ne nts o f the lo g istic s c ha in.

34 $1,428 $1,500 $1,603 $1,654 $2,083 $2,657 $3,774 $4,144 $5,025 Qa ta r Ne w Me g a tra in Driftwo o d Mo za mb iq ue Are a 4 Ya ma l L NG Ca na da APL NG Go rg o n Whe a tsto ne I c hthys $ pe r to nne

Capac ity, mtpa

9.5 27.6 10.0 16.5 13.0 9.0 15.6 9.0 8.9

L PI global r anking (1):

3.6 4.0 2.7 2.6 3.9 3.8 3.8 3.8 3.8 Ad d itio na l d e ta il

SLIDE 35

I nte gr ate d mo de l pr e vale nt inte r natio nally

So urc e : IHS.

35

Proje c ts inc lude :

Austra la sia

APL NG, Da rwin, GL NG, Go rg o n, Ic hthys, NWS, Pluto , No rthwe st She lf, QCL NG, Whe a tsto ne , PNG L NG, T a ng g uh, Brune i L NG, Do ng g i-Se no ro , ML NG, Ya ma l L NG

Mide a st/ Afric a

Ang o la L NG, E G L NG, Da mie tta , E L NG, Ye me n L NG, Mo za mb iq ue L NG, Co ra l L NG, Oma n L NG, Qa lha t L NG, Qa ta rg a s I-I V, Ra sGa s I-I I I , ADGAS

Ame ric a s

Atla ntic L NG, Pe ru L NG, L NG Ca na da

E uro pe

Sno hvit, Ya ma l L NG

E ur

• pe

Austr a la sia NOC IOC

Ad d itio na l d e ta il

SLIDE 36

• 12

24 36 48

Sa b ine Ca me ro n Co ve Po int Co rpus So uthe rn F re e po rt DWL NG Ma g no lia Go lde n Pa ss L a ke Cha rle s Ve nture Glo b a l Pre -filing F E RC a pplic a tio n

Dr iftwo o d sc he dule

Ad d itio na l d e ta il

No te : (1) Pro je c ts unde r E nviro nme nta l Asse ssme nt (E A), a ll o the r pro je c ts re q uire d a n E nviro nme nta l Impa c t Sta te me nt (E IS), whic h e nta ils a lo ng e r re vie w pro c e ss with F E RC.

36

Se c ond wave F ir st wave Mo nths

(1) (1) (1)

SLIDE 37

K e y te rms o f E PC a g re e me nts with Be c hte l

Ad d itio na l d e ta il 37

T ra ins 8 4 4 4 20 Sto ra g e fa c ilitie s 2 1 3 Be rths 1 1 1 3 $700 pe r to nne $490 $500 $380

~$550 Pha se 1 Pha se 2 Pha se 3 Pha se 4 T

• ta l

11.0 5.5 5.5 5.5 27.6

Ca pa c ity

SLIDE 38

Pipe line Ne two r k

38

Gillis Ma rke t Are a

• KMPL
• T

E T CO

• T

runkline

• T

ra nsc o

• T

e nn Ga s

• CT

PL

• Ca me ro n
• F

GT

• DWPL
• E

GAN

• T

e xa s Ga s

• Pine Pra irie
• ANR
• CGT

Inte r c onne c ts

Pe rmia n Supply Are a

• E

T C –Co ma nc he T ra il

• E

T C – T ra ns-Pe c o s

• E

T C – Oa sis

• Va q ue ro
• One OK We sT

e x

• OXY
• E

nte rprise

• Ja l
• E

l Pa so

• White Wa te r
• NGPL
• No rthe rn Na tura l

Ga s

• T

ra nsWe ste rn

• Atmo s

Inte r c onne c ts

Ha yne sville Supply Are a

• Cro sste x
• Re g e nc y (RIGS)
• Ac a dia n
• ME

P

• Gulf Cro ssing
• Ce nte rPo int
• T

e lluria n Pro duc tio n Co .

• T

e nn Ga s

• E

T C – T ig e r

• T

e xa s Ga s

• Gulf So uth

Inte r c onne c ts

Pr

• pose d pipe line s

DWPL DWPL inte rc o nne c ts

Ad d itio na l d e ta il

Pr

• pose d pipe line s

PGAP PGAP inte rc o nne c ts Pr

• pose d pipe line s

HGAP HGAP inte rc o nne c ts

SLIDE 39

PGAP c o nne c ts c o nstr aine d gas to SWL A

Ad d itio na l d e ta il

T ake away c onstr aints in the Pe r mian Southwe st L

• uisiana de mand

So urc e s: Co mpa ny da ta , Go ldma n Sa c hs, We lls F a rg o E q uity Re se a rc h, RBN E ne rg y, T e lluria n e stima te s. No te s: (1) L NG de ma nd b a se d o n a mb ie nt c a pa c ity. (2) Inc lude s Driftwo o d L NG, Sa b ine Pa ss L NG T 1-3, Ca me ro n L NG T 1-3, SASOL , L a ke Cha rle s CCGT , G2X Big L a ke F ue ls, L ACC – L

• tte a nd We stla ke Che mic a l.

39

L o u i s i a n a Te x a s G u l f o f M e x i c o

Gillis, L A E unic e , L A

Dr iftwood L NG Came r

• n L

NG Sabine Pass L NG 4 12 2017 2024 Southwe st L

• uisiana fir

m de mand(1)(2) (bc f/ d)

2 4 6 8 10 12 14 16 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Bc f/ d

No rth Me xic o E a st We st Pe rmia n pro duc tio n

SLIDE 40

Hayne sville type c ur ve c o mpar iso n

Compar ative type c ur ve statistic s Cumulative pr

• duc tion nor

malize d to 7,500’(3)

So urc e : Co mpa ny inve sto r pre se nta tio ns. No te s: (1) Assume s 75.00% ne t re ve nue inte re st (“NRI”) (8/ 8ths). (2) Assume s g a s pric e s o f $3.00/ mc f b a se d o n NRI a nd re turns pub lishe d spe c ific to e a c h o pe ra to r. (3) 7,500’ e stima te d ultima te re c o ve ry (“E UR”) = o rig ina l la te ra l le ng th E UR + ((7,500’ -o rig ina l la te ra l le ng th) * 0.75 * (o rig ina l la te ra l le ng th E UR / o rig ina l la te ra l le ng th)).

40

0.0 1.0 2.0 3.0 4.0 5.0 6.0 30 60 90 120 150 180 210 240 270 300 Bcf Days

Peer B Peer D Peer A Peer C Tellurian T e lluria n Pe e r A Pe e r B Pe e r C Pe e r D T ype c urve de ta il Are a De So to / Re d Rive r No rth L

• uisia na

De So to NL A De So to c o re NL A c o re / b le nde d de ve lo pme nt pro g ra m Co mple tio n (lb s. / ft.)

• 4,000

3,800 2,700 3,000

Sing le we ll sta ts

L a te ra l le ng th (ft.) 6,950' 7,500' 7,500' 4,500' 9,800' Gro ss E UR (Bc f) 15.5 18.8 18.6 9.9 19.9

E UR pe r 1,000' ft. (Bc f) 2.20 2.50 2.48 2.20 2.03

Gro ss D&C ($ millio ns) $10.20 $10.20 $8.50 $7.70 $10.30 F &D ($/ mc f)(1) $0.88 $0.73 $0.61 $1.04 $0.69

T ype c urve e c onomic s

Be fo re -ta x I RR (%)(2) 43% 60% 90%+ 54%

• Ad d itio na l d e ta il