U.S. LNG developer Tellurian ousts co-founder Souki as chairman
HOUSTON, Dec 8 (Reuters) - Tellurian ousted its chairman and co-founder Charif Souki as an executive officer, the U.S. liquefied natural gas (LNG) developer said on Friday, weeks after auditors raised doubts about the company's ability to cover future expenses.
Souki helped create the U.S. LNG export market in 1996 after seizing on discoveries of vast amounts of shale gas. He turned Cheniere Energy from an LNG importer into a major exporter, but has been unable to repeat the same success at Tellurian.
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Souki was pushed out of Cheniere Energy and co-founded Tellurian in 2016 with Martin Houston, who will replace him as chairman. Souki will remain on the company's board, Tellurian said.
Shares of company rose 4% in extended trading to 78 cents. The stock had traded as high as $11.19 in 2019 but fell after initial backers of its crucial Driftwood export project, including LNG traders Vitol and Shell, withdrew as potential customers.
Tellurian has changed its Driftwood strategy several times over the years, never attracting enough potential clients for the first, $14.5 billion phase of the 27.6 million metric ton per annum facility.
Last month, auditors put a going concern warning on its financial statements. It had begun construction on the first phase using cash from selling equity and from a small gas-production unit.
The management change is "an indication of change in direction and arguably a sign of greater discipline in the company and greater focus on profitability," said Ben Dell, managing partner at Kimmeridge, a private equity firm. Dell has been critical of Souki's spending and strategic flip-flops.
Tellurian has lost potential customers for Driftwood over the years. In August, Tellurian revealed that trader Gunvor Singapore Pte Ltd terminated its contract to take cargoes.
Souki's ouster shows Tellurian needed to do something big to salvage the company's prospects, with so much tied to the success or failure of its Driftwood LNG project, said Alex Munton, director of global gas and LNG research at consulting firm Rapidan Group.
"The company is still very focused on executing on its plan to complete construction of Driftwood LNG, and Souki recently said it had all but resorted to the tried and tested method of U.S. LNG projects, which he, Souki, was never in favor of," said Munton. (Reporting by Arunima Kumar in Bengaluru, Curtis Williams and Gary McWilliams in Houston; Editing by Shailesh Kuber and Richard Chang)