Tellurian Inc. ( TELL ) disclosed a deal for Aethon Energy Management to acquire the company’s integrated upstream assets for $260 million, alongside a Heads of Agreement for Aethon to purchase two million tons per annum (mtpa) of liquified natural gas (LNG) from its Driftwood LNG plant.

The deal will expand Aethon’s footprint in the Louisiana Haynesville and Bossier shale basins with around 31,000 net acres, including gathering and treating systems with capacity for up to 100 million cubic feet per day (MMcf/d).

The Heads of Agreement includes the parties negotiating a 20-year offtake agreement, which would be indexed to Henry Hub plus a liquefaction fee, with appropriate credit support, to offer the basis for project financing of Driftwood LNG.

The transaction is expected to close in the second quarter of 2024. Tellurian plans to use the proceeds to reduce borrowings and for general corporate purposes.

Tellurian Executive Chairman Martin Houston said, “For Tellurian, the proceeds from the sale of our upstream assets allow us to retire senior secured notes and strengthen our balance sheet for the long term. This is an important moment for our company, as Tellurian continues to make progress against our strategic plan.”

Investors can gain exposure to the stock via Exchange Traded Concepts Trust Range Global LNG Ecosystem Index ETF and SPDR S&P Oil & Gas Explor & Product .

Price Action: TELL shares are down 12.2% at $0.4923 at the last check Wednesday.