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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 001-5507
tell-20220630_g1.jpg
Tellurian Inc.
(Exact name of registrant as specified in its charter)
Delaware 06-0842255
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer Identification No.)
1201 Louisiana Street,Suite 3100,Houston,TX 77002
(Address of principal executive offices) (Zip Code)
(832) 962-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common stock, par value $0.01 per shareTELLNYSEAmerican LLC
8.25% Senior Notes due 2028TELZNYSEAmerican LLC
Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨
    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company



    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No x
    As of July 28, 2022, there were 568,620,208 shares of common stock, $0.01 par value, issued and outstanding.
Tellurian Inc.
TABLE OF CONTENTS
Page
Item 1.Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations
Condensed Consolidated Statement of Changes in Stockholders’ Equity
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Item 4.Controls and Procedures
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.Other Information
Item 6.Exhibits




Cautionary Information About Forward-Looking Statements
The information in this report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical facts, that address activity, events, or developments with respect to our financial condition, results of operations, or economic performance that we expect, believe or anticipate will or may occur in the future, or that address plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “assume,” “believe,” “budget,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “initial,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “project,” “proposed,” “should,” “will,” “would” and similar terms, phrases, and expressions are intended to identify forward-looking statements. These forward-looking statements relate to, among other things:
our businesses and prospects and our overall strategy;
planned or estimated costs or capital expenditures;
availability of liquidity and capital resources;
our ability to obtain financing as needed and the terms of financing transactions, including for the Driftwood Project;
revenues and expenses;
progress in developing our projects and the timing of that progress;
future values of the Company’s projects or other interests, operations or rights; and
government regulations, including our ability to obtain, and the timing of, necessary governmental permits and approvals.
Our forward-looking statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. These statements are subject to a number of known and unknown risks and uncertainties, which may cause our actual results and performance to be materially different from any future results or performance expressed or implied by the forward-looking statements. Factors that could cause actual results and performance to differ materially from any future results or performance expressed or implied by the forward-looking statements include, but are not limited to, the following:
the uncertain nature of demand for and price of natural gas and LNG;
risks related to shortages of LNG vessels worldwide;
technological innovation which may render our anticipated competitive advantage obsolete;
risks related to a terrorist or military incident involving an LNG carrier;
changes in legislation and regulations relating to the LNG industry, including environmental laws and regulations that impose significant compliance costs and liabilities;
governmental interventions in the LNG industry, including increases in barriers to international trade;
uncertainties regarding our ability to maintain sufficient liquidity and attract sufficient capital resources to implement our projects;
our limited operating history;
our ability to attract and retain key personnel;
risks related to doing business in, and having counterparties in, foreign countries;
our reliance on the skill and expertise of third-party service providers;
the ability of our vendors, customers and other counterparties to meet their contractual obligations;
risks and uncertainties inherent in management estimates of future operating results and cash flows;
our ability to maintain compliance with our debt arrangements;
changes in competitive factors, including the development or expansion of LNG, pipeline and other projects that are competitive with ours;
development risks, operational hazards and regulatory approvals;



our ability to enter into and consummate planned financing and other transactions;
risks related to pandemics or disease outbreaks;
risks of potential impairment charges and reductions in our reserves; and
risks and uncertainties associated with litigation matters.
The forward-looking statements in this report speak as of the date hereof. Although we may from time to time voluntarily update our prior forward-looking statements, we disclaim any commitment to do so except as required by securities laws.
DEFINITIONS
    To the extent applicable, and as used in this quarterly report, the terms listed below have the following meanings:
BcfBillion cubic feet of natural gas
DD&ADepreciation, depletion and amortization
DFCDeferred financing costs
EPCEngineering, procurement and construction
FIDFinal investment decision as it pertains to the Driftwood Project
GAAPGenerally accepted accounting principles in the U.S.
LNGLiquefied natural gas
LSTKLump sum turnkey
MtpaMillion tonnes per annum
NYSE AmericanNYSE American LLC
Phase 1Plants one and two of the Driftwood terminal
TrainAn industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
U.S.United States
USACEU.S. Army Corps of Engineers




PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts, unaudited)
June 30, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$823,522 $305,496 
Accounts receivable31,975 9,270 
Prepaid expenses and other current assets22,210 12,952 
Total current assets877,707 327,718 
Property, plant and equipment, net409,150 150,545 
Deferred engineering costs 110,025 
Other non-current assets54,085 33,518 
Total assets$1,340,942 $621,806 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$5,123 $2,852 
Accrued and other liabilities 69,970 85,946 
Borrowings162,848  
Total current liabilities237,941 88,798 
Long-term liabilities:
Borrowings381,072 53,687 
Finance lease liabilities50,034 50,103 
Other non-current liabilities18,161 10,917 
Total long-term liabilities449,267 114,707 
Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 authorized:
6,123,782 and 6,123,782 shares outstanding, respectively
61 61 
Common stock, $0.01 par value, 800,000,000 authorized:
568,620,208 and 500,453,575 shares outstanding, respectively
5,454 4,774 
Additional paid-in capital1,645,920 1,344,526 
Accumulated deficit(997,701)(931,060)
Total stockholders’ equity653,734 418,301 
Total liabilities and stockholders’ equity$1,340,942 $621,806 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
1


TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenues:
Natural gas sales$61,350 $5,578 $87,339 $14,284 
LNG sales 19,776 120,951 19,776 
Total revenues61,350 25,354 208,290 34,060 
Operating costs and expenses:
LNG cost of sales 22,847 131,663 22,847 
Operating expenses5,943 2,520 10,108 4,926 
Development expenses17,687 9,363 35,352 17,504 
Depreciation, depletion and amortization5,854 2,333 9,875 4,985 
General and administrative expenses23,514 17,426 55,839 32,537 
Total operating costs and expenses52,998 54,489 242,837 82,799 
Income (loss) from operations8,352 (29,135)(34,547)(48,739)
Interest expense, net(4,566)(829)(6,846)(6,721)
(Loss) gain on extinguishment of debt, net (152) 1,422 
Other expense, net(3,821)(482)(25,249)(3,545)
Loss before income taxes(35)(30,598)(66,642)(57,583)
Income tax    
Net loss$(35)$(30,598)$(66,642)$(57,583)
Net loss per common share(1):
Basic and diluted$0.00 $(0.08)$(0.13)$(0.16)
Weighted-average shares outstanding:
Basic and diluted534,521 386,045 515,338 371,442 
(1) The numerator for both basic and diluted loss per share is net loss. The denominator for both basic and diluted loss per share is the weighted-average shares outstanding during the period.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
2


TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Total shareholders’ equity, beginning balance$524,655 $181,906 $418,301 $109,090 
Preferred stock61 $61 61 61 
Common stock:
Beginning balance5,229 3,779 4,774 3,309 
Common stock issuances223 251 677 638 
Share-based compensation, net2 18 2 41 
Share-based payment— 1 
Warrant exercises— — — 60 
Ending balance5,454 4,048 5,454 4,048 
Additional paid-in capital:
Beginning balance1,517,031 1,021,373 1,344,526 922,042 
Common stock issuances127,859 92,950 299,063 181,726 
Share-based compensation, net811 2,492 1,716 5,148 
Share-based payments219 — 616 — 
Warrant exercises— — — 8,117 
Warrant cancellation— — — (218)
Ending balance1,645,920 1,116,815 1,645,920 1,116,815 
Accumulated deficit:
Beginning balance(997,666)(843,307)(931,059)(816,322)
Net loss(35)(30,598)(66,642)(57,583)
Ending balance(997,701)(873,905)(997,701)(873,905)
Total shareholders’ equity, ending balance$653,734 $247,019 $653,734 $247,019 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
3


TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Six Months Ended June 30,
20222021
Cash flows from operating activities:
Net loss$(66,642)$(57,583)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization9,875 4,985 
Amortization of debt issuance costs, discounts and fees580 3,061 
Share-based compensation1,718 3,129 
Share-based payments616  
Interest elected to be paid-in-kind 508 
Loss on financial instruments not designated as hedges13,472 927 
Net gain on extinguishment of debt (1,422)
Other555 562 
Net changes in working capital (Note 15)
(43,672)14,879 
Net cash used in operating activities(83,498)(30,954)
Cash flows from investing activities:
Development of natural gas properties(66,500)(6,139)
Driftwood Project construction costs(68,725) 
     Land purchases and land improvements(17,425)(611)
Investment in unconsolidated entity(6,089) 
Net cash used in investing activities(158,739)(6,750)
Cash flows from financing activities:
Proceeds from common stock issuances309,021 188,040 
Equity issuance costs(9,281)(5,677)
Borrowing proceeds501,178  
Borrowing issuance costs(11,488) 
Borrowing principal repayments (119,725)
Tax payments for net share settlement of equity awards (Note 15)
 (2,990)
Proceeds from warrant exercises 8,177 
Other(3,063)(1)
Net cash provided by financing activities786,367 67,824 
Net increase in cash, cash equivalents and restricted cash544,130 30,120 
Cash, cash equivalents and restricted cash, beginning of period307,274 81,738 
Cash, cash equivalents and restricted cash, end of period$851,404 $111,858 
Supplementary disclosure of cash flow information:
Interest paid$4,928 $3,099 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 1 — GENERAL
The terms “we,” “our,” “us,” “Tellurian” and the “Company” as used in this report refer collectively to Tellurian Inc. and its subsidiaries unless the context suggests otherwise. These terms are used for convenience only and are not intended as a precise description of any separate legal entity associated with Tellurian Inc.
Nature of Operations
Tellurian is developing and plans to own and operate a portfolio of natural gas, LNG marketing, and infrastructure assets that includes an LNG terminal facility (the “Driftwood terminal”), an associated pipeline (the “Driftwood pipeline”), other related pipelines, and upstream natural gas assets. The Driftwood terminal and the Driftwood pipeline are collectively referred to as the “Driftwood Project.”
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our consolidated financial position, results of operations or cash flows.
To conform with GAAP, we make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements and the accompanying notes. Although these estimates and assumptions are based on our best available knowledge at the time, actual results may differ.
Liquidity
Our Condensed Consolidated Financial Statements have been prepared in accordance with GAAP, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business as well as the Company’s ability to continue as a going concern. As of the date of the Condensed Consolidated Financial Statements, we have generated losses and negative cash flows from operations, and have an accumulated deficit. We have not yet established an ongoing source of revenues that is sufficient to cover our future operating costs and obligations as they become due during the twelve months following the issuance of the Condensed Consolidated Financial Statements.
The Company has sufficient cash on hand and available liquidity to satisfy its obligations and fund its working capital needs for at least twelve months following the date of issuance of the Condensed Consolidated Financial Statements. The Company has the ability to generate additional proceeds from various other potential financing transactions. We are currently focused on the financing and construction of the Driftwood terminal and continuing to expand our upstream activities.
NOTE 2 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
The components of prepaid expenses and other current assets consist of the following (in thousands):
June 30, 2022December 31, 2021
Prepaid expenses$454 $605 
Deposits18,719 3,589 
Restricted cash3,000  
Derivative assets, net current  8,693 
Other current assets37 65 
Total prepaid expenses and other current assets$22,210 $12,952 
Deposits
Margin deposits posted with a third-party financial institution related to our financial instrument contracts were approximately $17.6 million and $2.1 million as of June 30, 2022 and December 31, 2021, respectively.
Restricted Cash
Restricted cash as of June 30, 2022, represents funds held in escrow under the terms of an agreement to purchase land for the Driftwood Project.
5

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE 3 — PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment consist of the following (in thousands):
June 30, 2022December 31, 2021
Upstream natural gas assets:
Proved properties$156,105 $96,297 
Wells in progress13,115 17,653 
Accumulated DD&A(58,270)(48,638)
Total upstream natural gas assets, net 110,950 65,312 
Driftwood Project assets:
Land and land improvements49,169 25,222 
Driftwood terminal construction in progress189,980  
Finance lease assets, net of accumulated DD&A57,295 57,883 
Buildings and other assets, net of accumulated DD&A356 371 
Total Driftwood Project, net 296,800 83,476 
Fixed assets and other:
Leasehold improvements and other assets2,928 3,104 
Accumulated DD&A(1,528)(1,347)
Total fixed assets and other, net 1,400 1,757 
Total property, plant and equipment, net $409,150 $150,545 
Land
We own land in Louisiana intended for the construction of the Driftwood Project.
Driftwood Terminal Construction in Progress
During the year ended December 31, 2021, the Company initiated certain owner construction activities necessary to proceed under our LSTK EPC agreement with Bechtel Energy Inc., formerly known as Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”), for Phase 1 of the Driftwood terminal dated as of November 10, 2017 (the “Phase 1 EPC Agreement”). On March 24, 2022, the Company issued a limited notice to proceed to Bechtel under the Phase 1 EPC Agreement and commenced construction of Phase 1 of the Driftwood terminal on April 4, 2022. As the Company commenced construction activities, Deferred engineering costs and Permitting Costs of approximately $110.0 million and $13.4 million, respectively, were transferred to construction in progress as of March 31, 2022. During the six months ended June 30, 2022, we capitalized approximately $66.6 million of directly identifiable project costs as construction in progress.
NOTE 4 — DEFERRED ENGINEERING COSTS
Deferred engineering costs related to the planned construction of the Driftwood terminal were transferred to construction in progress upon issuing the limited notice to proceed to Bechtel in March 2022. See Note 3, Property, Plant and Equipment, for further information.









6

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE 5 — OTHER NON-CURRENT ASSETS
Other non-current assets consist of the following (in thousands):
June 30, 2022December 31, 2021
Land lease and purchase options$825 $6,368 
Permitting costs 13,408 
Right of use asset — operating leases12,872 10,166 
Restricted cash24,882 1,778 
Investment in unconsolidated entity 6,089  
Driftwood pipeline materials 5,229  
Other4,188 1,798 
Total other non-current assets$54,085 $33,518 
Land Lease and Purchase Options
During the first quarter of 2022, we exercised the final land purchase options related to the Driftwood terminal. Land purchase options held by the Company as of June 30, 2022 are related to the Driftwood pipeline and other related pipelines.
Permitting Costs
Permitting costs primarily represented the purchase of wetland credits in connection with our permit application to the USACE in 2017 and 2018. These wetland credits were transferred to construction in progress upon issuing the limited notice to proceed to Bechtel in March 2022. See Note 3, Property, Plant and Equipment, for further information. These wetland credits will be applied to our permit in accordance with the Clean Water Act and the Rivers and Harbors Act, which require us to mitigate the potential impact to Louisiana wetlands that might be caused by the construction of the Driftwood Project.
Restricted Cash
Restricted cash as of June 30, 2022 and December 31, 2021, represents cash collateralization of letters of credit associated with a finance lease.

Investment in unconsolidated entity
On February 24, 2022, the Company purchased 1.5 million ordinary shares of an unaffiliated entity engaged in renewable energy services for a total cost of approximately $6.1 million. This investment does not provide the Company with a controlling financial interest in or significant influence over the operating or financial decisions of the unaffiliated entity. The Company’s investment was recorded at cost.
NOTE 6 — FINANCIAL INSTRUMENTS
Natural Gas Financial Instruments
During the fourth quarter of 2021, we began entering into natural gas financial futures contracts to economically hedge the commodity price exposure of a portion of our natural gas production. The Company’s open positions as of June 30, 2022, had notional volumes of 5.9 Bcf, with maturities extending through March 2023.
LNG Financial Instruments
During the three months ended December 31, 2021, we entered into LNG financial futures contracts to reduce our exposure to commodity price fluctuations, and to achieve more predictable cash flows relative to two LNG cargos that we were committed to purchase from and sell to unrelated third-party LNG merchants in the normal course of business in January and April 2022. As of June 30, 2022, there were no open LNG financial instrument positions.






7

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
The following table summarizes the effect of the Company’s financial futures contracts which are included within Other expense, net on the Condensed Consolidated Statements of Operations (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Natural gas financial futures contracts:
Realized loss $10,536 $548 $11,251 $1,202 
Unrealized gain (loss) 6,790  (8,311) 
LNG financial futures contracts:
Realized gain   3,532  
Unrealized loss   5,161  
The following table presents the classification of the Company’s financial derivative assets and liabilities that are required to be measured at fair value on a recurring basis on the Company’s Condensed Consolidated Balance Sheets (in thousands):
June 30, 2022December 31, 2021
Current assets:
LNG financial futures contracts $8,693 
Current liabilities:
Natural gas financial futures contracts$8,311  
The Company’s natural gas and LNG financial instruments are valued using quoted prices in active exchange markets as of the balance sheet date and are classified as Level 1 within the fair value hierarchy.
NOTE 7 — ACCRUED AND OTHER LIABILITIES
    The components of accrued and other liabilities consist of the following (in thousands):
June 30, 2022December 31, 2021
Upstream accrued liabilities$25,498 $26,421 
Payroll and compensation18,685 50,243 
Accrued taxes569 991 
Driftwood Project development activities6,719 435 
Lease liabilities 2,609 2,279 
Current derivative liabilities8,311  
Other7,579 5,577 
Total accrued and other liabilities$69,970 $85,946 

8

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE 8 — BORROWINGS
The following tables summarize the Company’s borrowings as of June 30, 2022, and December 31, 2021 (in thousands):
June 30, 2022
Principal repayment obligationUnamortized DFCCarrying value
Senior Secured Convertible Notes, current$166,666 $(3,818)$162,848 
Senior Secured Convertible Notes, non-current333,334 (7,194)326,140 
Senior Notes due 202857,678 (2,746)54,932 
Total borrowings$557,678 $(13,758)$543,920 

December 31, 2021
Principal repayment obligationUnamortized DFCCarrying value
Senior Notes due 2028$56,500 $(2,813)$53,687 
Total borrowings$56,500 $(2,813)$53,687 

Senior Secured Convertible Notes due 2025
On June 3, 2022, we issued and sold $500.0 million aggregate principal amount of 6.00% Senior Secured Convertible Notes due May 1, 2025 (the “Convertible Notes”). Net proceeds from the Convertible Notes were approximately $488.7 million after deducting fees and expenses. The Convertible Notes have quarterly interest payments due on February 1, May 1, August 1, and November 1 of each year and on the maturity date. Debt issuance costs of approximately $11.5 million were capitalized and are being amortized over the full term of the Convertible Notes using the effective interest rate method.
The holders of the Convertible Notes have the right to convert the Convertible Notes into shares of our common stock at an initial conversion rate of 174.703 shares per $1,000 principal amount of Convertible Notes (equivalent to a conversion price of approximately $5.724 per share of common stock) (the “Conversion Price”), subject to adjustment in certain circumstances. Holders of the Convertible Notes may force the Company to redeem the Notes for cash upon (i) a fundamental change or (ii) an event of default. The Company will force the holders of the Notes to convert all of the Convertible Notes if the trading price of our common stock closes above 200% of the Conversion Price for 20 consecutive trading days and certain other conditions are satisfied. The Company may provide written notice to each holder of the Convertible Notes calling all of such holder’s Convertible Notes for a cash purchase price equal to 120% of the principal amount being redeemed, plus accrued and unpaid interest (the “Optional Redemption”), and each holder will have the right to accept or reject such Optional Redemption. On each of May 1, 2023 and May 1, 2024, the holders of the Convertible Notes may redeem up to $166.6 million of the initial principal amount of the Convertible Notes at par, plus accrued and unpaid interest (the “Redemption Amount”). The Company classified the Redemption Amount in respect of May 1, 2023 as a current borrowing on the Condensed Consolidated Balance Sheet as of June 30, 2022.
Our borrowing obligations under the Convertible Notes are collateralized by a first priority lien on the Company’s equity interests in Tellurian Production Holdings, LLC (“Tellurian Production Holdings”), a wholly owned subsidiary of Tellurian Inc. Tellurian Production Holdings owns all of the Company’s upstream natural gas assets described in Note 3, Property, Plant and Equipment. Upon the Company’s compliance with its obligations in respect of an Optional Redemption (regardless of whether holders accept or reject the redemption), the lien on the equity interests in Tellurian Production Holdings will be automatically released. The Convertible Notes contain a minimum cash covenant and non-financial covenants. As of June 30, 2022, we remained in compliance with all covenants under the Convertible Notes.
As of June 30, 2022, the estimated fair value of the Convertible Notes, was approximately $465.3 million. The Level 3 fair value was estimated based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including our stock price and inputs that are not observable in the market.
Senior Notes due 2028
On November 10, 2021, we sold in a registered public offering $50.0 million aggregate principal amount of 8.25% Senior Notes due November 30, 2028 (the “Senior Notes”). Net proceeds from the Senior Notes were approximately $47.5 million after deducting fees. The underwriter was granted an option to purchase up to an additional $7.5 million of the Senior Notes within 30 days. On December 7, 2021, the underwriter exercised the option and purchased an additional
9

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
$6.5 million of the Senior Notes resulting in net proceeds of approximately $6.2 million after deducting fees. The Senior Notes have quarterly interest payments due on January 31, April 30, July 31, and October 31 of each year and on the maturity date. As of June 30, 2022, the Company was in compliance with all covenants under the indenture governing the Senior Notes. The Senior Notes are traded on the NYSE American under the symbol “TELZ,” and are classified as Level 1 within the fair value hierarchy. As of June 30, 2022, the closing market price per Senior Note was $21.85.
At-the-Market Debt Offering Program
On December 17, 2021, we entered into an at-the-market debt offering program under which the Company may offer and sell from time to time on the NYSE American up to an aggregate principal amount of $200.0 million of additional Senior Notes. For the six months ended June 30, 2022, we sold approximately $1.2 million aggregate principal amount of additional Senior Notes for total proceeds of approximately $1.1 million after fees and commissions under our at-the-market debt offering program.
Extinguishment of the 2019 Term Loan
On May 23, 2019, Driftwood Holdings LP, a wholly owned subsidiary of the Company, entered into a senior secured term loan agreement (the “2019 Term Loan”) to borrow an aggregate principal amount of $60.0 million. On March 12, 2021 (the “Extinguishment Date”), we finalized a voluntary repayment of the remaining outstanding principal balance of the 2019 Term Loan. A total of approximately $43.7 million was repaid to the lender during the first quarter of 2021 to satisfy the outstanding borrowing obligation. The extinguishment of the 2019 Term Loan resulted in an approximately $2.1 million gain, which was recognized within Gain on extinguishment of debt, net, on our Condensed Consolidated Statements of Operations.
As a result of repaying the outstanding balance prior to its contractual maturity, an approximately $4.4 million in unamortized DFC and discount was included in the computation of the gain from the extinguishment of the 2019 Term Loan.
The holder of the 2019 Term Loan held approximately 3.5 million unvested warrants that had a fair value of approximately $6.3 million as of the Extinguishment Date. Due to the extinguishment of the 2019 Term Loan, all the unvested warrants were contractually terminated (the “Terminated Warrants”), and their respective fair value was included in the computation of the gain on extinguishment of the 2019 Term Loan. The fair value of the Terminated Warrants was determined using a Black-Scholes option pricing model.
2018 Term Loan
On September 28, 2018, Tellurian Production Holdings entered into a three-year senior secured term loan credit agreement (the “2018 Term Loan”) in an aggregate principal amount of $60.0 million. On February 18, 2021, we voluntarily repaid approximately $43.0 million of the 2018 Term Loan outstanding principal balance. Then, on April 23, 2021, we voluntarily repaid the remaining outstanding principal balance of $17.0 million.
These voluntary repayments resulted in losses of approximately $0.2 million and $0.7 million for the three and six months ended June 30, 2021, respectively, which were recognized within (Loss) gain on extinguishment of debt, net, on our Condensed Consolidated Statements of Operations.
Trade Finance Credit Line
On July 19, 2021, we entered into an uncommitted trade finance credit line for up to $30.0 million that is intended to finance the purchase of LNG cargos for ultimate resale in the normal course of business. On December 7, 2021, the uncommitted trade finance credit line was amended and increased to $150.0 million. As of June 30, 2022, no amounts were drawn under this credit line.
NOTE 9 — COMMITMENTS AND CONTINGENCIES
On January 26, 2022, our wholly owned subsidiary Tellurian Trading UK Ltd entered into an agreement to cancel three LNG cargos that the Company was committed to purchase in April, July and October 2022 under a master LNG sale and purchase agreement (“LNG SPA”) we entered into in April 2019 with an unrelated third-party LNG merchant. The Company is required to pay a cancellation fee of approximately $1.0 million for all three LNG cargos. As of June 30, 2022, a balance of approximately $690.0 thousand remains outstanding and is included within Accrued and other liabilities on our Condensed Consolidated Balance Sheet. The Company does not have any further commitments or obligations under this LNG SPA.
Related Party Contractor Service Fees and Expenses
The Company entered into a one-year independent contractor agreement, effective January 1, 2022, with Mr. Martin Houston, who serves as Vice Chairman and a member of the Company’s Board of Directors. Pursuant to the terms and conditions of this agreement, the Company pays Mr. Houston a monthly fee of $50.0 thousand plus approved expenses. For the three and six months ended June 30, 2022, the Company paid Mr. Houston $150.0 thousand and $325.0 thousand, respectively, for contractor service fees and expenses. As of June 30, 2022, there were no balances due to Mr. Houston.
10

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE 10 — STOCKHOLDERS’ EQUITY
At-the-Market Equity Offering Programs
We maintain multiple at-the-market equity offering programs pursuant to which we may sell shares of our common stock from time to time on the NYSE American. During the six months ended June 30, 2022, we issued 67.7 million shares of our common stock under our at-the-market equity offering programs for net proceeds of approximately $299.7 million. As of June 30, 2022, we had remaining availability under such at-the-market programs to raise aggregate gross sales proceeds of up to approximately $323.7 million.
Common Stock Purchase Warrants
2019 Term Loan
During the first quarter of 2021, the lender of the 2019 Term Loan exercised warrants to purchase approximately 6.0 million shares of our common stock for total proceeds of approximately $8.2 million. As discussed in Note 8, Borrowings, the 2019 Term Loan has been repaid in full and the lender no longer holds any warrants.
Preferred Stock
In March 2018, we entered into a preferred stock purchase agreement with BDC Oil and Gas Holdings, LLC (“Bechtel Holdings”), a Delaware limited liability company and an affiliate of Bechtel, pursuant to which we sold to Bechtel Holdings approximately 6.1 million shares of our Series C convertible preferred stock (the “Preferred Stock”).
The holders of the Preferred Stock do not have dividend rights but do have a liquidation preference over holders of our common stock. The holders of the Preferred Stock may convert all or any portion of their shares into shares of our common stock on a one-for-one basis. At any time after “Substantial Completion” of “Project 1,” each as defined in and pursuant to the Phase 1 EPC Agreement, or at any time after March 21, 2028, we have the right to cause all of the Preferred Stock to be converted into shares of our common stock on a one-for-one basis. The Preferred Stock has been excluded from the computation of diluted loss per share because including it in the computation would have been antidilutive for the periods presented.
NOTE 11 — SHARE-BASED COMPENSATION
We have granted restricted stock and restricted stock units (collectively, “Restricted Stock”), as well as unrestricted stock and stock options, to employees, directors and outside consultants (collectively, the “grantees”) under the Tellurian Inc. 2016 Omnibus Incentive Compensation Plan, as amended (the “2016 Plan”), and the Amended and Restated Tellurian Investments Inc. 2016 Omnibus Incentive Plan (the “Legacy Plan”). The maximum number of shares of Tellurian common stock authorized for issuance under the 2016 Plan is 40 million shares of common stock, and no further awards can be granted under the Legacy Plan.
Upon the vesting of restricted stock, shares of common stock will be released to the grantee. Upon the vesting of restricted stock units, the units will be converted into either cash, stock, or a combination thereof. As of June 30, 2022, there was no Restricted Stock that would be required to be settled in cash.    
As of June 30, 2022, we had approximately 31.9 million shares of primarily performance-based Restricted Stock outstanding, of which approximately 19.2 million shares will vest entirely at FID, as defined in the award agreements, and approximately 11.7 million shares will vest in one-third increments at FID and the first and second anniversaries of FID. The remaining shares of primarily performance-based Restricted Stock, totaling approximately 1.0 million shares, will vest based on other criteria. As of June 30, 2022, no expense had been recognized in connection with performance-based Restricted Stock.
For the three and six months ended June 30, 2022, the recognized share-based compensation expenses related to all share-based awards totaled approximately $0.8 million and $1.7 million, respectively. As of June 30, 2022, unrecognized compensation expenses, based on the grant date fair value, for all share-based awards totaled approximately $204.2 million. Further, approximately 31.9 million shares of primarily performance-based Restricted Stock, as well as approximately 11.1 million stock options outstanding, have been excluded from the computation of diluted loss per share because including them in the computation would have been antidilutive for the periods presented.
11

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
NOTE 12 — INCENTIVE COMPENSATION PROGRAM
On November 18, 2021, the Company’s Board of Directors approved the adoption of the Tellurian Incentive Compensation Program (the “Incentive Compensation Program” or “ICP”). The ICP allows the Company to award short-term and long-term performance and service-based incentive compensation to full-time employees of the Company. ICP awards may be earned with respect to each calendar year and are determined based on guidelines established by the Compensation Committee of the Board of Directors, as administrator of the ICP.
Long-term incentive awards
Long-term incentive (“LTI”) awards under the ICP were granted in January 2022 in the form of “tracking units,” at the discretion of the Company’s Board of Directors (the “2021 LTI Award”). Each such tracking unit has a value equal to one share of Tellurian common stock and entitles the grantee to receive, upon vesting, a cash payment equal to the closing price of our common stock on the trading day prior to the vesting date. These tracking units will vest in three equal tranches at grant date, and the first and second anniversaries of the grant date. Non-vested tracking unit awards as of June 30, 2022 and awards granted during the period were as follows:
Number of Tracking Units (in thousands)Price per Tracking Unit
Balance at January 1, 2022  
Granted 19,332 $3.09 
Vested(6,444)3.38 
Forfeited(110)3.34 
Unvested balance at June 30, 202212,778 $2.98 

We recognize compensation expense for awards with graded vesting schedules over the requisite service periods for each separately vesting portion of the award as if each award was in substance multiple awards. Compensation expense for the first tranche of the 2021 LTI Award that vested at the grant date was recognized over the performance period when it was probable that the performance condition was achieved. Compensation expense for the second and third tranches of the 2021 LTI Award is recognized on a straight-line basis over the requisite service period. Compensation expense for unvested tracking units is subsequently adjusted each reporting period to reflect the estimated payout levels based on changes in the Company’s stock price and actual forfeitures. For the three and six months ended June 30, 2022, we recognized approximately $1.6 million and $14.3 million, respectively, in compensation expense for the second and third tranches of the 2021 LTI Award.
NOTE 13 — INCOME TAXES
Due to our cumulative loss position, historical net operating losses (“NOLs”), and other available evidence related to our ability to generate taxable income, we have recorded a full valuation allowance against our net deferred tax assets as of June 30, 2022 and December 31, 2021. Accordingly, we have not recorded a provision for federal, state or foreign income taxes during the three and six months ended June 30, 2022.

We experienced ownership changes as defined by Internal Revenue Code (“IRC”) Section 382 in 2017, and an analysis of the annual limitation on the utilization of our NOLs was performed at that time. It was determined that IRC Section 382 will not limit the use of our NOLs over the carryover period. We will continue to monitor trading activity in our shares that may cause an additional ownership change, which may ultimately affect our ability to fully utilize our existing NOL carryforwards.
NOTE 14 — LEASES
Our land leases are classified as finance leases and include one or more options to extend the lease term for up to 40 years, as well as to terminate the lease within five years, at our sole discretion. We are reasonably certain that those options will be exercised, and that our termination rights will not be exercised, and we have, therefore, included those assumptions within our right of use assets and corresponding lease liabilities. Our office space leases are classified as operating leases and include one or more options to extend the lease term up to 10 years, at our sole discretion. As we are not reasonably certain that those
12

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
options will be exercised, none are recognized as part of our right of use assets and lease liabilities. As none of our leases provide an implicit rate, we have determined our own discount rate.

The following table shows the classification and location of our right-of-use assets and lease liabilities on our Consolidated Balance Sheets (in thousands):
LeasesConsolidated Balance Sheets ClassificationJune 30, 2022December 31, 2021
Right of use asset
OperatingOther non-current assets$12,872 $10,166 
FinanceProperty, plant and equipment, net57,295 57,883 
Total leased assets$70,167 $68,049 
Liabilities
Current
OperatingAccrued and other liabilities$2,473 $2,147 
FinanceAccrued and other liabilities136 132 
Non-Current
OperatingOther non-current liabilities11,910 9,563 
FinanceFinance lease liabilities50,034 50,103 
Total leased liabilities$64,553 $61,945 
Lease costs recognized in our Consolidated Statements of Operations is summarized as follows (in thousands):
Six months ended
Lease Costs20222021
Operating lease cost$1,452 $1,448 
Finance lease cost
Amortization of lease assets587 201 
Interest on lease liabilities1,990 911 
Finance lease cost$2,577 $1,112 
Total lease cost$4,029 $2,560 
Other information about lease amounts recognized in our Consolidated Financial Statements is as follows:
June 30, 2022
Lease term and discount rate
Weighted average remaining lease term (years)
Operating lease5.0
Finance lease48.9
Weighted average discount rate
Operating lease6.1 %
Finance lease9.4 %






13

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
The following table includes other quantitative information for our operating and finance leases (in thousands):
Six Months Ended June 30,
20222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$1,494 $724 
Operating cash flows from finance leases$ $ 
Financing cash flows from finance leases$2,668 $ 

The table below presents a maturity analysis of our lease liability on an undiscounted basis and reconciles those amounts to the present value of the lease liability as of June 30, 2022 (in thousands):
OperatingFinance
2022$1,614 $2,055 
20233,316 4,111 
20243,359 4,111 
20253,401 4,111 
20263,423 4,111 
After 20261,633 182,222 
Total lease payments$16,746 $200,721 
Less: discount2,362 150,551 
Present value of lease liability$14,384 $50,170 
NOTE 15 — ADDITIONAL CASH FLOW INFORMATION
The following table provides information regarding the net changes in working capital (in thousands):
Six Months Ended June 30,
20222021
Accounts receivable$(22,705)$398 
Prepaid expenses and other current assets 1
(11,454)(350)
Accounts payable2,271 2,048 
Accounts payable due to related parties  (910)
Accrued liabilities 1
(12,585)14,439 
Other, net801 (746)
Net changes in working capital$(43,672)$14,879 
1 Excludes changes in the Company’s derivative assets and liabilities.
The following table provides supplemental disclosure of cash flow information (in thousands):
Six Months Ended June 30,
20222021
Non-cash accruals of property, plant and equipment and other non-current assets$(3,551)$5,367 
Non-cash settlement of withholding taxes associated with the 2019 bonus and vesting of certain awards 2,990 
Non-cash settlement of the 2019 bonus 5,430 
14

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):
Six Months Ended June 30,
20222021
Cash and cash equivalents$823,522 $111,858 
Current restricted cash3,000  
Non-current restricted cash24,882  
Total cash, cash equivalents and restricted cash shown in the statements of cash flows$851,404 $111,858 
NOTE 16 — DISCLOSURE ABOUT SEGMENTS AND RELATED INFORMATION
During the quarter ended June 30, 2022, the Company commenced construction of the Driftwood terminal under the Phase 1 EPC Agreement with Bechtel while continuing to increase its natural gas presence in the Haynesville Shale basin in northern Louisiana and expanding its natural gas marketing activities. The Company’s Chief operating decision maker (“CODM”) determined to place additional emphasis and visibility on operating cash flows generated by our upstream and natural gas marketing business activities. Consequently, we identified the Upstream, Midstream and Marketing & Trading components as the Company’s operating segments.
These functions have been defined as the operating segments of the Company because (1) they are engaged in business activities from which revenues are recognized and expenses are incurred, (2) their operating results are regularly reviewed by the Company’s CODM to make decisions about resources to be allocated to the segment and to assess its performance, and (3) they are segments for which discrete financial information is available.
Factors used to identify these operating segments are based on the nature of the business activities that are undertaken by each component. The Upstream segment is organized and operates to produce natural gas. The Midstream segment is organized to develop, construct and operate LNG terminals and pipelines. The Marketing & Trading segment is organized and operates to purchase and sell natural gas, market the Driftwood terminal’s LNG production capacity and trade LNG. These operating segments represent the Company’s reportable segments. The Company’s CODM does not currently assess segment performance or allocate resources based on a measure of total assets. Accordingly, a total asset measure has not been provided for segment disclosure.
The remainder of our business is presented as “Corporate,” and consists of corporate costs and intersegment eliminations.
Three Months Ended June 30, 2022UpstreamMidstreamMarketing & TradingCorporateConsolidated
Revenues from external customers (1)
$ $ $61,350 $ $61,350 
Intersegment revenues (purchases) (2)
61,352 (230)(59,404)(1,718)— 
Segment operating profit (loss) (3)
38,505 (20,016)(4,292)(5,845)8,352 
Interest expense, net (995) (3,571)(4,566)
Other income (loss), net  (3,746)(75)(3,821)
Consolidated loss before tax$(35)
Three Months Ended June 30, 2021UpstreamMidstreamMarketing & TradingCorporateConsolidated
Revenues from external customers (1)
$ $ $25,354 $ $25,354 
Intersegment revenues (purchases) (2)
5,578  (5,578) — 
Segment operating profit (loss) (3)
(6,310)(10,740)(8,876)(3,209)(29,135)
Interest expense, net(382)(456) 9 (829)
Gain (loss) on extinguishment of debt(152)   (152)
Other income (loss), net(548)  66 (482)
Consolidated loss before tax$(30,598)


15

Tellurian Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
Six Months Ended June 30, 2022UpstreamMidstreamMarketing & TradingCorporateConsolidated
Revenues from external customers (1)
$ $ $208,290 $ $208,290 
Intersegment revenues (purchases) (2)
87,341 (230)(77,115)(9,996)— 
Segment operating profit (loss) (3)
43,101 (37,800)(16,583)(23,265)(34,547)
Interest expense, net (1,990)(454)(4,402)(6,846)
Other income (loss), net  (25,758)509 (25,249)
Consolidated loss before tax$(66,642)
Six Months Ended June 30, 2021UpstreamMidstreamMarketing & TradingCorporateConsolidated
Revenues from external customers (1)
$ $ $34,060 $ $34,060 
Intersegment revenues (purchases) (2)
14,274  (14,274) — 
Segment operating loss (3)
(8,034)(16,013)(12,712)(11,980)(48,739)
Interest expense, net(1,635)(2,730) (2,356)(6,721)
Gain (loss) on extinguishment of debt(665)2,087