Tellurian Removes Co-Founder Charif Souki as Chairman in Executive Shake-Up

Charif Souki played a pivotal role in the inception of the U.S. LNG export market back in 1996, capitalizing on the discovery of vast shale gas reserves.

Tellurian (TELL.A), the U.S. liquefied natural gas (LNG) developer, made a significant executive move on Friday by removing Charif Souki, its chairman and co-founder, from his position as an executive officer.

This decision came in the wake of recent concerns raised by auditors regarding Tellurian’s ability to cover its future expenses.

Charif Souki played a pivotal role in the inception of the U.S. LNG export market back in 1996, capitalizing on the discovery of vast shale gas reserves.

He successfully transformed Cheniere Energy from an LNG importer into a major exporter.

However, his endeavors at Tellurian did not yield the same level of success.

Having previously been pushed out of Cheniere Energy, Souki co-founded Tellurian in 2016 alongside Martin Houston, who will now assume the role of chairman. It’s worth noting that Charif Souki will maintain his position on the company’s board, according to Tellurian’s official statement.

Following this announcement, Tellurian’s stock witnessed a 4% increase during extended trading, reaching 78 cents per share.

In contrast, the stock had reached as high as $11.19 in 2019 before encountering setbacks, particularly when initial supporters of the crucial Driftwood export project, such as LNG traders Vitol and Shell, withdrew their interest as potential customers.

Tellurian has faced significant challenges with its Driftwood project, altering its strategy multiple times over the years, yet failing to attract sufficient clients for the initial phase, which carries a price tag of $14.5 billion and boasts an annual capacity of 27.6 million metric tons.

Last month, auditors added a “going concern” warning to the company’s financial statements. Construction of the first phase had commenced, funded by equity sales and a small gas-production unit.

Ben Dell, managing partner at Kimmeridge, a private equity firm, expressed that this management change signals a shift in direction and highlights a newfound focus on profitability.

Dell, a critic of Souki’s spending and strategic shifts, believes this move signifies a potential turning point for the company.

Tellurian has lost several potential customers for the Driftwood project over the years, with the recent termination of the contract with trader Gunvor Singapore Pte Ltd in August being one example.

The removal of Charif Souki underscores the significance of Tellurian’s commitment to salvaging the prospects of its company, particularly since the success or failure of the Driftwood LNG project is intertwined with its future.

Alex Munton, director of global gas and LNG research at the Rapidan Group consulting firm, emphasized that Tellurian remains dedicated to completing the construction of Driftwood LNG, and Charif Souki’s departure reflects a shift towards a more conventional approach for U.S. LNG projects, despite his prior reservations.