UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2021


☐			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

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,

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 class

Trading symbol

Name of each exchange on which registered

Common stock, par value $0.01 per share

TELL

~~NASDAQ~~NYSE

~~Capital Market~~American

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 ~~April 30,~~October 22, 2021, there were ~~409,630,935~~479,005,062 shares of common stock, $0.01 par value, issued and outstanding.

Tellurian Inc.

TABLE OF CONTENTS

Page

Part I — Financial Information (Unaudited)

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

1312

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

1615

Part II — Other Information

Item 1.

Legal Proceedings

1615

Item 1A.

Risk Factors

1615

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

1615

Item 5.

Other Information

Item 6.

Exhibits

1716

Signatures

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,” “continue,” “estimate,” “expect,” “forecast,” “initial,” “intend,” “likely,” “may,” “plan,” “potential,” “project,” “proposed,” “should,” “will,” “would” and similar 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 capital expenditures;

•our ability to grow our upstream operations;

•availability of liquidity and capital resources;

•our ability to obtain additional 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 to meet their contractual obligations;

•risks and uncertainties inherent in management estimates of future operating results and cash flows;

•the potential discontinuation of LIBOR;

•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:


Bcf						Billion cubic feet of natural gas
Bcf/d						Bcf per day
DD&A						Depreciation, depletion and amortization
DES						Delivered ex-ship
DFC						Deferred financing costs
EPC						Engineering, procurement and construction
FID						Final investment decision as it pertains to the Driftwood Project
FOB						Free on board
GAAP						Generally accepted accounting principles in the U.S.
JKM						Platts Japan Korea Marker index price for LNG
LNG						Liquefied natural gas
LSTK						Lump sum turnkey
MMBtu						Million British thermal units
Mtpa						Million tonnes per annum
~~Nasdaq~~						~~Nasdaq Capital Market~~
OTC						Over-the-counter
SEC						U.S. Securities and Exchange Commission
SPA						Sale and purchase agreement
Train						An industrial facility comprised of a series of refrigerant compressor loops used to cool natural gas into LNG
TTF						Platts Dutch Title Transfer Facility index price for LNG
U.S.						United States
USACE						U.S. Army Corps of Engineers

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


TELLURIAN INC. AND SUBSIDIARIES	TELLURIAN INC. AND SUBSIDIARIES					TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS	CONDENSED CONSOLIDATED BALANCE SHEETS					CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts, unaudited)	(in thousands, except share and per share amounts, unaudited)					(in thousands, except share and per share amounts, unaudited)

		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	58,729	$	78,297	Cash and cash equivalents	$	210,812	$	78,297
Accounts receivable	Accounts receivable	3,584		4,500		Accounts receivable	13,056		4,500
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,411		2,105		Prepaid expenses and other current assets	467		2,105
Total current assets	Total current assets	63,724		84,902		Total current assets	224,335		84,902
Property, plant and equipment, net	Property, plant and equipment, net	59,671		61,257		Property, plant and equipment, net	117,118		61,257
Deferred engineering costs	Deferred engineering costs	110,626		110,499		Deferred engineering costs	110,025		110,499
Non-current restricted cash	Non-current restricted cash	3,443		3,440		Non-current restricted cash	—		3,440
Other non-current assets	Other non-current assets	32,806		32,897		Other non-current assets	32,399		32,897
Total assets	Total assets	$	270,270	$	292,995	Total assets	$	483,877	$	292,995

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	25,247	$	23,573	Accounts payable	$	27,861	$	23,573
Accounts payable due to related parties	Accounts payable due to related parties	450		910		Accounts payable due to related parties	—		910
Accrued and other liabilities	Accrued and other liabilities	19,897		22,003		Accrued and other liabilities	35,203		22,003
Borrowings	Borrowings	16,848		72,819		Borrowings	—		72,819
Total current liabilities	Total current liabilities	62,442		119,305		Total current liabilities	63,064		119,305
Long-term liabilities:	Long-term liabilities:					Long-term liabilities:
Borrowings	Borrowings	0		38,275		Borrowings	—		38,275
Other non-current liabilities	Other non-current liabilities	25,922		26,325		Other non-current liabilities	61,612		26,325
Total long-term liabilities	Total long-term liabilities	25,922		64,600		Total long-term liabilities	61,612		64,600

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value, 100,000,000 authorized: 6,123,782 and 6,123,782 shares outstanding, respectively	Preferred stock, $0.01 par value, 100,000,000 authorized: 6,123,782 and 6,123,782 shares outstanding, respectively	61		61		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: 401,037,076 and 354,315,739 shares outstanding, respectively		3,779		3,309
Common stock, $0.01 par value, 800,000,000 authorized: 470,813,044 and 354,315,739 shares outstanding, respectively						Common stock, $0.01 par value, 800,000,000 authorized: 470,813,044 and 354,315,739 shares outstanding, respectively	4,477		3,309
Additional paid-in capital	Additional paid-in capital	1,021,373		922,042		Additional paid-in capital	1,244,500		922,042
Accumulated deficit	Accumulated deficit	(843,307)		(816,322)		Accumulated deficit	(889,837)		(816,322)
Total stockholders’ equity	Total stockholders’ equity	181,906		109,090		Total stockholders’ equity	359,201		109,090
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	270,270	$	292,995	Total liabilities and stockholders’ equity	$	483,877	$	292,995

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


TELLURIAN INC. AND SUBSIDIARIES	TELLURIAN INC. AND SUBSIDIARIES					TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS					CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)	(in thousands, except per share amounts, unaudited)					(in thousands, except per share amounts, unaudited)

		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Natural gas sales	Natural gas sales	$	8,706	$	8,217	Natural gas sales	$	15,638	$	7,272	$	29,922	$	21,818
LNG sales						LNG sales	—		6,993		19,776		6,993
Total revenue						Total revenue	15,638		14,265		49,698		28,811

Operating costs and expenses:	Operating costs and expenses:					Operating costs and expenses:
Cost of sales	Cost of sales	2,406		2,879		Cost of sales	3,068		9,241		30,841		14,529
Development expenses	Development expenses	8,141		11,183		Development expenses	8,823		5,799		26,327		26,105
Depreciation, depletion and amortization	Depreciation, depletion and amortization	2,652		5,832		Depreciation, depletion and amortization	3,735		3,474		8,720		14,301
General and administrative expenses	General and administrative expenses	15,111		17,239		General and administrative expenses	14,528		10,734		47,065		43,342
Impairment charges						Impairment charges	—		—		—		81,065
Severance and reorganization charges	Severance and reorganization charges	0		5,505		Severance and reorganization charges	—		—		—		6,359
Related party charges						Related party charges	—		—		—		7,357
Total operating costs and expenses	Total operating costs and expenses	28,310		42,638		Total operating costs and expenses	30,154		29,248		112,953		193,058
Loss from operations	Loss from operations	(19,604)		(34,421)		Loss from operations	(14,516)		(14,983)		(63,255)		(164,247)
Interest expense, net	Interest expense, net	(5,892)		(6,396)		Interest expense, net	(968)		(15,973)		(7,689)		(33,564)
Gain on extinguishment of debt, net	Gain on extinguishment of debt, net	1,574		0		Gain on extinguishment of debt, net	—		—		1,422		—
Other (expense) income, net	Other (expense) income, net	(3,063)		83		Other (expense) income, net	(448)		1,490		(3,993)		(1,235)
Loss before income taxes	Loss before income taxes	(26,985)		(40,734)		Loss before income taxes	(15,932)		(29,466)		(73,515)		(199,046)
Income tax		0		0
Income taxes						Income taxes	—		—		—		—
Net loss	Net loss	$	(26,985)	$	(40,734)	Net loss	$	(15,932)	$	(29,466)	$	(73,515)	$	(199,046)
Net loss per common share(1):	Net loss per common share(1):					Net loss per common share(1):
Basic and diluted	Basic and diluted	$	(0.08)	$	(0.18)	Basic and diluted	$	(0.04)	$	(0.10)	$	(0.19)	$	(0.79)
Weighted-average shares outstanding:	Weighted-average shares outstanding:					Weighted-average shares outstanding:
Basic and diluted	Basic and diluted	356,676		221,133		Basic and diluted	427,204		291,409		390,233		252,825

(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.	(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.					(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.


TELLURIAN INC. AND SUBSIDIARIES	TELLURIAN INC. AND SUBSIDIARIES	TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY	CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY	CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, unaudited)	(in thousands, unaudited)	(in thousands, unaudited)

			Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
			2021		2020			2021		2020		2021		2020
Total shareholders’ equity, beginning balance	Total shareholders’ equity, beginning balance		$	109,090	$	166,285	Total shareholders’ equity, beginning balance	$	247,019	$	75,913	$	109,090	$	166,285

Preferred stock	Preferred stock		61		61		Preferred stock	$	61	$	61	$	61	$	61

Common stock:	Common stock:						Common stock:
Beginning balance	Beginning balance		3,309		2,211		Beginning balance	4,048		2,627		3,309		2,211
Common stock issuances	Common stock issuances		387		23		Common stock issuances	428		371		1,066		567
Share-based compensation, net(1)	Share-based compensation, net(1)		23		—		Share-based compensation, net(1)	1		23		42		33

Severance and reorganization charges							Severance and reorganization charges	—		15		—		22
Settlement of Final Payment Fee	Settlement of Final Payment Fee		—		110		Settlement of Final Payment Fee	—		—		—		110

Borrowings principal repayment							Borrowings principal repayment	—		—		—		93
Warrant exercises	Warrant exercises		60		—		Warrant exercises	—		—		60		—
Ending balance	Ending balance		3,779		2,344		Ending balance	4,477		3,036		4,477		3,036

Additional paid-in capital:	Additional paid-in capital:						Additional paid-in capital:
Beginning balance	Beginning balance		922,042		769,639		Beginning balance	$	1,116,815	$	848,431	$	922,042	$	769,639
Common stock issuances	Common stock issuances		88,776		13,238		Common stock issuances	126,313		34,483		308,039		70,327
Share-based compensation, net(1)	Share-based compensation, net(1)		2,656		684		Share-based compensation, net(1)	1,372		3,299		6,520		5,619

Severance and reorganization charges							Severance and reorganization charges	—		1,890		—		2,667
Share-based payments	Share-based payments		—		111		Share-based payments	—		113		—		337
Settlement of Final Payment Fee	Settlement of Final Payment Fee		—		9,036		Settlement of Final Payment Fee	—		—		—		9,036
Warrants issued in connection with Borrowings	Warrants issued in connection with Borrowings		—		(2,109)		Warrants issued in connection with Borrowings	—		—		—		16,896

Borrowings principal repayment							Borrowings principal repayment	—		—		—		13,695
Warrant exercises	Warrant exercises		8,117		—		Warrant exercises	—		—		8,117		—
Warrant cancellation	Warrant cancellation		(218)		—		Warrant cancellation	—		—		(218)		—
Ending balance	Ending balance		1,021,373		790,599		Ending balance	$	1,244,500	$	888,216	$	1,244,500	$	888,216

Accumulated deficit:	Accumulated deficit:						Accumulated deficit:
Beginning balance	Beginning balance		(816,322)		(605,626)		Beginning balance	$	(873,905)	$	(775,206)	$	(816,322)	$	(605,626)
Net loss	Net loss		(26,985)		(40,734)		Net loss	(15,932)		(29,466)		(73,515)		(199,046)
Ending balance	Ending balance		(843,307)		(646,360)		Ending balance	$	(889,837)	$	(804,672)	$	(889,837)	$	(804,672)

Total shareholders’ equity, ending balance	Total shareholders’ equity, ending balance		$	181,906	$	146,644	Total shareholders’ equity, ending balance	$	359,201	$	86,641	$	359,201	$	86,641

(1) Includes settlement of 2019 bonus that was accrued for in 2019.	(1) Includes settlement of 2019 bonus that was accrued for in 2019.	(1) Includes settlement of 2019 bonus that was accrued for in 2019.

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


TELLURIAN INC. AND SUBSIDIARIES	TELLURIAN INC. AND SUBSIDIARIES					TELLURIAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS					CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)	(in thousands, unaudited)					(in thousands, unaudited)

		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(26,985)	$	(40,734)	Net loss	$	(73,515)	$	(199,046)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization	Depreciation, depletion and amortization	2,652		5,832		Depreciation, depletion and amortization	8,720		14,301
Amortization of debt issuance costs, discounts and fees	Amortization of debt issuance costs, discounts and fees	3,061		3,231		Amortization of debt issuance costs, discounts and fees	3,061		22,467
Share-based compensation	Share-based compensation	1,571		683		Share-based compensation	4,577		2,184

Severance and reorganization charges						Severance and reorganization charges	—		2,689
Share-based payments	Share-based payments	0		111		Share-based payments	—		338
Interest elected to be paid-in-kind	Interest elected to be paid-in-kind	508		130		Interest elected to be paid-in-kind	508		2,431
Loss (gain) on financial instruments not designated as hedges		1,080		(101)

Loss on financial instruments not designated as hedges						Loss on financial instruments not designated as hedges	927		4,624
Impairment charges						Impairment charges	—		81,065
Net gain on extinguishment of debt	Net gain on extinguishment of debt	(1,574)		0		Net gain on extinguishment of debt	(1,422)		—
Other	Other	(80)		1,163		Other	800		485
Net changes in working capital (Note 15)	Net changes in working capital (Note 15)	9,292		9,191		Net changes in working capital (Note 15)	17,174		11,728
Net cash used in operating activities	Net cash used in operating activities	(10,475)		(20,494)		Net cash used in operating activities	(39,170)		(56,734)

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Development of natural gas properties	Development of natural gas properties	(1,130)		(269)		Development of natural gas properties	(23,416)		(389)
Purchase of property, plant and equipment	Purchase of property, plant and equipment	(270)		0		Purchase of property, plant and equipment	(1,000)		—
Net cash used in investing activities	Net cash used in investing activities	(1,400)		(269)		Net cash used in investing activities	(24,416)		(389)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from common stock issuances	Proceeds from common stock issuances	91,929		13,324		Proceeds from common stock issuances	319,998		73,986
Equity issuance costs	Equity issuance costs	(2,766)		(63)		Equity issuance costs	(10,893)		(3,091)

Borrowing proceeds						Borrowing proceeds	—		50,000
Borrowing issuance costs						Borrowing issuance costs	—		(2,612)
Borrowing principal repayments	Borrowing principal repayments	(102,725)		(2,000)		Borrowing principal repayments	(119,725)		(45,600)
Tax payments for net share settlement of equity awards (Note 15)	Tax payments for net share settlement of equity awards (Note 15)	(2,305)		0		Tax payments for net share settlement of equity awards (Note 15)	(3,064)		(878)
Proceeds from warrant exercises	Proceeds from warrant exercises	8,177		0		Proceeds from warrant exercises	8,177		—
Other	Other	(1)		42		Other	(1,833)		(1,776)
Net cash (used in) provided by financing activities		(7,691)		11,303
Net cash provided by financing activities						Net cash provided by financing activities	192,660		70,029

Net decrease in cash, cash equivalents and restricted cash		(19,566)		(9,460)
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	129,074		12,906
Cash, cash equivalents and restricted cash, beginning of period	Cash, cash equivalents and restricted cash, beginning of period	81,738		68,482		Cash, cash equivalents and restricted cash, beginning of period	81,738		68,482
Cash, cash equivalents and restricted cash, end of period	Cash, cash equivalents and restricted cash, end of period	$	62,172	$	59,022	Cash, cash equivalents and restricted cash, end of period	$	210,812	$	81,388
Supplementary disclosure of cash flow information:	Supplementary disclosure of cash flow information:					Supplementary disclosure of cash flow information:
Interest paid	Interest paid	$	2,116	$	2,905	Interest paid	$	3,299	$	7,956

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

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

We plan to develop, own and operate a global natural gas business and to deliver natural gas to customers worldwide. Tellurian is developing a portfolio of natural gas, ~~production,~~ LNG marketing, and infrastructure assets ~~including~~that includes an LNG terminal facility (the “Driftwood terminal”) ~~and~~, an associated pipeline (the “Driftwood pipeline”) ~~in southwest Louisiana. Tellurian plans to develop~~, other related pipelines, and upstream natural gas assets. The Driftwood terminal and the Driftwood pipeline ~~as part of what we refer to as the “Pipeline Network.” The Driftwood terminal, the Pipeline Network and required natural gas production assets~~ are collectively referred to as the “Driftwood Project”.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain notes and other information have been condensed or omitted. The accompanying interim financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of our Condensed Consolidated Financial Statements. These interim financial statements 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, 2020.

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.

Liquidity

Our Condensed Consolidated Financial Statements were 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 sufficient to satisfy our obligations and fund working capital needs.

~~We are planning~~The Company has sufficient cash on hand and available liquidity to ~~generate proceeds from our at-the-market program and have determined that it is probable that such proceeds will~~ satisfy ~~our~~its obligations and fund ~~our~~its working capital needs for at least twelve months following the date of issuance of the condensed consolidated financial statements. ~~We also continue~~The Company has the ability to ~~evaluate generating~~generate additional proceeds from various other potential financing transactions, such as issuances of equity, equity-linked and debt securities, or similar transactions to fund our obligations and working capital needs.

Use of Estimates

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.

NOTE 2 — PREPAID EXPENSES AND OTHER CURRENT ASSETS

The components of prepaid expenses and other current assets consist of the following (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Prepaid expenses	Prepaid expenses	$	1,064	$	1,156	Prepaid expenses	$	280	$	1,156
Deposits	Deposits	100		100		Deposits	150		100
Derivative asset	Derivative asset	0		843		Derivative asset	—		843
Other current assets	Other current assets	247		6		Other current assets	37		6
Total prepaid expenses and other current assets	Total prepaid expenses and other current assets	$	1,411	$	2,105	Total prepaid expenses and other current assets	$	467	$	2,105

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 3 — PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is comprised of fixed assets, proved oil and natural gas properties and ~~finance~~financing leases, as shown below (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Land		$	14,180	$	13,808
Land and land improvement						Land and land improvement	$	15,284	$	13,808
Proved properties	Proved properties	62,889		62,227		Proved properties	76,406		62,227
Wells in progress	Wells in progress	603		492		Wells in progress	11,200		492
Corporate and other	Corporate and other	3,477		3,476		Corporate and other	3,476		3,476
Total property, plant and equipment at cost	Total property, plant and equipment at cost	81,149		80,003		Total property, plant and equipment at cost	106,366		80,003
Accumulated DD&A	Accumulated DD&A	(41,396)		(38,764)		Accumulated DD&A	(47,424)		(38,764)
Right of use asset — finance leases		19,918		20,018
Right of use asset — financing leases						Right of use asset — financing leases	58,176		20,018
Total property, plant and equipment, net	Total property, plant and equipment, net	$	59,671	$	61,257	Total property, plant and equipment, net	$	117,118	$	61,257

Land

We own land in Louisiana for the purpose of constructing the Driftwood ~~Project.~~terminal.

NOTE 4 — DEFERRED ENGINEERING COSTS

Deferred engineering costs of approximately ~~$110.6~~$110.0 million represent detailed engineering services related to the planned construction of the Driftwood terminal as of ~~March 31,~~September 30, 2021. The balance in this account will be transferred to construction in progress upon reaching an affirmative FID by the Company’s Board of Directors.

NOTE 5 — OTHER NON-CURRENT ASSETS

Other non-current assets consist of the following (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Land lease and purchase options	Land lease and purchase options	$	6,040	$	5,831	Land lease and purchase options	$	6,363	$	5,831
Permitting costs	Permitting costs	13,345		13,092		Permitting costs	13,497		13,092
Right of use asset — operating leases	Right of use asset — operating leases	11,469		11,884		Right of use asset — operating leases	10,610		11,884
Other	Other	1,952		2,090		Other	1,929		2,090
Total other non-current assets	Total other non-current assets	$	32,806	$	32,897	Total other non-current assets	$	32,399	$	32,897

Land Lease and Purchase Options

We hold lease and purchase option agreements (the “Options”) for certain tracts of land and associated river frontage. Upon exercise of the Options, the leases are subject to maximum terms of 50 years (inclusive of various renewals, at the option of the Company). Costs of the Options will be amortized over the life of the lease once obtained, or capitalized into the cost of land if purchased.

Permitting Costs

Permitting costs primarily represent the purchase of wetland credits in connection with our permit application to the USACE in 2017 and 2018. These wetland credits will be applied to our permit in accordance with the Clean Water Act and the Rivers and Harbors Act, which may require us to mitigate the potential impact to Louisiana wetlands that might be caused by the construction of the Driftwood Project. In May 2019, we received the USACE permit. The permitting costs will be transferred to construction in progress upon reaching an affirmative FID by the Company’s Board of Directors.

NOTE 6 — FINANCIAL INSTRUMENTS

As ~~discussed in Note 9,~~ ~~Borrowings, as~~ part of entering into the ~~senior secured term loan credit agreement~~2018 Term Loan, which was repaid in ~~2018,~~full in April 2021, we ~~are~~were required to enter into and maintain certain hedging transactions. As a result, we ~~use~~used derivative financial instruments, namely OTC commodity swap instruments (“commodity swaps”), to maintain compliance with ~~this~~that covenant. ~~We do not hold or issue derivative financial instruments for trading purposes.~~

Commodity swap agreements involve payments to or receipts from counterparties based on the differential between two prices for the commodity and include basis swaps to protect earnings from undue exposure to the risk of geographic disparities in commodity ~~prices, as required by the negative covenant of the senior secured term loan credit agreement.~~prices. The fair value of our commodity swaps iswas classified as Level 2 in the fair value hierarchy and iswas based on standard industry income approach models that use significant observable inputs, including but not limited to

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

~~approach models that use significant observable inputs, including but not limited to~~ New York Mercantile Exchange (NYMEX) natural gas forward curves and basis forward curves, all of which ~~are~~were validated against external sources at least monthly.

~~The Company recognizes~~We recognized all derivative instruments as either assets or liabilities at fair value on a net basis as they ~~are~~were with a single counterparty and subject to a master netting arrangement. ~~The Company can~~In April 2021, we net ~~settle its~~settled our derivative instruments ~~at any time. As of March 31, 2021,~~when we ~~had a current liability, net of $0.1 million, and a non-current liability, net of $0.1 million, with respect to~~voluntarily repaid the ~~fair value of the current and non-current portion of our commodity swaps.~~2018 Term Loan in full.

We dodid not apply hedge accounting for our commodity swaps; therefore, all changes in the fair value of ~~the Company’s~~our derivative instruments ~~are~~were recognized within Other (expenses) income, net, in the Condensed Consolidated Statements of Operations. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we recognized a realized ~~gain of $0.4 million, as well as an unrealized~~ loss of ~~$1.1~~approximately $1.2 million ~~related to the changes in fair value of the commodity swaps~~ in our Condensed Consolidated Statements of Operations. Derivative contracts which result in physical delivery of a commodity expected to be used or sold by the Company in the normal course of business are designated as normal purchases and sales and are exempt from derivative accounting. OTC arrangements require settlement in cash. Settlements of commodity derivative instruments are reported as a component of cash flows from operations in the Condensed Consolidated Statements of Cash Flows.

With respect to the commodity swaps, the Company hedged 5.6 Bcf of its fixed price and basis exposure, which represents a portion of its expected sales of equity production as of March 31, 2021. The open positions as of March 31, 2021 had maturities extending through September 2022.

NOTE 7 — RELATED PARTY TRANSACTIONS

In conjunction with the dismissal of prior litigation, we agreed to reimburse the Vice Chairman of our Board of Directors, Martin Houston, for reasonable attorneys’ fees and expenses he incurred during the litigation. As of ~~March 31,~~September 30, 2021, ~~a balance of approximately $0.5 million remained~~all amounts owed to Mr. Houston ~~and has been classified within Accounts payable due to related parties on the Condensed Consolidated Balance Sheets.~~were fully settled.

NOTE 8 — ACCRUED AND OTHER LIABILITIES

The components of accrued and other liabilities consist of the following (in thousands):


		March 31, 2021		December 31, 2020			September 30, 2021		December 31, 2020
Project development activities	Project development activities	$	2,709	$	3,228	Project development activities	$	11,380	$	3,228
Payroll and compensation	Payroll and compensation	10,313		9,454		Payroll and compensation	15,512		9,454
Accrued taxes	Accrued taxes	1,056		1,057		Accrued taxes	1,047		1,057
Professional services (e.g., legal, audit)	Professional services (e.g., legal, audit)	2,023		1,004		Professional services (e.g., legal, audit)	2,764		1,004
Warrant liabilities	Warrant liabilities	0		3,774		Warrant liabilities	—		3,774
Lease liabilities	Lease liabilities	1,998		1,950		Lease liabilities	2,287		1,950
Other	Other	1,798		1,536		Other	2,213		1,536
Total accrued and other liabilities	Total accrued and other liabilities	$	19,897	$	22,003	Total accrued and other liabilities	$	35,203	$	22,003

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 9 — BORROWINGS

The following tables summarize the Company’s borrowings as of ~~March 31,~~September 30, 2021, and December 31, 2020 (in thousands):

March 31, 2021
Principal repayment obligation
Unamortized DFC and discounts Carrying value
2018 Term Loan, due September 2021 $ 17,000 $ (152) $ 16,848
2019 Term Loan 0 0 0
2020 Unsecured Note 0 0 0
Total borrowings $ 17,000 $ (152) $ 16,848
December 31, 2020
Principal repayment obligation Unamortized DFC and discounts Carrying value
2018 Term Loan, due September 2021 $ 60,000 $ (805) $ 59,195
2019 Term Loan, due March 2022 (a)
43,217 (4,942) 38,275
2020 Unsecured Note 16,000 (2,376) 13,624
Total borrowings $ 119,217 $ (8,123) $ 111,094
(a) Includes paid-in-kind interest on the 2019 Term Loan of $3.3 million.

~~Extinguishment of the 2019 Term Loan~~

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 throughout 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 Statement 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 were included in the computation of the gain from the extinguishment of the 2019 Term Loan as of March 31, 2021.

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.~~


	September 30, 2021
	Principal repayment obligation		Unamortized DFC and discounts		Carrying value
2018 Term Loan, due September 2021	$	—	$	—	$	—
2019 Term Loan, due March 2022	—		—		—
2020 Unsecured Note	—		—		—
Total borrowings	$	—	$	—	$	—

	December 31, 2020
	Principal repayment obligation		Unamortized DFC and discounts		Carrying value
2018 Term Loan, due September 2021	$	60,000	$	(805)	$	59,195
2019 Term Loan, due March 2022 (a)	43,217		(4,942)		38,275
2020 Unsecured Note	16,000		(2,376)		13,624
Total borrowings	$	119,217	$	(8,123)	$	111,094


(a) Includes paid-in-kind interest on the 2019 Term Loan of $3.3 million.

Full Repayment of the ~~2020 Unsecured Note~~Company’s Borrowing Obligations

~~On March 31, 2020, we made~~Over the ~~final contractually required amortization payment of $4.0 million under the terms~~course of the ~~2020 Unsecured Note, thereby satisfying~~current year, we voluntarily repaid all ~~financial~~borrowing obligations ~~under the 2020 Unsecured Note.~~

~~2018 Term Loan~~

On September 28, 2018 (the “Closing Date”), Tellurian Production Holdings LLC (“Production Holdings”), a wholly owned subsidiary of the Company, entered into a three-year senior secured term loan credit agreement (the “2018 Term Loan”) in an aggregate principal amount of $60.0 million.

Our use of proceeds from the 2018 Term Loan is predominantly restricted to capital expenditures associated with certain development and drilling activities and fees related to the transaction itself. As of March 31, 2021, unused proceeds from the 2018 Term Loan totaled $3.4 million andthat were ~~classified as Non-current restricted cash on our Condensed Consolidated Balance Sheets.~~

We have the right, but not the obligation, to make voluntary principal repayments starting six months following the Closing Date in a minimum amount of $5.0 million or any integral multiples of $1.0 million in excess thereof. If no voluntary principal repayments are made, the principal amount, together with any accrued interest, is payable at the maturity date of

~~Tellurian Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~September 28, 2021. The 2018 Term Loan can be terminated without penalty, with an early termination payment equal to the~~ outstanding ~~principal plus accrued interest.~~

~~Amounts borrowed~~ under the 2018 Term Loan, are guaranteed by Tellurian Inc. and each of Production Holdings’ subsidiaries. The 2018 Term Loan is collateralized by a first priority lien on all assets of Production Holdings and its subsidiaries, including our proved natural gas properties.

On February 18, 2021, we voluntarily repaid approximately $43.0 million of the 2018 Term Loan outstanding principal balance. As a result of this voluntary repayment, we recognized an approximately $0.5 million loss, which was netted against the gain on extinguishment of the 2019 Term Loan, and presented within Gain on extinguishment of debt, net, on our Condensed Consolidated Statement of Operations on this partial extinguishment due to the pro-rata recognition of the unamortized DFC and discount associated with the 2018 Term Loan. See Note 16, ~~Subsequent Events, for further information.~~

~~The carrying value of the 2018 Term Loan approximates its fair value.~~

~~Covenant Compliance~~

2020 Unsecured Note. As of ~~March 31,~~September 30, 2021, our total borrowing obligation was zero.

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 ~~Company was~~purchase and sale of LNG cargoes for ultimate resale in ~~compliance with all covenants under its credit agreement. Refer to Note 6,~~ ~~Financial Instruments, for details~~the normal course of ~~hedging transactions, as~~business. As of ~~and for~~ the period ended ~~March 31,~~September 30, 2021, ~~entered into as required by the 2018 Term Loan described above.~~no amounts have been drawn.

NOTE 10 — COMMITMENTS AND CONTINGENCIES

~~On April 23, 2019,~~LNG Purchases

In connection with our LNG trading activities, we have previously entered into ~~a master LNG sale and purchase agreement and related confirmation notices (collectively, the “SPA”)~~agreements with an unrelated third-party LNG ~~merchant. Pursuant~~merchants pursuant to ~~the SPA,~~which we ~~committed~~are obligated to purchase ~~one~~1 cargo of LNG per quarter through October ~~2022.~~2022 at a price based on then-prevailing JKM prices. The volume of each cargo is expected to range from 3.3 to 3.6 million MMBtu, and each cargo will be purchased under DES terms. ~~The price of each cargo will be based on the JKM price in effect at the time of each purchase.~~

NOTE 11 — STOCKHOLDERS’ EQUITY

Common Stock Issuance

On August 6, 2021, we sold 35.0 million shares of our common stock in an underwritten public offering at a price of $3.00 per share. Net proceeds from this offering, after deducting fees and expenses, were approximately $100.8 million. The underwriters were granted an option to purchase up to an additional 5.3 million shares of common stock within 30 days. On August 31, 2021, the underwriters exercised this option, which generated net proceeds, after deducting fees, of approximately $15.1 million.

At-the-Market Program

We maintain an at-the-market equity offering program pursuant to which we may sell shares of our common stock from time to ~~time on Nasdaq.~~time. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021, we issued ~~38.7~~66.4 million shares of our common stock under our at-the-market program for net proceeds of approximately ~~$89.2~~$193.3 million. As of ~~March 31,~~September 30, 2021, we had remaining availability under the at-the-market program to raise aggregate gross sales proceeds of up to approximately ~~$241.9~~$334.6 million. ~~See Note 16,~~ ~~Subsequent Events, for further information.~~

Common Stock Purchase Warrants

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

2019 Term Loan

During the first quarter of 2021, the lender ofunder the 2019 Term Loan purchased approximately 6.0 million shares of our common stock pursuant to the exercise of warrants for total proceeds of approximately $8.2 million. ~~As discussed in Note 9,~~ ~~Borrowings~~,On March 12, 2021, we repaid the 2019 Term Loan ~~has been repaid~~ in full and the lender no longer holds any warrants.

2020 Unsecured Note

In conjunction with the issuance of the 2020 Unsecured Note, we issued a warrant providing the lender with the right to purchase up to 20.0 million shares of our common stock at $1.542 per share (the “2020 Warrant”). The 2020 Warrant vested immediately and will expire in October 2025. The 2020 Warrant 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.

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 Oil, Gas and Chemicals, Inc., a Delaware corporation, 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 1-for-one basis. At any time after “Substantial Completion” of “Project 1,” each as defined in and pursuant to the LSTK EPC Agreement for the Driftwood LNG Phase 1 Liquefaction Facility, dated as of November 10, 2017, 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 1-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.

~~Tellurian Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

NOTE 12 — 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 March 31, 2021, there was no Restricted Stock that would be required to be settled in cash.~~

As of ~~March 31,~~September 30, 2021, we had approximately ~~29.7~~30.2 million shares of performance-based Restricted Stock outstanding, of which approximately ~~19.3~~19.2 million shares will vest entirely at FID, as defined in the award agreements, and approximately ~~9.8~~10.2 million shares will vest in one-third increments at FID and the first and second anniversaries of FID. The remaining shares of ~~performance-based~~ Restricted Stock, totaling approximately ~~0.6~~0.8 million shares, will vest based on other criteria. As of ~~March 31,~~September 30, 2021, 0no expense had been recognized in connection with performance-based Restricted Stock.

As of March 31, 2021, we had approximately 2.3 million shares of time-based Restricted Stock outstanding. They primarily represent the settlement of the 2019 employee bonuses, which were recognized as compensation expenses and included in our accrued liabilities balance as of December 31, 2019, and will vest in their entirety during 2021.

For the three and nine months ended ~~March 31,~~September 30, 2021, the recognized share-based compensation expenses related to all share-based awards totaled approximately ~~$1.6 million.~~$1.5 million and $4.6 million, respectively. As of ~~March 31,~~September 30, 2021, unrecognized compensation expenses, based on the grant date fair value, for all share-based awards totaled approximately ~~$202.2~~$200.5 million. Further, the approximately ~~32.0~~30.2 million shares of ~~performance-based and time-based~~ Restricted Stock, as well as approximately ~~11.2~~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.

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 ~~March 31,~~September 30, 2021 and December 31, 2020. Accordingly, we have not recorded a provision for federal, state or foreign income taxes during the three and nine months ended ~~March 31,~~September 30, 2021.

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.

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 14 — LEASES

~~Finance~~Financing Leases

Our land leases are classified as financing leases and include 1 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. As of ~~March 31,~~September 30, 2021, the weighted-average remaining lease term for our financing leases was approximately fifty years. As none of our ~~finance~~financing leases provide an implicit rate, we have determined our own discount rate, which, on a weighted-average basis ~~at March 31, 2021,~~ was approximately ~~13%.~~9% at September 30, 2021.

As of ~~March 31,~~September 30, 2021, our financing leases had a ~~corresponding~~ right of use asset of approximately ~~$19.9~~$58.2 million, which is recognized within Property, plant and equipment, net, and a ~~total~~corresponding lease liability of approximately ~~$13.5~~$50.3 million, most of which is recognized inwithin Other non-current liabilities. For the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, our ~~finance~~financing lease costs, which are associated with the interest on our lease liabilities, were approximately $1.0 million and $0.5 million, respectively, and ~~$0.3~~$1.9 million and $1.2 million, respectively. For the nine months ended September 30, 2021, we paid approximately $1.0 million in required finance lease payments which are presented within the operating section of the Condensed Consolidated Statements of Cash Flows. For each of the nine months ended September 30, 2021 and 2020, we paid approximate $1.8 million, in required financing lease payments which are presented within the financing section of the Condensed Consolidated Statements of Cash Flows.

Operating Leases

Our office space leases are classified as operating leases and include 1 or more options to extend the lease term for up to 10 years, at our sole discretion. As we are not reasonably certain that those options will be exercised, none are recognized as part of our right of use assets and lease liabilities. As of ~~March 31,~~September 30, 2021, our weighted-average remaining lease term for our operating leases was approximately five years. As none of our operating leases provide an implicit rate, we have determined our own discount rate, which, on a weighted-average basis at ~~March 31,~~September 30, 2021, was approximately 8%.

~~Tellurian Inc. and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

As of ~~March 31,~~September 30, 2021, our operating leases had a corresponding right of use asset of approximately ~~$11.5~~$10.6 million, which is recognized within Other non-current assets, and a total lease liability of approximately ~~$13.2~~$12.2 million which is recognized within Accrued and other liabilities (approximately ~~$2.0~~$2.1 million) and Other non-current liabilities (approximately ~~$11.2~~$10.1 million). For the three and nine months ended ~~March 31,~~September 30, 2021 and 2020, our operating lease costs were $0.7 million and ~~$0.9~~$0.7 million, respectively, and $2.1 million and $2.1 million, respectively. For the ~~three~~nine months ended ~~March 31,~~September 30, 2021 and 2020, we paid approximately ~~$0.7~~$2.1 million and ~~$0.9~~$2.1 million, respectively, in ~~cash for amounts included in the measurement of~~required operating lease ~~liabilities, all of~~payments, which are presented within the operating ~~cash flows.~~section of the Condensed Consolidated Statements of Cash Flows.

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 ~~March 31,~~September 30, 2021 (in thousands):


Maturity of lease liability	Maturity of lease liability	Operating		Finance		Maturity of lease liability	Operating Leases		Financing Leases
2021	2021	$	2,231	$	1,369	2021	$	745	$	1,028
2022	2022	3,006		1,826		2022	3,006		4,111
2023	2023	3,044		1,826		2023	3,044		4,111
2024	2024	3,081		1,826		2024	3,081		4,111
2025	2025	3,119		1,826		2025	3,119		4,111
After 2025		1,861		82,368
Thereafter						Thereafter	1,860		186,333
Total lease payments	Total lease payments	$	16,342	$	91,041	Total lease payments	$	14,855	$	203,805
Less: discount	Less: discount	3,154		77,532		Less: discount	2,641		153,477
Present value of lease liability	Present value of lease liability	$	13,188	$	13,509	Present value of lease liability	$	12,214	$	50,328

NOTE 15 — ADDITIONAL CASH FLOW INFORMATION

The following table provides information regarding the net changes in working capital (in thousands):

Three Months Ended March 31,
2021 2020
Accounts receivable $ 916 $ 1,811
Prepaid expenses and other current assets 5 2,262
Accounts payable 1,674 3,280
Accounts payable due to related parties (460) 0
Accrued liabilities 7,669 2,500
Other, net (512) (662)
Net changes in working capital $ 9,292 $ 9,191

~~The following table provides supplemental disclosure of cash flow information (in thousands):~~

Three Months Ended March 31,
2021 2020
Non-cash accruals of property, plant and equipment and other non-current assets $ (356) $ 2,174
Non-cash settlement of withholding taxes associated with the 2019 bonus and vesting of certain awards 2,305 0
Non-cash settlement of the 2019 bonus 3,258 0
Non-cash settlement of Final Payment Fee 0 8,539
Tradable equity securities 0 2,362

1110

Tellurian Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)


	Nine Months Ended September 30,
	2021		2020
Accounts receivable	$	(8,556)	$	1,991
Prepaid expenses and other current assets	412		6,995
Accounts payable	4,288		(25)
Accounts payable due to related parties	(910)		1,360
Accrued liabilities	23,030		3,155
Other, net	(1,090)		(1,748)
Net changes in working capital	$	17,174	$	11,728

The following table provides supplemental disclosure of cash flow information (in thousands):


	Nine Months Ended September 30,
	2021		2020
Non-cash accruals of property, plant and equipment and other non-current assets	$	38,509	$	7,955
Non-cash settlement of withholding taxes associated with the 2019 bonus and vesting of certain awards	3,064		878
Non-cash settlement of the 2019 bonus	5,430		4,344
Non-cash settlement of Final Payment Fee	—		8,539

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):


		Three Months Ended March 31,					Nine Months Ended September 30,
		2021		2020			2021		2020
Cash and cash equivalents	Cash and cash equivalents	$	58,729	$	55,452	Cash and cash equivalents	$	210,812	$	77,947
Non-current restricted cash	Non-current restricted cash	3,443		3,570		Non-current restricted cash	—		3,441
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	62,172	$	59,022	Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	210,812	$	81,388

NOTE 16 — SUBSEQUENT EVENTS

~~At-the-Market Program~~

Subsequent to ~~March 31,~~September 30, 2021, and through the date of this filing, we issued approximately ~~7.9~~8.2 million shares of common stock under our at-the-market equity offering program for ~~total~~net proceeds of approximately ~~$15.2 million, net of approximately $0.5 million in fees and commissions.~~$29.0 million. As of ~~April 30, 2020,~~October 22, 2021, we have remaining capacity under our at-the-market program to raise aggregate gross sales proceeds of approximately ~~$226.3~~$304.7 million.

~~2018 Term Loan Extinguishment~~

~~On April 23,~~Effective November 2, 2021, ~~we voluntarily repaid~~ the ~~outstanding principal balance~~listing of ~~$17.0 million and all associated interest~~our common stock was transferred from the Nasdaq Capital Market to the NYSE American. The stock continues to trade under the ~~2018 Term Loan, thereby satisfying all of our borrowing obligations under the 2018 Term Loan.~~symbol “TELL”.

1211

Tellurian Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion and analysis presents management’s view of our business, financial condition and overall performance and should be read in conjunction with our Condensed Consolidated Financial Statements and the accompanying notes. This information is intended to provide investors with an understanding of our past development activities, current financial condition and outlook for the future organized as follows:

•Our Business

•Overview of Significant Events

•Liquidity and Capital Resources

•Capital Development Activities

•Results of Operations

•Recent Accounting Standards

Our Business

Tellurian Inc. (“Tellurian,” “we,” “us,” “our,” or the “Company”) intends to create value for shareholders by building a low-cost, global natural gas business, profitably delivering natural gas to customers worldwide (the “Business”). We are developing a portfolio of natural gas, ~~production,~~ LNG marketing, and infrastructure assets that includes an LNG terminal facility (the “Driftwood terminal”) ~~and~~, an associated pipeline (the “Driftwood pipeline”), other related pipelines, ~~(the “Pipeline Network”). We refer to~~and upstream natural gas assets. The Driftwood terminal and the Driftwood ~~terminal, the Pipeline Network and required natural gas production assets~~pipeline are collectively referred to as the “Driftwood ~~Project.”~~Project”. Our existing upstream natural gas ~~production~~ assets consist of ~~9,704~~9,750 net acres and interests in 7274 producing wells located in the Haynesville Shale trend of northern Louisiana. Our Business may be developed in phases.

As part of our execution strategy, we will consider partnering with third parties across the natural gas value chain. We are also pursuing activities such as direct sales of LNG to global counterparties, the acquisition of additional upstream acreage, the drilling of new wells on our existing or newly acquired upstream acreage and trading LNG. As discussed in “Overview of Significant Events – LNG Sale and Purchase Agreements” below, we entered into four LNG SPAs with three unrelated purchasers, completing the planned sales for plants one and two of the Driftwood terminal (“Phase 1”). We are currently focused on securing financing for the construction of Phase 1.

We continue to evaluate, and discuss with potential partners, the scope and other aspects of our Business in light of the evolving economic environment, needs of potential partners and other factors. How we execute our Business will be based on a variety of factors, including the results of our continuing analysis, changing business conditions and market feedback.

Overview of Significant Events

~~Debt Reductions~~LNG Sale and Purchase Agreements

~~During~~Subsequent to entering into LNG SPAs with Gunvor Singapore Pte Ltd and Vitol Inc. for the ~~first quarter~~purchase of ~~2021, we repaid~~ a total of ~~approximately $102.7~~6.0 Mtpa during the second quarter of this year, on July 29, 2021, Driftwood LNG LLC, a wholly owned subsidiary of the Company, has entered into two LNG SPAs with Shell NA LNG LLC (“Shell”) for the purchase of 3.0 Mtpa at a price that will be based on the JKM index price or the TTF futures contract price, in each case minus a transportation netback. Each LNG SPA has a ten-year term from the date of first commercial delivery from the Driftwood terminal.

Public Equity Offering

On August 6, 2021, we sold 35.0 million ~~in outstanding principal balance~~shares of our ~~borrowing obligations. As~~common stock in an underwritten public offering at a price of ~~March~~$3.00 per share. Net proceeds from this offering, after deducting fees and expenses, were approximately $100.8 million. The underwriters were granted an option to purchase up to an additional 5.3 million shares of common stock within 30 days. On August 31, 2021, ~~we had one term loan outstanding with an outstanding balance~~the underwriters exercised this option, which generated net proceeds, after deducting fees, of ~~$17.0~~approximately $15.1 million. ~~On April 23, 2021, the remaining outstanding principal balance was voluntarily repaid.~~

Liquidity and Capital Resources

Capital Resources

We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. We are currently funding our operations, development activities and general working capital needs through our cash on hand. Our current capital resources consist of approximately ~~$58.7~~$210.8 million of cash and cash equivalents as of ~~March 31, 2021, on a consolidated basis, of which approximately $9.4 million is maintained at a wholly owned subsidiary of Tellurian Production Holdings LLC.~~September 30, 2021. We currently maintain an at-the-market equity offering program under which, as of the date of this filing, we have remaining availability to raise aggregate gross sales proceeds of approximately $226.3 million. Since January 1, 2021, and through April 30, 2021, we have sold approximately 46.5 million shares of common stock under our at-the-market program for total proceeds of approximately $104.3 million, net of approximately $3.2 million in fees and commissions. We plan to enter into a new at-the-market equity offering program shortly after the filing of this report.

As of March 31, 2021, we had total indebtedness of $17.0 million that is scheduled to be repaid within the next twelve months. We also had contractual obligations associated with our finance and operating leases totaling $107.4 million, of which $4.8 million is scheduled to be paid within the next twelve months.

~~On April 23, 2021, the remaining indebtedness balance of $17.0 million was voluntarily repaid.~~

1312

Tellurian Inc. and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

~~We are planning~~availability to ~~generate~~raise aggregate gross sales proceeds ~~from~~of approximately $304.7 million. Since January 1, 2021, and through October 22, 2021, we have sold approximately 74.6 million shares of common stock under our at-the-market program for net proceeds of approximately $222.3 million.

As of September 30, 2021, we had contractual obligations associated with our financing and operating leases totaling $218.7 million, of which $7.1 million is scheduled to be paid within the next twelve months.

In connection with our LNG trading activities, we have ~~determined that it is probable that such proceeds will~~previously entered into agreements with unrelated third-party LNG merchants pursuant to which we are obligated to purchase one cargo of LNG per quarter through October 2022 at a price based on then-prevailing JKM prices. We may be required to use cash on hand as well as trade financing arrangements to finance the purchase of these cargoes.

The Company has sufficient cash on hand and available liquidity to satisfy ~~our~~its obligations and fund ~~our~~its working capital needs for at least twelve months following the date of issuance of the condensed consolidated financial statements. ~~We also continue~~The Company has the ability to ~~evaluate generating~~generate additional proceeds from various other potential financing transactions, such as issuances of equity, equity-linked and debt securities, or similar transactions to fund our obligations and working capital needs.

Sources and Uses of Cash

The following table summarizes the sources and uses of our cash and cash equivalents and costs and expenses for the periods presented (in thousands):


		Three Months Ended March 31,
							Nine Months Ended September 30,
		2021		2020			2021		2020
Cash used in operating activities	Cash used in operating activities	$	(10,475)	$	(20,494)	Cash used in operating activities	$	(39,170)	$	(56,734)
Cash used in investing activities	Cash used in investing activities	(1,400)		(269)		Cash used in investing activities	(24,416)		(389)
Cash (used in) provided by financing activities		(7,691)		11,303
Cash provided by financing activities						Cash provided by financing activities	192,660		70,029

Net decrease in cash, cash equivalents and restricted cash		(19,566)		(9,460)
Net increase in cash, cash equivalents and restricted cash						Net increase in cash, cash equivalents and restricted cash	129,074		12,906
Cash, cash equivalents and restricted cash, beginning of the period	Cash, cash equivalents and restricted cash, beginning of the period	81,738		68,482		Cash, cash equivalents and restricted cash, beginning of the period	81,738		68,482
Cash, cash equivalents and restricted cash, end of the period	Cash, cash equivalents and restricted cash, end of the period	$	62,172	$	59,022	Cash, cash equivalents and restricted cash, end of the period	$	210,812	$	81,388

Net working capital	Net working capital	$	1,282	$	3,699	Net working capital	$	161,271	$	(58,741)

Cash used in operating activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 decreased by approximately ~~$10.0~~$17.6 million compared to the same period in 2020 due to an overall decrease in disbursements as a result of the reorganization in the ~~normal course~~first quarter of ~~business.~~2020.

Cash used in investing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 increased by approximately ~~$1.1~~$24.0 million compared to the same period in 2020. This increase is predominantly driven by increased natural gas development activities.

Cash ~~(used in)~~ provided by financing activities for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 ~~decreased~~increased by approximately ~~$19.0~~$122.6 million compared to the same period in 2020. This ~~decrease~~increase primarily relates to the following:

•Increase of approximately ~~$102.7~~$246.4 million in net proceeds from equity issuances and warrant exercises.

•Decrease of approximately $47.4 million in net borrowings proceeds due to the absence of these activities during the current period.

•Increase of approximately $74.1 million in principal repayments of our borrowings compared to ~~$2.0 million in~~ the prior period. ~~This increase in principal repayments was offset by an increase in net proceeds of approximately $89.2 million from equity issuances compared to approximately $13.3 million in the prior period.~~

See Note 9,11, ~~Borrowings~~Stockholders’ Equity, of our Notes to the Condensed Consolidated Financial Statements for further ~~information.~~information about our financing activities.

~~Borrowings~~

Tellurian Inc. and Subsidiaries

Management's Discussion and Analysis of ~~March 31, 2021, we had total indebtedness~~Financial Condition and Results of approximately $17.0 million, all of which was secured indebtedness, and we were in compliance with the covenants under our credit agreement. On April 23, 2021, the remaining outstanding principal balance was voluntarily repaid. For additional details regarding our borrowing activity, refer to Note 9, ~~Borrowings~~,~~of our Notes to the Condensed Consolidated Financial Statements.~~Operations

Capital Development Activities

The activities we have proposed will require significant amounts of capital and are subject to risks and delays in completion. We ~~have~~ received all major regulatory approvals for the construction of Phase 1 and, as a result, our business success will depend to a significant extent upon our ability to obtain the funding necessary to construct assets on a commercially viable basis and to finance the costs of staffing, operating and expanding our company during that process. We have initiated certain owner construction activities.

We currently estimate the total cost of the Driftwood Project as well as related pipelines and upstream natural gas assets to be approximately ~~$24.7~~$25.0 billion including owners’ costs, transaction costs and contingencies but excluding interest costs incurred during construction ~~of the Driftwood terminal~~ and other financing costs. We have entered into four LSTK EPC agreements currently totaling $15.5 billion, or $561 per tonne, with Bechtel Oil, Gas and Chemicals, Inc. (“Bechtel”) for construction of the Driftwood terminal. The proposed Driftwood terminal will have a liquefaction capacity of up to approximately 27.6 Mtpa and will be situated on approximately 1,000 acres in Calcasieu Parish, Louisiana. The proposed Driftwood terminal will include up to 20 liquefaction Trains, three full containment LNG storage tanks and three marine berths.

In addition, part of our strategy involves acquiring additional natural gas properties, including properties in the Haynesville shale trend. We intend to pursue potential acquisitions of such assets, or public or private companies that own such

~~Tellurian Inc. and Subsidiaries~~

~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~

~~assets, in 2021.~~ assets. We would expect to use stock, cash on hand, or cash raised in financing transactions to complete an acquisition of this type.

We anticipate funding our more immediate liquidity requirements relative to the detailed engineering work and other developmental costs, natural gas development costs, and general and administrative costs through the use of cash on hand, proceeds from operations, and proceeds from completed and future issuances of securities by us. Consistent with our overall financing strategy, the Company has considered, and in some cases discussed with investors, various potential financing transactions, including issuances of debt, equity and equity-linked securities or similar transactions, to support its short- and medium-term capital requirements. The Company will continue to evaluate its cash needs and business outlook, and it may execute one or more transactions of this type in the future.

We currently expect that our long-term capital requirements will be financed by proceeds from future debt, equity and/or equity-linked transactions.

Results of Operations

The following table summarizes revenue, costs and expenses for the periods presented (in thousands):


		Three Months Ended March 31,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020			2021		2020		2021		2020
Total revenue	Total revenue	$	8,706	$	8,217	Total revenue	$	15,638	$	14,265	$	49,698	$	28,811
Cost of sales	Cost of sales	2,406		2,879		Cost of sales	3,068		9,241		30,841		14,529
Development expenses	Development expenses	8,141		11,183		Development expenses	8,823		5,799		26,327		26,105
Depreciation, depletion and amortization	Depreciation, depletion and amortization	2,652		5,832		Depreciation, depletion and amortization	3,735		3,474		8,720		14,301
General and administrative expenses	General and administrative expenses	15,111		17,239		General and administrative expenses	14,528		10,734		47,065		43,342

Impairment charge						Impairment charge	—		—		—		81,065
Severance and reorganization charges	Severance and reorganization charges	—		5,505		Severance and reorganization charges	—		—		—		6,359

Related party charges						Related party charges	—		—		—		7,357
Loss from operations	Loss from operations	(19,604)		(34,421)		Loss from operations	(14,516)		(14,983)		(63,255)		(164,247)
Interest expense, net	Interest expense, net	(5,892)		(6,396)		Interest expense, net	(968)		(15,973)		(7,689)		(33,564)
Gain on extinguishment of debt, net	Gain on extinguishment of debt, net	1,574		—		Gain on extinguishment of debt, net	—		—		1,422		—
Other (expense) income, net	Other (expense) income, net	(3,063)		83		Other (expense) income, net	(448)		1,490		(3,993)		(1,235)
Income tax benefit	Income tax benefit	—		—		Income tax benefit	—		—		—		—
Net loss	Net loss	$	(26,985)	$	(40,734)	Net loss	$	(15,932)	$	(29,466)	$	(73,515)	$	(199,046)

Our consolidated net loss was approximately ~~$27.0~~$15.9 million for the three months ended ~~March 31,~~September 30, 2021, compared to a net loss of approximately ~~$40.7~~$29.5 million during the same period in 2020. The decrease in net loss of approximately ~~$13.7~~$13.5 million is primarily a result of the following:

•Decrease of approximately ~~$5.5~~$15.0 million in ~~severance and reorganization charges~~interest expense due to the ~~lack~~decline in interest charges associated with our borrowing obligations, which were fully repaid during 2021.

Tellurian Inc. and Subsidiaries

Management's Discussion and Analysis of ~~these activities~~Financial Condition and Results of Operations

•Decrease of $6.2 million in cost of sales primarily because we did not execute any purchases and sales of LNG cargos during the current period.

The decreases were partially offset by an approximately $6.8 million increase in General and administrative and Development expenses as a result of an increase in spending activities primarily associated with the Driftwood Project.

Our consolidated net loss was approximately $73.5 million for the nine months ended September 30, 2021, compared to a net loss of approximately $199.0 million during the same period in 2020. The decrease in net loss of approximately $125.5 million is primarily a result of the following:

•~~Decreases~~Absence of upstream impairment charges, severance and reorganization costs, and related party expenses of approximately ~~$2.1~~$81.1 million, $6.4 million, and ~~approximately $3.0~~$7.4 million ~~in general and administrative expenses and development expenses,~~ respectively, ~~due to an overall decrease in business activities~~that were incurred during ~~the quarter.~~2020.

•Decrease of approximately ~~$3.2~~$25.9 million in interest expense due to the decline in interest charges associated with our borrowing obligations, which were fully repaid during 2021.

•Decrease of approximately $5.6 million in DD&A due to the lower net book value utilized in the calculation ~~when compared to~~as a result of the impairment charge that occurred during the prior period.

The increases of approximately $20.9 million in total revenues and $16.3 million in cost of sales were primarily related to the purchase and sale of an LNG cargo in April 2021.

Recent Accounting Standards

We do not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our Condensed Consolidated Financial Statements or related disclosures.

Critical Accounting Estimates

There were no changes made by management to the critical accounting policies in the ~~three~~nine months ended ~~March 31,~~September 30, 2021. Please refer to the Summary of Critical Accounting Estimates section within MD&A and Note 1 to the consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our critical accounting estimates and accounting policies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not believe that we hold, or are party to, instruments that are subject to market risks that are material to our Business.

~~Tellurian Inc. and Subsidiaries~~

~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~

ITEM 4. CONTROLS AND PROCEDURES

As indicated in the certifications in Exhibits 31.1 and 31.2 to this report, our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures as of ~~March 31,~~September 30, 2021. Based on that evaluation, these officers have concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring that such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. There were no changes during our last fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as amended.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

None that occurred during the three months ended ~~March 31, 2021 that have not already been reported in a Current Report on Form 8-K.~~September 30, 2021.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None that occurred during the three months ended ~~March 31,~~September 30, 2021.

ITEM 5. OTHER INFORMATION

~~Compliance Disclosure~~

Pursuant to Section 13(r) of the Exchange Act, if during the quarter ended March 31, 2021, we or any of our affiliates during the quarter had engaged in certain transactions with Iran or with persons or entities designated under certain executive orders, we would be required to disclose information regarding such transactions in our quarterly report on Form 10-Q as required under Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (the “ITRSHRA”). Disclosure is generally required even if the activities were conducted outside the United States by non-U.S. entities in compliance with applicable law. During the quarter ended March 31, 2021, we did not engage in any transactions with Iran or with persons or entities related to Iran.

Although Total Delaware, Inc. and TOTAL SE (formerly known as TOTAL S.A.) beneficially owned more than 10% of the outstanding Tellurian common stock at the beginning of the quarter ended March 31, 2021, Total Delaware, Inc. and TOTAL SE beneficially owned approximately 8% of the outstanding Tellurian common stock as of March 31, 2021. Total Delaware, Inc. had the right to designate for election one member of Tellurian’s Board of Directors as long as its percentage ownership of Tellurian voting stock was at least 10%. On March 31, 2021, TOTAL SE included information in its Annual Report on Form 20-F for the year ended December 31, 2020 (the “Total 2020 Annual Report”) regarding activities during 2020 that require disclosure under the ITRSHRA. The relevant disclosures are reproduced in Exhibit 99.1 to this report and are incorporated by reference herein. We have no involvement in or control over such activities, and we have not independently verified or participated in the preparation of the disclosures made in the Total 2020 Annual Report.

None.

ITEM 6. EXHIBITS


Exhibit No.						Description
10.1††‡						LNG Sale and Purchase Agreement 1 by and between Driftwood LNG LLC and Shell NA LNG LLC, dated as of July 29, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 29, 2021)
10.2††‡						LNG Sale and Purchase Agreement 2 by and between Driftwood LNG LLC and Shell NA LNG LLC, dated as of July 29, 2021 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 29, 2021)
10.3†‡						Executive Chairman Employment Agreement, effective as of October 1, 2021, by and between Tellurian Inc.and Charif Souki (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 4, 2021)
10.4†‡						President and Chief Executive Officer Employment Agreement, effective as of October 1, 2021, by and between Tellurian Inc. and Octávio Simões (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 4, 2021)
10.5†*						Form of Restricted Stock Unit Agreement pursuant to the Amended and Restated Tellurian Inc. 2016 Omnibus Incentive Compensation Plan (U.S. Selected Senior Management) (Milestone-Based Vesting)
31.1*						Certification by Chief Executive Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
31.2*						Certification by Chief Financial Officer required by Rule 13a-14(a) and 15d-14(a) under the Exchange Act
32.1**						Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1*						~~Section 13(r) Disclosure~~
101.INS*						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*						Inline XBRL Taxonomy Extension Schema Document
101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2020,~~2021, formatted in Inline XBRL


*			Filed herewith.
**			Furnished herewith.
†			Management contract or compensatory plan or arrangement.
††			Portions of this exhibit have been omitted in accordance with Item 601(b)(2) or 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed. The registrant hereby agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon request.
‡			Certain schedules or similar attachments to this exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K. The registrant hereby agrees to furnish supplementally to the Securities and Exchange Commission upon request a copy of any omitted schedule or attachment to this exhibit.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		TELLURIAN INC.

Date:	~~May 5,~~November 3, 2021	By:	/s/ L. Kian Granmayeh
			L. Kian Granmayeh
			Chief Financial Officer
			(as Principal Financial Officer)
			Tellurian Inc.

Date:	~~May 5,~~November 3, 2021	By:	/s/ Khaled A. Sharafeldin
			Khaled A. Sharafeldin
			Chief Accounting Officer
			(as Principal Accounting Officer)
			Tellurian Inc.