A unit of Tokyo Gas Co Ltd is close to a deal to buy US natural gas producer Rockcliff Energy from private equity firm Quantum Energy Partners for about $4.6 billion, sources have revealed.
The deal, which would include debt, is another significant move by a Japanese entity to secure gas from a country perceived as friendly.
The import-dependent Asian nation has been seeking reliable supply markets for energy ever since Russia invaded Ukraine in late February last year.
The all-cash deal with Houston-based TG Natural Resources, which is 70% owned by the Japanese energy firm, is set to be announced this month, according to the sources, who requested anonymity as the discussions are confidential.
Castleton Commodities International (CCI) owns the rest of TG Natural Resources.
TG Natural Resources is arranging funding from several financing sources to support the transaction, including banks and private credit providers, said the sources, who cautioned that no deal was guaranteed and the talks could end without an agreement.
Quantum and CCI declined to comment. Rockcliff and TG Natural Resources did not immediately respond to requests for comment. Tokyo Gas was not immediately available to comment.
Rockcliff produces more than 1 billion cubic feet per day of natural gas from the Haynesville shale formation, which stretches across Louisiana and East Texas. Quantum originally backed the Rockcliff management team with a $350 million investment in 2015.
Buying Rockcliff would significantly increase TG Natural Resources’ operations, with the company producing around 330 net million cubic feet per day as of June 2022 from the Haynesville formation, according to its website.
Japan’s biggest city gas supplier is in the midst of a portfolio reshuffle aimed at moving resources to growth areas. In October, Tokyo Gas agreed to sell its stakes in a portfolio of four Australian liquefied natural gas (LNG) projects for $2.15 billion to a unit of US investment firm EIG.
Russia’s invasion of Ukraine has cut gas supply flows to Europe and led European nations to import record amounts of LNG cargoes, straining global supplies and elevating prices.
Resource-poor Japan has been working to diversify from Russia’s Sakhalin project, which accounts for 9% of Japan’s total LNG imports of 74.3 million tonnes per year.
Japanese companies inked several deals on December 28 to receive LNG supplies, with a preliminary agreement lasting up to 10 years with Oman LNG and a 20-year deal with US-based Venture Global.
In 2021, Japan imported 7.1 million tonnes of LNG from the United States, accounting for 9.5% of its total imports.
Tokyo Gas shares were down 5.07% at the midday break in Tokyo trading.
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