SHREVEPORT, Louisiana – The acquisition of private companies by large-to-mid cap companies has been driving consolidation in the Haynesville, Energy Advisors Group partner Adrian Goodisman said during the second day of Hart Energy’s DUG Haynesville.
“There are a number of international oil companies [IOCs] looking at the Haynesville,” Goodisman said, adding that the key drivers have been LNG supply and the deal structure either with a premium operator or companies looking to buy a platform.
There is plenty of traditional drilling inventory that exists across the Haynesville. However, the quality of inventory is not equal, which affects transaction metrics, he said, but added there potentially could be more big consolidation in the play.
“Given the proximity of the Haynesville to Gulf Coast LNG and given continuous demand for gas, and also particularly now… [and] as the majors and big internationals have balance sheets flush with cash, there will be potentially more M&A in general going forward over the next couple of years,” Goodisman said.
That bodes well when looking at global oil and gas M&A trends last year when the North America market was the hottest.
In 2022, there were $97 billion in asset and corporate deals—with North America accounting for 73% (218 deals with a value of $70.9 billion), according to Energy Advisors data, followed by Europe (21 deals, $12.1 billion), South/Central America (16 deals, $8 billion), Africa/Middle East (19 deals, $4.6 billion), Asia-Pacific (21 deals, $1.1 billion) and finally the former Soviet Union (3 deals, $0.4 billion).
Tokyo Gas Rockcliff deal rumor
M&A in the Haynesville this year and last is relatively quiet compared to 2021, which counted on deals from Southwestern Energy and Chesapeake, according to Energy Advisors data.
Diversified Energy Co.’s recent $250 million deal with Tanos Exploration was the first large gas proved developed producing weighted deal since the collapse of gas prices in December 2022.
And more deals could follow as IOCs eye the potential of the Haynesville, Greenhill & Co. Managing Director Jeet Benipal said as well during another panel during the Hart Energy conference.
“International companies are looking at the Haynesville from both an upstream and LNG buildout perspective,” Benipal said.
A rumored deal involving Tokyo Gas is a case in point.
Tokyo Gas and Osaka Gas have built sizable businesses in the Haynesville through a series of transactions. Both are big importers of LNG into Japan and both have interest in terminals in Gulf Coast LNG, according to Goodisman.
At the start of the year, Hart Energy and other media outlets from Reuters, Bloomberg and JapanTimes reported that TG Natural Resources LLC, a unit of Tokyo Gas, was advancing talks to acquire Rockcliff Energy LLC in a deal worth $4.6 billion. However, the deal reportedly fell apart due to to price volatility, Reuters reported as recently as March 8.
Rockcliff Energy LLC President and CEO Alan Smith generally addressed the company’s exit during a talk at the DUG Haynesville conference.
“We are inventory builders. And we do reach a point where there does [come] a time to devise an exit strategy.”
Without specifically commenting on Tokyo Gas, Smith said that Rockcliff had run a sales process and had discussions with potential buyers, “some of them more advanced than others.”
“And I should probably leave it at that,” he said.
In a separate DUG Haynesville session, Craig Jarchow, president and CEO of TG Natural Resources, did not reference the rumored deal. When asked whether he had any M&A announcements, Jarchow said he had none.
Had the deal succeeded, it would have created a combined company with 1.4 Bcf/d of gas production, which would have ranked it as the fifth largest producer in the Haynesville.
“So, my expectation is you’ll see additional acquisitions from one or both of these companies again,” Goodisman said, “and the Tokyo Gas Rockcliff rumor is an example of that potentially happening.”