Antero Resources announced it has entered into an agreement to acquire the upstream assets of privately held natural gas producer HG Energy II in a deal valued at $2.8 billion. Terms of the transaction include cash along with the assumption of HG Energy's commodity hedge book.
The acquisition is expected to add about 850 MMcfe/D of production to Antero’s position in the Marcellus Shale of West Virginia. HG Energy operates 385,000 net acres directly south of Antero’s existing 475,000-net-acre footprint. Antero noted in its announcement that about 90% of HG Energy’s production is hedged in 2026 and 2027 at an average price of $4.00/ MMBtu and $3.88/MMBtu, respectively.
Antero said the assets include roughly 400 remaining gross drilling locations, 75% of which are liquids-rich, with average lateral lengths exceeding 20,000 ft. At maintenance capital levels, the company added that the additional locations represent about 5 years of drilling inventory.
The Denver-headquartered producer said it has identified nearly $950 million in capital synergies over the next decade, including $550 million in development optimization and drilling and completions savings. Antero also highlighted that it will be able to better develop areas along the current lease boundaries with longer lateral wells.
"Today's acquisition expands our core acreage and enhances our position as the premier liquids developer in the Marcellus, “ Michael Kennedy, president and CEO of Antero, said in a statement, adding, “The acquired assets will also bolster our industry-leading maintenance capital efficiency while providing us with further dry-gas optionality for local demand from data centers and natural gas-fired power plants.”
Antero also announced an agreement to divest its Utica Shale position in Ohio for $800 million in cash, while its separately listed pipeline company, Antero Midstream, will acquire HG Energy’s midstream assets for $1.1 billion in cash. The Utica assets will be sold to a subsidiary of Infinity Natural Resources. The transaction gives Infinity 102,000 net acres with 1.4 Tcfe of undeveloped reserves, along with 141 miles of gas-gathering lines capable of handling 600 MMcf/D. Antero said the asset in Ohio is expected to produce 150 MMcfe/D in 2026.
“This transformational and strategic acquisition represents the largest transaction in Infinity’s history, continuing our track record of aggregation within the Appalachian Basin,” said Zack Arnold, president and CEO of Infinity.
The acquisition of HG Energy is expected to close in the second quarter of next year. Antero’s Utica divesture is expected to close in the first quarter of next year.
Market research and analytics firm Enverus Intelligence Research (EIR) said the deal increases total US upstream transactions for the quarter to almost $19 billion. "Gas transactions have played a material role in that, contributing about $6.6 billion in deal value," said Andrew Dittmar, principal analyst at EIR.
He added, "There is likely more to come, but gas [mergers and acquisitions] will start to run into the same problem that has slowed oil-weighted deals, which is a dwindling of large-scale attractive targets. That makes both Antero's and Infinity’s decision to jump on strategic assets a sensible move to close out the year."