Asset/portfolio management

Tokyo Gas To Acquire Rockcliff Energy for $2.7 Billion

The deal will quadruple Tokyo Gas' natural gas production volumes from the Haynesville Shale.

Shale gas pipeline over a field of green
Rockcliff's Haynesville holdings cover east Texas counties including Harrison, Gregg, Rusk, and Panola.
SOURCE: nightman1965/Getty Images/iStockphoto

A unit of Tokyo Gas is buying private equity funded Rockcliff Energy II for $2.7 billion in a bid to expand its overseas exposure to natural gas markets. Rockcliff is a portfolio company of Quantum Energy Partners focused on natural gas production in the east Texas portion of the Haynesville Shale play.

Rockcliff's holdings cross five counties are made up of about 200,000 net acres with more than 1.3 Bcf/D of gross operated natural gas production. The deal will quadruple Tokyo Gas’ current production of 330 MMcf/D from the area.

“With this acquisition, TG Natural Resources (TGNR) is committed to leadership in the Haynesville play, one of the world’s most important sources of clean natural gas,” said Craig Jarchow, chief executive of Tokyo Gas unit TGNR. “We will have nearly a century in rig-years of gross operated and nonoperated drilling inventory in the Haynesville, not counting the important plays in the Bossier and Cotton Valley. TGNR has a strong track record of investing across commodity cycles, and this acquisition positions the company for long-term success. Rockcliff has also made large investments in reducing methane emissions from their already very clean operations and we plan to continue to accelerate the drive to lower methane intensity in our combined operations.”

Rockcliff grew its production footprint in the area, increasing volumes from 100 MMcf/D via its initial slate of acquisitions in 2017 to 1.3 Bcf/D today.

TGNR is 79% owned by Tokyo Gas, Japan’s biggest city gas supplier.

“The sale of Rockcliff will memorialize Quantum’s ninth successful partnership with (CEO) Alan (Smith) and other members of the Rockliff leadership team,” said Wil VanLoh, chief executive of Quantum. “Through our partnership and collective efforts, we were able to identify a unique opportunity to transform the east Texas Haynesville into a major supplier of clean US natural gas for LNG exports from the Gulf Coast.”

In May 2017, Tokyo Gas America invested in Castleton Resources LLC, the predecessor of TGNR, and in August 2020, it made Castleton Resources LLC a subsidiary. TGNR has been seeking assets in the Texas and Louisiana areas near new LNG export terminals where future gas demand is expected to increase.

The transaction is expected to close by the end of the year, subject to customary closing conditions and regulatory approvals.

The deal will contribute to Tokyo Gas Group’s Management Vision, Compass 2030, which calls for the company to triple its overseas profits.