Natural gas producer TG Natural Resources LLC (TGNR) has entered a deal to acquire fellow Haynesville Shale heavyweight Rockcliff Energy II LLC for $2.7 billion.
Rockcliff, which is backed by private equity firm Quantum Capital Group, operates in the East Texas portion of the Haynesville, which also straddles northwestern Louisiana.
Rockcliff operates across more than 200,000 net acres spanning five Texas counties, with more than 1.3 Bcf/d of gross operated production. This figure is up from about 100 MMcf/d in 2017 when Rockcliff made its initial acquisitions, highlighted CEO Alan Smith.
“The continued support of our partners at Quantum – who have shared our vision from day one to position Rockliff as an industry-leading natural gas producer – has played an essential role in our exceptional growth and commercial success,” Smith said.
TGNR CEO Craig Jarchow said, “With this acquisition, TG Natural Resources is committed to leadership in the Haynesville play, one of the world’s most important sources of clean natural gas. We will have nearly a century in rig-years of gross operated and non-operated drilling inventory in the Haynesville, not counting the important plays in the Bossier and Cotton Valley.”
He added, “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.”
The Haynesville is a dry gas play with higher breakeven costs than rival basins such as Appalachia. The Haynesville rig count was down 40% year/year to 43 units as of Friday (Dec. 15), according to Baker Hughes Co. data.
However, the Haynesville’s proximity to LNG exports and industrial demand in the Gulf Coast region has made it an attractive target for producers.
“The sale of Rockcliff will memorialize Quantum’s ninth successful partnership with Alan and other members of the Rockliff leadership team,” said Quantum CEO Wil VanLoh. “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 U.S. natural gas” including for Gulf Coast liquefied natural gas exports.
TGNR is jointly owned by TG East Texas Resources LLC, a subsidiary of Tokyo Gas America, and CCI U.S. Asset Holdings LLC, a subsidiary of Castleton Commodities International LLC.
“The Texas and Louisiana areas where TGNR owns assets are in close proximity to new LNG export terminals where future gas demand is expected to increase, and TGNR has been seeking to acquire superior assets in these areas,” said Tokyo Gas Americas CEO Akira Inukai. He noted that the Rockcliff portfolio “is located adjacent to the TGNR assets and therefore aligns very well with our overall growth strategy.”
The transaction, part of a consolidation wave among Lower 48 exploration and production firms, is slated to close by the end of this year.
