TG Natural Resources has agreed to buy 70% of Chevron’s natural gas assets in East Texas for $525 million, as the company indirectly owned by Japan’s Tokyo Gas and Castleton Commodities International expands its footprint in the Haynesville shale gas play.
Of the $525 million price of the deal, TG Natural Resources (TGNR) is paying $75 million in cash, while the remainder $450 million would be paid as a capital carry to fund Haynesville development, prior to customary adjustments, TG Natural Resources said in a statement.
The transaction will add more than 250 gross locations to TGNR’s existing inventory in the Haynesville shale play, assuming four wells per section. These will extend TGNR’s inventory life beyond 20 years at the current development pace, not counting the Bossier and Cotton Valley plays which are commercial at current prices, the company said.
The Haynesville acreage in this transaction is relatively undrilled and held by shallower production, allowing parent-child effects between wells to be mitigated, TGNR added.
“There is considerable operational overlap between the Chevron acreage and the legacy TGNR acreage, which will allow TGNR to realize synergies of over $170 million during the development of the asset,” TGNR’s chief executive Craig Jarchow said in the press release.
TGNR, one of the largest producers in the Ark-La-Tex region of East Texas and Northern Louisiana, could benefit from additional development in Haynesville, which is expected to thrive in the coming years with the Trump Administration’s agenda to boost U.S. LNG exports.
The recent rise in U.S. natural gas prices is also expected to incentivize higher gas production.
The benchmark U.S. natural gas price at Henry Hub has more than doubled in one year—from $1.83 per million British thermal units (MMBtu) at this time in 2024 to over $4 per MMBtu this week.
“With rising gas prices, the time has come for the Haynesville,” Murray Auchincloss, chief executive of supermajor BP, said at the CERAWeek conference in Houston last month.
By Tsvetana Paraskova for Oilprice.com
