Reports: Mitsubishi Targeting Haynesville E&P Aethon in $8B Deal

Rumors continue to swirl around international buyer interest in Aethon Energy Management’s Haynesville assets, fueling speculation of a potential deal with one of the basin’s top natural gas producers.

Bloomberg first reported June 16 that Japan’s Mitsubishi Corp. is in talks to acquire Haynesville assets from Aethon for roughly $8 billion. Reuters confirmed that talks are ongoing.

A representative for Aethon declined to comment. Hart Energy has reached out to Mitsubishi for comment.

It’s the latest report concerning Aethon’s massive position across Louisiana and East Texas. In April, unsubstantiated reports claimed that Abu Dhabi National Oil Co. (ADNOC) was evaluating an acquisition of Aethon for around $9 billion.

Meanwhile, an ADNOC-led consortium this week made a bid to acquire Australian oil and gas producer Santos in a deal valued at $18.78 billion. The buyer consortium also includes private equity group Carlyle.

Aethon is the second-largest producer in the Haynesville Shale, a key natural gas play with exposure to the expanding Gulf Coast LNG corridor.

Aethon’s net production averages around 2 Bcf/d, trailing only publicly traded Expand Energy among top Haynesville producers.

Aethon plans to spend around $1 billion to keep Haynesville gas output relatively flat this year, President and Partner Gordon Huddleston said earlier this month at Hart Energy’s Energy Capital Conference (ECC).

Mitsubishi has not historically operated an upstream business in the U.S. But the company invests in several gas projects through its Natural Gas Group, including the Cameron LNG plant in Hackberry, Louisiana, and the LNG Canada project in British Columbia.

Experts say the Haynesville, with abundant gas reserves and proximity to the Gulf Coast, is uniquely positioned to capitalize on the expanding U.S. LNG complex.

U.S. LNG exports are expected to effectively double between now and 2030 based the nameplate capacities of export terminals scheduled to come online.

Rising demand is pushing prices higher. Henry Hub prices are forecast to average $4.20/MMBtu over the next 12 months; the 24-month strip is $4.23.

But that may not be high enough to spur increased drilling activity in the Haynesville.

“From our standpoint, we think pricing needs to be higher over a sustained period of time if you want to incentivize a much broader group of producers to deploy capital,” Huddleston said at ECC.

“You’re always fighting the natural decline of these assets, so it does take an incremental amount of capital to meet the call that demand has,” he continued.

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International interest

International interest in U.S. shale is heating up once again, particularly among Asian buyers that import large volumes of LNG.

Jeet Benipal, managing partner at Greenhill, a Mizuho affiliate, recently noted that five or six pending deals involving international buyers could exceed $10 billion in the coming months.

This spring, TG Natural Resources, a subsidiary of Japanese utility Tokyo Gas, acquired a 70% interest in Chevron’s Haynesville assets for $575 million. Chevron will retain a 30% non-operated stake in the joint venture.

The deal included around 71,000 net contiguous acres in Panola County, Texas, considered among the last undeveloped tracts in the Haynesville.

Japan’s Mitsui is also developing natural gas positions in the western Eagle Ford and in the emerging western Haynesville play north of Houston.

Middle Eastern buyers are also interested in U.S. shale gas. In April, Kimmeridge sold a 24.1% stake in its upstream shale gas and LNG operation to Mubadala Energy, a subsidiary of Abu Dhabi’s sovereign wealth fund Mubadala Investment Co.

European interest is also returning to U.S. shale. U.K.-based petrochemical firm INEOS has built an Eagle Ford operated position and acquired a non-op Gulf Coast offshore property from CNOOC last year.

IENOS’ Denver-based, U.S.-focused E&P business continues to look for ways to grow through M&A.

New faces are also getting into the Haynesville. Hedge fund giant Citadel made a $1.2 billion acquisition of private Haynesville E&P Paloma Natural Gas in February, Hart Energy first reported in March. The deal included around 60 undeveloped Haynesville locations on the Louisiana side of the basin.

The midsized operator, backed by private equity firm EnCap Investments, produced around 450 MMcf/d at the basin’s peak in 2023, according to East Daley Analytics.

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Sources: Citadel Buys Haynesville E&P Paloma Natural Gas for $1.2B