Mitsubishi to buy Texas, Louisiana shale gas assets for US$7.53 billion
The logo of Mitsubishi Corp is pictured at its head office in Tokyo, Japan August 2, 2017. REUTERS/Kim Kyung-Hoon
TOKYO: Japanese trading house Mitsubishi Corp said on Friday (Jan 16) it would take over the US shale production and infrastructure assets of Aethon Energy Management for US$7.53 billion to strengthen its gas value chain.
The deal - the biggest acquisition to date by Mitsubishi - would give the company a substantial natural gas operation adjacent to the US Gulf Coast and the energy export facilities being developed there.
The transaction includes US$5.2 billion to acquire Aethon's equity interests and US$2.33 billion of net interest-bearing debt.
"Building on our North American energy platform - including shale gas development in Canada, midstream marketing and logistics operations in Houston, liquefied natural gas (LNG) exports via LNG Canada and Cameron LNG - this acquisition further strengthens our integrated energy business," Mitsubishi said in a statement.
The deal is the latest example of a Japanese company investing in the US energy sector after Tokyo positioned gas as its key transition fuel beyond 2050 and as Japan prepares for surging power demand from data centres driven by the artificial intelligence boom.
Mitsubishi is a major player in the global LNG sector across the full value chain, from upstream production to trading, marketing and logistics. It holds stakes in multiple LNG projects worldwide, including in projects in Malaysia, Oman, Australia, Russia, the US and Canada, giving it equity LNG production of 15 million metric tons per year.
The upstream assets of Aethon primarily focus on the Haynesville shale formation in Louisiana and East Texas. The holdings have made it one of the largest privately held US gas producers, with output of 2.1 billion cubic feet per day of natural gas, equivalent to 15 million tons per year of LNG.
Mitsubishi said it reached an agreement with Aethon and its existing stakeholders, including the Ontario Teachers' Pension Plan and RedBird Capital Partners, for a total equity investment of US$5.2 billion. The deal is expected to close in the April to June quarter, subject to regulatory approvals.
The Japanese company plans to use cash, debt financing and other methods to pay for the deal, a company spokesperson said.
In October, JERA, Japan's top power generator, said it would buy US natural gas production assets for US$1.5 billion, and Japan Petroleum Exploration said in December it would acquire Verdad Resources Intermediate Holdings (VRIH), which owns US tight oil and gas assets, for US$1.3 billion in its largest-ever deal.
Shares in Mitsubishi extended their decline following the news, trading down 1.5 per cent against a flat broader benchmark Nikkei 225 index.
Reuters reported in June last year that Mitsubishi was in talks to acquire the assets of Aethon Energy Management.
