International buying momentum has carried into the new year with Mitsubishi’s $7.5 billion purchase of Haynesville producer Aethon Energy. The acquisition marks the third major purchase of a private Haynesville producer by a Japanese firm since 2023 following the entries of Tokyo Gas and JERA. That has pushed international buying in the Gulf Coast gas play to nearly $13 billion since December 2023. These groups have become the dominate buyers in the play, likely pricing out domestic public E&Ps. The only major public company acquisition in the Haynesville over that period was Chesapeake Energy’s merger with Southwestern to form Expand Energy. Inclusive of the Mitsubishi deal, Japanese buyers have come to control more than 4 Bcfe/d of Haynesville production or about 30% of the play’s output. The surge in gas M&A speaks to a bullish outlook for natural gas in the U.S. from LNG exports as well as datacenter and industrial demand. The participation of so many international buyers is a reflects the increasing globalization of gas markets and these groups interests in U.S. LNG.
While the Haynesville remains the epicenter for international interest, there is broadening appetite for international firms to acquire exposure to U.S. hydrocarbons generally. Japan Petroleum Exploration made its bet in the DJ Basin, acquiring operated oil-focused assets from Verdad Resources. The return of these firms signals a mature U.S. unconventional industry that has now established a track record of operating profitably. International groups were participants in the early days of shale, with ambitious investments that in many cases struggled as shale went through its early growing pains. In contrast to that time, when international capital often participated as a non-operating partner with a U.S. E&P, firms are now taking control of the assets themselves. Several groups have partnered with a U.S. based team to operate the assets include Japex, JERA and Tokyo Gas. These groups are in some cases filling a capital roll that would traditionally have been taken by private equity. The challenge for continued buying will be finding the right assets at the right price. International interest, combined with continued PE acquisition activity, is pushing up valuations in A&D markets. While shale has shown it can be a profitable business, there are still plenty of risks that could lead to the poor results of a decade ago.
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