The acquisition of Sabine Oil & Gas by Osaka Gas marks the first instance of a Japanese company buying a US-based shale gas developer
Image: Osaka Gas building in Osaka Prefecture, Japan. Photo: courtesy of J o/Wikipedia.org.
Japanese gas company Osaka Gas has agreed to acquire US oil and gas developer Sabine Oil & Gas for an undisclosed price.
Osaka Gas said that the acquisition has improved its energy business portfolio in North America. As a result, the Japanese company, to expand its income in the coming years, plans to continue developing its three core businesses in the US, made up of Freeport LNG liquefaction project, IPP projects and the shale gas project of Sabine.
Currently, Sabine has acreage in East Texas across counties like Harrison, Panola, Upshur, and Rusk. Spread over 175,000 net acres, the acreage is producing 210MMcfed of shale gas with nearly 1,200 wells as of now.
According to Osaka Gas, the acreage has a significant drilling inventory in the Haynesville and Cotton Valley formations.
In July 2018, the Japanese gas company bought a 35% stake in the acreage in the east half of the entire acreage being developed by Sabine, which is located mainly in Harrison and Panola Counties, for $146m. The Japanese company said that the wells in this part of the acreage have been producing more than the expected volumes, while delivering stable cash flow.
The properties are located near the Freeport project, an LNG export project designed to have a capacity of more than 5mtpa, whose first train is expected to begin operations in third quarter of this year.
Osaka Gas said that the integration of Sabine into its existing shale gas development business will boost the efficiency and sustainability of its upstream business growth in the US.
Osaka Gas focusing on energy markets outside Japan for its growth
The company, in a statement, said: “Under its long-term management vision “Going Forward, Beyond Borders 2030,” which focuses on overseas energy markets as one of the growth areas, the Daigas Group aims to accelerate its endeavor to expand its energy businesses globally along the energy value chain from upstream to mid- and downstream businesses including LNG trading.”
The closing of the deal will be subject to receipt of required governmental permits.