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Japanese Utility Takes Another Dip in U.S. Shale

The U.S. unit of Tokyo Gas Co. Ltd. has closed a deal to acquire Eagle Ford Shale assets a little more than three years after the Japanese utility company entered the Barnett Shale.

Tokyo Gas America Ltd. affiliate TG Eagle Ford Resources LP of Houston closed a deal with privately held VirTex Producing Co. of Corpus Christi, TX, to acquire Eagle Ford assets in Webb and LaSalle counties in South Texas.

The approx. 34,000-acre package entails a 25% working interest in a joint project with privately held Lewis Energy Group (operator) and BP Lower 48 (see Shale DailyApril 29, 2014). Tokyo Gas estimates that the net capital required is about US$75 million, assuming that natural gas production attributable to Tokyo Gas could average the equivalent of 200,000 tons per year of liquefied natural gas (LNG). Tokyo Gas said the production is to be marketed in the United States.

According to the VirTex website, in 2010 the company struck a deal with BP wherein BP acquired 75% of VirTex's leasehold in Webb and LaSalle counties over about 39,000 acres prospective for the Eagle Ford. VirTex at the time retained 25% interest in the 39,000 acres.

Tokyo Gas, Japan's largest provider of city gas, said it will continue to expand its upstream business "and build global LNG value chains." In Spring 2013 a unit of Tokyo Gas acquired an undivided 25% interest in the Barnett Shale assets of Quicksilver Resources Inc. for $485 million (see Shale DailyApril 2, 2013).

Earlier this year, Quicksilver put its U.S. assets, including one-time high-valued ones in the Barnett Shale, on the auction block as part of its Chapter 11 voluntary bankruptcy filing last March (see Shale DailyJan. 20Feb. 18, 2015).

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