Osaka Gas Co. Ltd., which has stakes in a Gulf Coast natural gas export project, on Monday agreed to buy Haynesville Shale-focused Sabine Oil & Gas Corp. for $610 million in what is said to be the first Lower 48 unconventional acquisition by a Japanese company.
Houston-based Sabine owns around 175,000 net acres in the Haynesville Shale/Cotton Valley formation in East Texas within Harrison, Panola, Rusk and Upshur counties that are producing about 210 MMcf/d from 1,200 wells.
Last year, Osaka Gas acquired a 35% stake in Sabine’s East Texas holdings for close to $145 million.
By taking over 100% of the company, Osaka Gas has gained operatorship of the upstream business, as well as management and operation capabilities. Integrating Sabine into the company’s existing unconventional gas business is expected to enhance its U.S. upstream business growth not only in production, but in the liquefied natural gas (LNG) trade and domestic independent power projects.
Osaka Gas has gas supply contracts in place with Freeport LNG, which is near start up on the Upper Texas coast. The first production unit is expected to begin commercial operations by the end of September, with two more trains expected online by mid-2020. A fourth train could begin operations in 2023.
The Sabine takeover is expected to be completed by year’s end. Under the company’s long-term management strategy, Going Forward, Beyond Borders 2030, the Daigas Group, formed by Osaka Gas last year, is working to expand global holdings in the upstream to downstream sectors, including LNG trading. Osaka Gas already has its hand in myriad gas-related projects worldwide.
Under its long-term business strategy, Osaka Gas plans to boost its earnings from the overseas businesses to account for one-third of total recurring profit in the business year to March 2031, up from 9% in the year ended in March.