With the backing of Japan’s largest natural gas utility, Castleton Resources LLC has 222,400 net acres of gassy leasehold to explore, develop and potentially export from the Haynesville Shale/Cotton Valley after completing a deal with Royal Dutch Shell plc.
The Castleton Commodities International LLC (CCI) subsidiary is taking over the East Texas and North Louisiana assets from Shell’s BG US Production Co. LLC. Pro forma for the acquisition, Castleton production would be 334 MMcfe/d net.
"This transaction is consistent with our strategy of asset aggregation and subsequent cost reduction” in the Arkansas-Louisiana-Texas region, said Castleton Resources CEO Craig Jarchow. “Castleton Resources will execute this transaction with no increase in ongoing general and administrative expenses.
“With the help of our partners, we are well positioned to continue building a world class, and relatively low-decline portfolio in the Haynesville and Cotton Valley natural gas and liquids plays."
Castleton Resources is owned by CCI and Tokyo Gas America Ltd., itself a subsidiary of Tokyo Gas Co. Ltd. With the Shell transaction, Tokyo Gas America also increased its stakes in Castleton Resources to 46% from 30%.
Tokyo Gas America CEO Jun Tabei said the transaction is “another step toward becoming a leading gas producer in the region. The Gulf Coast, as we have previously stated, is strategically important to Tokyo Gas, and we are eager to expand our footprint in the East Texas and Louisiana area through Castleton Resources."
Tokyo Gas Co. is the largest gas utility company in Japan, and Tokyo Gas America has its hand in North America’s liquefied natural gas exports business.
Two years ago, Tokyo Gas bought into the Haynesville by taking the initial 30% stake in Castleton Resources after CCI in 2016 paid more than $1 billion to purchase East Texas Carthage assets from subsidiaries of Anadarko Petroleum Corp. CCI subsequently combined its assets under Castleton Resources.
Moelis & Co. served as Castleton Resources’ financial adviser while Latham & Watkins LLP was legal adviser.