Minerals and royalties buyers want greater exposure to U.S. natural gas, particularly in Haynesville and Appalachia, experts say.

The market for natural gas-weighted minerals and royalties has been relatively tepid in recent years, hanging in the doldrums of low commodity prices.

Oily packages, particularly in the mighty Permian Basin, have stolen headlines—like Viper Energy’s $4.45 billion drop-down acquisition from parent company Diamondback Energy.

But as the natural gas macro improves, the M&A market for gas-weighted interests is gathering steam.

Henry Hub futures prices average about $4.60 over the next 12 months, per CME Group data; 24-month strip is $4.41.

It’s a marked improvement over average Henry Hub prices of $2.20 seen last year, according to U.S. Energy Information Administration (EIA) data.

“We’re starting to see more and more competition, regardless of basin,” said Darin Zanovich, president and CEO of Mesa Minerals, last month at Hart Energy’s DUG Gas Conference & Expo in Shreveport, Louisiana.

Appalachia

Zanovich said large gas-weighted packages are for sale or hitting the market soon.

“There’s two large Appalachia acquisitions that are on market, I think, waiting for bid right now,” he said.

On March 31, WhiteHawk Energy announced a $118 million acquisition of additional interests in Appalachia’s Marcellus Shale play.

The royalties transaction doubles WhiteHawk’s ownership interests on Marcellus assets spanning 475,000 gross unit acres in Washington and Greene counties, Pennsylvania.

The acquired assets are 95% operated by top Marcellus producers, including EQT Corp., Range Resources and CNX Resources, WhiteHawk said.

“On the Appalachia side, you haven’t seen a whole lot of large, $100 million-plus transactions happen,” Zanovich said. “It’ll be interesting to see as there’s a couple of those coming to market now.”

Speaking during the NAPE conference in February, Tim Pawul, president of the Minerals & Royalties Authority, said mineral and royalty owners in Appalachia are excited about in-basin gas demand for AI data centers and other uses.

Appalachia’s Marcellus and Utica shales hold the lowest-cost gas reserves to drill. But pipeline takeaway constraints strand considerable volumes within the basin.

RELATED

Exclusive: Mesa Minerals IV to Reload in Haynesville, Permian, Other Basins

Haynesville

Buyers are also interested in Haynesville gas as new LNG export projects tick online along the Gulf Coast.

Experts expect to see increased Haynesville drilling activity to supply the rising demand.

Haynesville dry gas production is expected to grow 27% from 14.1 Bcf/d in fourth-quarter 2024 to 18 Bcf/d by fourth-quarter 2026, per EIA forecasts.

That growth outlook sounds aggressive to Haynesville gas producers themselves. Haynesville output might be closer to 16 Bcf/d by year-end 2026, Aethon Energy President and Partner Gordon Huddleston said at DUG Gas.

Privately held Aethon is the second-largest Haynesville gas producer, behind Expand Energy.

But with Haynesville drilling and production set to grow, minerals and royalties buyers want additional exposure.

Zanovich’s most recent venture, NGP-backed Mesa Minerals III, consolidated 16,000 net royalty acres (NRAs) in the Haynesville and about 6,000 NRAs in the Permian Basin.

Mesa and NGP plan to bring Mesa III’s portfolio to market “in the next few years,” Zanovich said.

The Mesa franchise has had a long history in the gassy Haynesville play. Both Mesa I and II built up Haynesville mineral positions and exited through separate transactions with Franco-Nevada Corp.

But Mesa isn’t the only private buyer consolidating the Haynesville.

“There are probably two other large Haynesville portfolios besides ours you see out there in the hands of private guys right now,” Zanovich said.

Zanovich and NGP recently launched Mesa Minerals IV to acquire interests in the Haynesville, the Permian and other oily basins.

RELATED

NatGas Rising: WhiteHawk Inks $118MM Marcellus Royalties Deal

Comments