TG Natural Resources (TGNR) is the winning bidder against other Haynesville Shale E&Ps in year-long negotiations with Chevron Corp. for what is considered the last block of undeveloped Haynesville leasehold.

TGNR will pay $525 million for 70% interest in the property, Chevron Corp. reported. Of this, Chevron will receive $75 million in cash and $450 million as a capital carry to fund D&C of the leasehold’s Haynesville rights. 

Chevron retains a 30% non-operated interest in the joint venture and an overriding royalty interest (ORRI) in the assets. Chevron estimates the deal is valued to it at $1.2 billion at current Henry Hub futures.

“Chevron expects to maintain future upside through the joint venture structure while accelerating development of a non-core asset through a capital efficient approach,” it reported.

Tokyo Gas’ Houston-based Haynesville pureplay TGNR will gain the 70% working interest in 71,000 net contiguous acres, all in Panola County, Texas.

The Japan-based utility confirmed the deal in a separate announcement.

“The capital carry allows for staged development and payment within TGNR's existing cash flow,” it reported.

“This asset is expected to have a high profit margin and contribute to improved return on assets for Tokyo Gas' U.S. shale gas business.”

TGNR, of which Tokyo Gas owns 93% and trader Castleton Commodities owns 7%, will have inventory of more than 20 years at its current D&C pace, Tokyo Gas reported.

Five Haynesville wells

Chevron produced 29 MMcf/d this past December from Panola County, with just 4.2 MMcf/d of that from Carthage-Haynesville Field, where it has only five wells in the Haynesville, according to Texas Railroad Commission (RRC) data.

The balance of its production was from hundreds of legacy, shallower, vertical Carthage-Cotton Valley wells.

It had gained the position in 2000 in its merger with Texaco Inc.

The sale will be a Chevron exit from the Haynesville in a portfolio revision of $15 billion in divestments over five years as part of its $53 billion all-stock merger with Hess Corp.

TGNR is among Texas’ largest gas producers with 25 Bcf in December, according to the RRC.

Of that, 0.54 Bcf/d was from Panola County alone: 0.49 Bcf/d from Haynesville wells there; the balance, landed in other formations.

TG Natural Resources Wins Chevron’s Haynesville Assets for $525MM

‘Virgin inventory’

Jefferies marketed the Chevron property, opening the data room in February of 2024, offering a sale or joint venture in the acreage block.

Jefferies described it in the flyer as “substantial virgin inventory with approximately 300 [potential] operated Haynesville locations.”

The acres are 85% operated and 100% HBP, primarily by vertical Cotton Valley wells.

PDP was 120 Bcf net in February of 2024, according to Jefferies. EUR averaged 1.9 Bcf per 1,000 lateral feet for the handful of Haynesville horizontals.

Mike Winsor, CEO of Paloma Natural Gas, which he sold recently to hedge fund Citadel for $1.2 billion, said at Hart Energy’s 2024 DUG Gas conference in Shreveport, “That [Chevron Panola acreage] is a position that all Haynesville operators are interested in.

“[And] mainly because it's undeveloped: You don't have parent-child [well] concerns.”

It’s a rare block of property. “It's not very often you can come into an acreage position that is consolidated,” Winsor said.

“You can come [into the Chevron acreage] with a blank slate. And whatever your well-spacing, whatever your design, there’s a huge amount of running room there.”

Paloma Natural Gas’ leasehold consisted initially of Goodrich Petroleum’s gas pureplay property, which it bought for $480 million in December 2021.

Carthage-Haynesville

Panola County gas production in December totaled 46 Bcf or 1.5 Bcf/d, according to RRC records.

In addition to TGNR’s 540 MMcf from the county in December, Sabine Oil & Gas made 295 MMcf/d; R. Lacy Services, 185 MMcf/d; and Comstock Resources, 72 MMcf/d.

TGNR’s Panola production includes what it picked up from Haynesville pureplay Rockcliff Energy in December 2023 for $2.7 billion.

Rockcliff’s production was 720 MMcf/d from Carthage-Haynesville Field in Panola, while TGNR produced 77 MMcf/d that month.

Throughout East Texas, Rockcliff’s production was 1.3 Bcf/d gross and 1.2 Bcf/d net before exiting.

Its net leasehold was more than 200,000 acres in Panola and adjacent northeastern Texas counties, making a deal value averaging roughly $3,650 per flowing Mcf/d net.

Henry Hub at the time was $2.44, according to the U.S. Energy Information Administration archive, having plunged from $3.34 just six weeks earlier.

Currently, the 12-month gas strip is some $4.50.

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