Osaka Gas to buy US shale gas developer in $610 million deal

Japan’s Osaka Gas Co is set to buy US shale gas developer Sabine Oil & Gas Corp for US$610 million, as part of the company’s long-term strategy to expand its business overseas.

Through the deal Osaka Gas will become operator of Sabine’s assets in East Texas, which include around 1,200 wells, producing about 1.7 million tonnes of shale gas a year over 175,000 net acres.

“In addition to the increased share, the complete acquisition gives Osaka Gas operatorship, specifically control over capital and drilling decisions,” said Kristy Kramer, research director at consultancy Wood Mackenzie.

“This means Osaka Gas can directly control the volume produced,” she added.

The Sabine shale gas project becomes one of the company’s three core US businesses, along with the Freeport LNG liquefaction project and independent power producer (IPP) projects.

The deal also marks the first acquisition of a US shale gas developer by a Japanese company, according to the firm.

Under its long-term business strategy – christened Going Forward, Beyond Borders 2030 – Osaka Gas aims to boost overseas earnings to a third of total recurring profit by 2031, up from 9% in the year ended March this year.