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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Why Are Private Equity Firms Dumping U.S. Shale Gas Assets?


Private equity firms are selling their assets and operations in U.S. shale plays to take advantage of soaring gas prices, Reuters has reported, noting the Haynesville play alone has seen deals worth $16.5 billion since the start of the year.

The data comes from energy analytics firm Enverus.

The Haynesville play is the second-largest shale formation in the United States and is next month seen producing 13.6 billion cu ft of gas daily. This would be a record high and equal to about 15 percent of total U.S. shale gas output.

Haynesville appears to be a more attractive destination for investors than other shale gas plays because it still has spare pipeline capacity to export hubs on the Gulf Coast, Reuters notes in its report.

Right now, exports look particularly good for energy firms because of the spike in demand from Europe and Asia amid an inventory crunch that has pushed gas prices to record highs.

As a result of these developments, the price for acreage in Haynesville is on the rise, too. According to Enverus director Andrew Dittmar, two years ago, one company sold for $3,000 per acre, adjusted for production. In two deals this year, the price per acre was four times higher than that.

As for the prospective buyers, these would be export-focused producers such as Tellurian, which said it was considering an expansion of its assets in Haynesville ahead of the start of construction of its Driftwood LNG facility.

LNG has seen a fresh wave of planned capacity amid Europe’s and Asia’s energy crunch, requiring more producing assets for the companies making these plans.

“We are aggressively pursuing upstream acquisitions,” Charif Souki, co-founder and executive chairman of Tellurian, said, as quoted by Reuters. “There are plenty of targets in the Haynesville that make sense.”

By Charles Kennedy for Oilprice.com


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