Investor Returns Keep Aethon IPO-ready

Pietro D Pitts Tue, October 8, 2024 Hart Energy

Investor returns are Aethon Energy Management LLC’s top priority—and that means keeping the E&P’s options open.

As Aethon Energy continues to grow its asset base with bolt-ons in the Haynesville Shale, the potential for an IPO is growing as well, said Aethon Senior Vice President of Finance Matt Cain at Hart Energy’s Energy Capital Conference (ECC) Oct. 3 in Dallas.

Whether it’s a reverse merger, M&A or an IPO, the company is always weighing its options for the best path to liquidity, especially since there are limited options for its investors, Cain said.

“An IPO is a very viable option … you always want to be IPO ready if you want to be able to pull the trigger.”

And, Cain argues that there is demand for another name in the Haynesville.

“I do think there's an appetite whether it's Appalachia or Haynesville, for more gas names. You think about the number of public names that people can invest in, whether it's the Permian, the Eagle Ford, Appalachia. … There is demand for another name in Haynesville,” Cain said.

Dallas-based Aethon has drilled over 400 wells in the Haynesville and is the most active operator there, Cain said. Aethon produces approximately 2 Bcf/d net of gas with over 300,000 acres across the basin.

Aethon’s assets in the Haynesville are concentrated in North Louisiana and East Texas. Aethon also owns and operates vertically-integrated Moneta Divide oil and gas assets in the Wind River Basin of Wyoming, according to details on its website.

Aethon’s scale in the Haynesville adds to the company’s attractiveness, Cain said.

“We do think we have a differentiated platform because of the scale. Because of the vertical integration, our cost of supply is much lower than our gas peers, and then our proximity to the Gulf Coast,” Cain said.

In May, Aethon acquired Tellurian Inc.’s integrated upstream Haynesville assets for $260 million.

The deal expanded Aethon’s footprint in the Louisiana Haynesville and Bossier Shale basins with an additional 31,000 net acres, including gathering and treating systems with a combined capacity of up to 100 MMcf/d.

A post-Tellurian Aethon will boast gathering and treating capacity to over 3 Bcf/d across its assets, the company said in a May 29 press release.

“I think the Tellurian acquisition made a lot of sense,” Cain said, adding that the assets contained great rock as well as upside. The acquisition also included 43 miles of pipeline, he said.

Production and rig plans

On the operational and financial fronts, Aethon is no stranger to hedging gas production to weather the gas price downturn. And, the company has over 15 years of Haynesville inventory to offer an attractive rate of return, Cain said.

Aethon had curtailed around 400 MMcf/d during the recent pull back in prices, but its goal is to keep production flat at around 2 Bcf/d net over the near-term.

Aethon is currently operating with seven rigs, Cain said. But that figure could shrink due to rig efficiencies, he added.

“I think you're more likely to see us with the rig efficiencies that we were seeing in the field, whether it's on rigs or frac, I think you're more likely to see us drop another rig before we add [one],” Cain said.