Japan's Osaka Gas to buy Sabine Oil for $610 million

TOKYO (Reuters) - Osaka Gas Co Ltd said on Monday it will buy U.S. shale gas developer Sabine Oil & Gas Corp for $610 million, as the Japanese company aims to expand its overseas business to seek future growth.

The deal marks the first acquisition of a U.S. shale gas developer by a Japanese company, according to Osaka Gas.

Sabine owns 175,000 net acres in East Texas with about 1,200 wells which annually produce about 1.7 million tonnes of shale gas.

In July 2018, Osaka Gas bought a 35% stake in the eastern half of the asset being developed by Sabine.

Osaka Gas decided to buy the whole company after Sabine notified the Japanese company that it was putting itself on sale since the wells were producing more volume than expected and generating stable cash flow, a company spokesman said.

The deal is subject to approvals by local authorities and is expected to be closed by the end of this year, the Osaka Gas spokesman said.

Through the purchase, Osaka Gas aims to enhance shale gas development operation, one of its three core U.S. businesses which also include the Freeport liquefied natural gas liquefaction and independent power producer projects.

Under its long-term business strategy, Osaka Gas plans to boost its earnings from overseas to account for one-third of its total recurring profit in the business year to March 2031, up from 9% in the year ended March this year.

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Lots of questions about this.  1. Is this good news for the industry and mineral owners?  2. Do you think it will get approval from regulators?  3.  Do you think there's a deal in the works for more/expanded pipelines in East Texas to get product to market?  And on that point... do you think they have or working on deals with Tellurian and Cheniere or just one of them... or others to get product to Japan and other markets?  Sabine has been a good operator since coming out of bankruptcy.  Thanks

I suspect that Osaka Gas will keep the Sabine middle management and field personnel in place.  I think that Japan's interest is generally in securing long term access to natural gas at a good price.  Just as Tellurian LNG acquired the Samson Haynesville units in LA for their supply needs.  I doubt that Osaka looks at Sabine as a way to make a sizeable profit.  I don't see why there would be any problem with regulators.  As to benefit to mineral owners, we'll have to wait and see.

Very good, thanks

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