Mitsubishi to acquire US gas assets from Aethon in $5 billion deal

Mitsubishi Corp on Friday announced a multi-billion-dollar acquisition of assets from Aethon Energy Management LLC, facilitating entry into the US shale gas industry across the value chain.

Mitsubishi, a Tokyo-based general trading and investment company, said it reached an agreement with Dallas, Texas-based Aethon Energy Management for a total equity investment of approximately USD5.2 billion.

"In connection with this acquisition, the company will acquire shares and other interests in Aethon, as well as multiple US entities that hold interests in Aethon. Among these entities, Aethon III LLC, Aethon United LP, and Aethon III Blocker LLC will qualify as specified subsidiaries, as each entity's stated capital will represent 10% or more of the company's stated capital," Mitsubishi explained.

The shale gas assets being acquired by Mitsubishi are primarily located in the Haynesville shale formation across Texas and Louisiana, which currently produce the equivalent of 15 million tonnes per year of liquefied natural gas.

Mitsubishi said the acquisition will strengthen the earnings base of its natural gas and LNG business, while also boosting efforts to build an integrated value chain in the US encompassing upstream gas development, power generation, data centre development, chemicals production, and more.

"Haynesville is a major supply source of natural gas for the growing southern US market and offers favourable access to multiple LNG export terminals, including Cameron LNG, where MC holds liquefaction capacity rights under a tolling agreement," Mitsubishi said. "Aethon's natural gas is currently sold in the US southern market, and part of this volume is being considered for export as LNG to Asia, including Japan, as well as to Europe."

The acquisition is expected to close in the first quarter of Japan's fiscal year running from April through to June, and Mitsubishi said the impact on its annual earnings for the twelve months ending March 31 will be "immaterial".