Osaka Gas Co. Ltd. announced Monday that it agreed to buy Houston-based Sabine Oil & Gas Corp. for $610 million, claiming it’s the first acquisition of a U.S. shale gas developer by a Japanese company.
The deal will have to clear U.S. regulators but is expected to close by year-end.
Hunton Andrews Kurth advised Sabine Oil & Gas Holdings on the sale of the unit with a team led by corporate partners John Clutterbuck and Phil Haines with assistance from corporate associate Garrett Hughey.
Also weighing in were oil and gas partner Parker Lee, oil and gas associates Ian Goldberg and Alex Miron, tax partner Allison Mantor and compensation and benefits partners Tony Eppert and Kelly Ultis and associate Emily Cabrera.
Vinson & Elkins assisted Osaka with partner Shay Kuperman leading the group with assistance from associates Josh Rocha and Tara Tegeleci, partners Bill Wallander on restructuring, Tzvi Werzberger on finance, Larry Nettles on environmental, Hill Wellford on antitrust, Sean Becker on labor/employment and Jeremy Marwell on appellate.
Others pitching in were partner Todd Way and associates Brian Russell and Jake Wight (tax); partner Stephen Jacobson and senior associate Steve Oyler (executive compensation/benefits); associates Andrew DeVore and Abby Meredith (energy regulatory); and associate Ryan Stalnaker (government contracts).
Sabine assistant general counsel Jeffrey Lawson and external in-house counsel Tom Owen worked on the deal while Takanobu Ogura did so from Osaka in Japan.
Barclays provided Sabine with financial advice, including Chris Watson, Will Hodge, Rob Edgell and Steve Almrud. Moelis & Co. did so for Osaka (managing director Kevin Voelte in Houston, among others).
Osaka has been acquiring energy assets to expand its overseas businesses so as to bolster growth. That includes its upstream business portfolio, from which it aims to build a natural gas value chain in the U.S. that includes its stake in the Freeport LNG liquefaction facility in Texas and an electric power business.
Sabine filed for bankruptcy in July 2015 with Kirkland & Ellis advising it. It emerged the following April as a private company with a new $200 million senior secured credit facility and a new $150 million second lien term loan.
Led by CEO Doug Krenek, the company has operations in North Texas targeting the Granite Wash formation and East Texas focusing on the Cotton Valley Sand and Haynesville Shale. The company and Alerion Gas AXA sold their properties in South Texas’s Eagle Ford Shale to Lonestar Resources last year for $38.7 million.
Osaka already was familiar with Sabine’s operations, having bought 35% of the target’s working interest in gas properties in the eastern half of its East Texas position a year ago for $146 million.
Since then, the wells have been producing more than the expected volumes and generated stable cash flow and the acquisition of all of Sabine will give it the entire acreage position, Osaka said.
Osaka said it plans to expand its energy value chain further, from upstream to midstream and downstream businesses, including LNG trading.
An Osaka spokesman told Reuters that it decided to buy all of Sabine after the target notified it that it was putting itself up for sale.
Greenhill provided financial advice to Osaka on the original asset acquisition from Sabine while Hunton Andrews Kurth provided outside legal advice to Sabine (partner Ashley Muehlberger). V&E had assisted Osaka, including Kuperman and partner John B. Connally.