East Texas upstreamer Rockcliff Energy II, a major natural gas producer in the Haynesville Shale Play, announced late Friday that it has agreed to be acquired by TG Natural Resources, a company jointly owned by Castleton Commodities and Tokyo Gas America, for $2.7 billion.
The move further consolidates the production of natural gas in anticipation of a major uptick in the export of liquefied natural gas from the cluster of LNG terminals on the Gulf Coast of Texas and Southern Louisiana.
Rockcliff II is a portfolio company of Houston-based Quantum Capital Group, which had been shopping Rockcliff assets since early 2022. Rockcliff said its assets include more than 200,000 net acres over five East Texas counties with daily natural gas production of 1.3 billion cubic feet.
Akira Inukai, president and CEO of Tokyo Gas America, said the acquisition is part of a strategy in place since 2017, when the company first invested in Castleton, which became a TGA subsidiary in 2020. “The Texas and Louisiana areas where TGNR owns assets are in close proximity to new LNG export terminals where future gas demand is expected to increase, and TGNR has been seeking to acquire superior assets in these areas.”
Vinson & Elkins advised Rockcliff and Quantum on the transactions, while TGNR reached out to Kirkland & Ellis as outside counsel.
The Vinson & Elkins team was led by Houston partner Robert Hughes, with assistance from partner Shay Kuperman and associates Brian Broussard, Jake Lubenow and Charlie Fitzpatrick. Other key team members include partners John Lynch and Gary Huffman, senior associate Curt Wimberly and associates Katie Dillard and Keleigh Carver (tax); partner David D’Alessandro and counsel Regina Ibarra (executive compensation/benefits); partner Hill Wellford, counsel Michelle Arishita, senior associate Ryan Will and associate Austin Turman (litigation); partners Jackson O’Maley and Doug McWilliams and associate Walt Baker (corporate); partner Sean Becker (employment/labor); partners Guy Gribov and Tzvi Werzberger and counsels Carter Olson and Zach Rider (finance); partner Matt Dobbins (environmental); associates Sebastian Devora and Destiny Alliniece (energy transactions/projects); partner Sarah Mitchell and associate Victoria Bahrami-Negad (insurance); and partner Michael Kurzer (technology transactions/IP).
The Kirkland team was led by real asset transactions partners Chad Smith and Will Eiland with assistance from corporate partner Adam Larson; debt finance partners Will Bos and Marco Chan; capital markets partners Matt Pacey and Brian Flannery; and tax partners David Wheat and Adam Arikat.
J.P. Morgan serves as Quantum/Rockhill financial advisors, while Goldman Sachs and BofA Securities advised TGNR. Greenhill served as TGNR’s M&A advisor.
In October 2021, a V&E team advised Rockcliff on its issue of $700 million in 5.5 percent senior notes due in 2029. Under terms of the acquisition TGNR assumes the balance of that debt.
The transaction is expected to close by the end of the year.