Tokyo Gas to Buy Rockcliff Energy from Quantum Energy Partners

A unit of Tokyo Gas has decided to buy Texas-based natural gas producer Rockcliff Energy from private equity firm Quantum Energy Partners for $2.7 billion to expand its overseas business, it said on Saturday.

The deal comes as part of the Japanese company's efforts to expand its North American shale gas operations to meet the growing demand for natural gas as an energy transition fuel.

Tokyo Gas, Japan's biggest city gas supplier, and other utilities are stepping up overseas expansion to counter falling demand in their domestic market. Japan has an aging population and a declining birthrate, while energy market reform has spurred competition among old-guard utilities.

Under the deal, TG Natural Resources (TGNR) - 79 percent owned by Tokyo Gas - will buy all shares in Rockcliff Energy from Quantum Energy Partners. The deal is expected to close on Dec. 29, Tokyo Gas said.

With the acquisition, TGNR's natural gas production will quadruple to 1.3 billion cubic feet per day from about 330 million cubic feet per day, making it one of the largest shale gas producers in Texas and Louisiana, according to Tokyo Gas.

"We expect our gas production will be more efficient after the acquisition as Rockcliff Energy's output area is located adjacent to TGNR's blocks," Takashi Nakao, senior general manager of global business development at Tokyo Gas, told reporters.

The production is also close to new liquefied natural gas (LNG) export terminals and other facilities expected to increase demand for natural gas in the future, Nakao said.