Mitsubishi reportedly in talks to buy Aethon’s shale assets

Japan’s Mitsubishi is reportedly in talks to buy the US shale production and pipeline assets of Aethon Energy Management. Citing a source familiar with the matter, Reuters reported this week that talks were ongoing and that a deal could fetch around $8bn. Meanwhile, in a separate report published on the same day, Bloomberg cited multiple sources familiar with the matter and said that if a deal worth close to $8bn goes ahead, it would be Mitsubishi’s largest ever acquisition.

According to Bloomberg’s sources, a deal could be announced in the next couple of months. Some of them added that a deal would likely be structured as a purchase of Aethon’s portfolio. It is also possible that another buyer could emerge to bid for Aethon’s assets, according to the sources.

Indeed, this comes after Bloomberg and Reuters both reported in April that Abu Dhabi National Oil Co. (ADNOC) was also considering a potential transaction involving Aethon. None of the companies have commented publicly on the matter, though.

Aethon is focused on developing the Haynesville shale, with its assets concentrated in North Louisiana and East Texas. The company says it is one of the largest privately owned gas producers in North America.

Reuters reported in November 2024, citing sources familiar with the matter, that Aethon was exploring options for its production and midstream assets. According to those sources, options being explored included a sale or an initial public offering (IPO) at a valuation of about $10bn including debt.

This was reported against the backdrop of a boom in artificial intelligence (AI) and data centres that was driving up demand for power, which in turn was boosting the prospects of gas producers. Additionally, gas producers near the US Gulf Coast, including in the Haynesville, have seen rising demand for years as LNG export capacity in the region ramped up, with the trend ongoing today.

Mitsubishi is a global LNG player with stakes in LNG projects in Malaysia, Oman, Australia, Russia, the US and Canada and total equity LNG production of about 13mn tonnes per year (tpy), Reuters noted. This includes a stake in the Cameron LNG terminal in Louisiana. Expanding its nearby upstream and midstream gas holdings could therefore be seen as an attractive option for the Japanese company.