Tokyo Gas Co. said on June 21 it has bought a 25% stake in an Eagle Ford Shale gas formation, in what could be among the first shale investments in the U.S. by a Japanese firm since the tumble in energy prices.
Japan's biggest city gas supplier said it purchased the stake from VirTex Producing Co. The company did not give a break-down of the value of the stake but said it expects to spend up to 8 billion yen (US$76.64 million) for the stake plus investments in subsequent drilling combined.
The Nikkei newspaper said earlier on June 21 the company plans to buy a 25% interest in an Eagle Ford shale development for more than 5 billion yen.
The project, which already is under commercial production, is expected to supply gas equivalent to 200,000 tonnes per year of LNG output for 20 years, Tokyo Gas said.
Tokyo Gas in 2013 bought a shale gas stake in Texas' Barnett Basin from Quicksilver Resources that gave it gas output equivalent to 0.35 million to 0.5 million tonnes per year of LNG output for $485 million. But hurt by falling energy prices, the company has posted impairment losses for the project twice.
The company's senior general manager of global business department, Hisashi Nakamura, told Reuters after a briefing the firm is considering buying more U.S. stakes in future.
"We would look for more deals if there are good ones, but only the cost-competitive projects that are profitable even at low prices would survive, so they are not found everywhere," he said. (US$1 = 104.3900 yen)
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