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Potential Deal for $5 Billion: Tug Hill and Quantum Energy Seek Sale

Undisclosed industry sources said that THQ Appalachia I LLC (Tug Hill and Quantum Energy) is seeking a sale of the U.S. natural gas producer for more than $5 billion, including debt.

To run the sale process, which kicked off earlier this month, an investment bank has been hired for the company backed by Tug Hill Operating and private equity firm Quantum Energy Partners.

Mainly operating in the Marshall and Wetzel counties in West Virginia, THQ Appalachia has net production of around 760 MMcf/d.

Despite volatility in commodity markets which has made the valuation of energy producers tougher, THQ Appalachia is anticipating more than $5 billion due to the worth of its existing production and the possible value of its undeveloped acreage, the sources said on June 17.

Tug Hill Operating is a privately held, independent oil & gas exploration company focused on drilling and producing oil and clean-burning natural gas in the continental United States.

Tug Hill Operating plans to continue to grow in these areas through select strategic acquisitions and leasing efforts. Moreover, the company maintains an extensive non-operated asset position in Northeast Pennsylvania in the tier 1 Marcellus where Tug Hill or its team have drilled and/or participated in over 850 wells since 2007.

The company focuses on operational and detailed analysis, with all decisions underpinned by deep technical and financial evaluation. The senior team has acquired, operated, developed, and managed E&P assets in nearly every major US Domestic basin and has a proven track record of managing large-scale assets.

Founded in 1998, Quantum Energy Partners is a leading global provider of private capital to the responsibly sourced energy and energy transition & decarbonization sectors, what we call the Sustainable Energy Ecosystem. Quantum Innovation Fund invests in transformative technology-based businesses focused on the energy and sustainability sectors. It can provide early-stage companies with differentiated strategic insights and access. The company has significant experience coaching and mentoring founders to “cross the chasm” and build businesses of significant scale.

Additionally to purchasing THQ Appalachia, possible bidders in the sale process also have the opportunity to buy XcL Midstream, the pipeline firm that moves the company’s gas to market and has the same CEO as in Tug Hill. If the same buyer chooses to purchase XcL, the deal consideration will increase further.

However, the anonymous sources admitted that the sale depends on the market conditions and is not guaranteed since Tug Hill and Quantum could ultimately decide to retain some or all of THQ Appalachia and XcL’s assets. Tug Hill and Quantum refused to comment on these statements and XcL did not respond to a comment request.

Meanwhile, in June U.S. natural gas futures traded at their highest level since 2008. The high commodity price levels are inspiring longstanding owners of privately-held gas producers to explore sales.

If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.

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Earthstone Expands Due to Acquisition of Titus’ Delaware

Earthstone Energy Inc., based in Texas, announced the transaction on June 28: the acquisition of Titus Oil&Gas which will raise production in the Delaware Basin by 26%. The $627 million acquisition fills the Permian Basin in Eddy and Lea counties, N.M. with 86 net locations on 7,900 net acres of leasehold, while it is not clear how much of the leasehold might be on federal acreage It is Earthstone’s seventh acquisition since 2021, a span that includes the closing of approximately $1.89 billion in acquisitions in the Permian Basin. The purchase of Titus Oil & Gas Production LLC and Titus Oil & Gas Production II LLC, privately held companies backed by NGP Energy Capital Management LLC, is estimated at $575 million in cash and it is the equivalent of $52 million in stock (3.9 million shares of its Class A common stock based on the June 24 closing price). Titus shared that its net production in June was 31,800 boe/d. The company had reserves of approximately 28.9 MMboe. Earthstone is sure its net production will increase, at the midpoint, by 20,500 boe/d (65% oil) in the fourth quarter.

According to a July 28 report, Magellan Midstream Partners LP stated that the volumes in the last quarter on the Longhorn and BridgeTex pipelines that carry crude from the Permian Basin to Houston dropped dramatically since shippers likely exported barrels, meanwhile, refined product volumes grew on pandemic demand recovery. Volumes on the 450-mile (724-km) Magellan’s wholly-owned Longhorn crude oil pipeline from West Texas to Houston averaged approximately 200,000 bbl/d in the three months ended June 30 in contrast with 260,000 bbl/d in the same period the year before. A joint venture, the BridgeTex crude pipeline from the Permian to Magellan’s East Houston terminal dropped to 215,000 bbl/d from virtually 315,000 bbl/d in the year-ago period. However, volumes on the most prominent common carrier refined products pipeline system in the U.S. increased 3% partly because of pandemic demand recovery. Income from oil storage plunged as a steeply risen-in-price market made holding barrels less attractive and following contract expirations while operating expenses grew $28 million.

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