On January 3, U.S. natural gas producer Rockcliff Energy from private equity firm Quantum Energy Partners was set to be sold to a unit of Tokyo Gas Co. Ltd. for roughly $4.6 billion, including debt.

The all-cash agreement with Houston-based TG Natural Resources, which is 70% possessed by the Japanese energy firm, is decided to be claimed this month, according to anonymous resources, as the discussions were requested to be confidential. Castleton Commodities International (CCI) owns the rest of TG Natural Resources.

TG Natural Resources is organizing funding from several financing sources to sponsor the transaction, including banks and private credit providers, however, no deal was guaranteed and the talks could end without a final agreement.

The agreement would be the latest move by a Japanese entity to secure gas in jurisdictions perceived as friendly, the importance of which has increased for the import-dependent Asian nation after supply markets for the commodity were roiled by the conflict in Ukraine.

Quantum and CCI refused to comment, Rockcliff and TG Natural Resources has not responded to requests for comment yet, and Tokyo Gas was not immediately available to comment.

Rockcliff generates more than 1 Bcf/d of natural gas from the Haynesville shale formation, which spans across Louisiana and East Texas. Quantum originally financed the Rockcliff management team with a $350 million investment in 2015. Rockcliff Energy is widely accepted as a leader in the Haynesville Shale: more than 270,000 net acres in East Texas​, almost 90% of the acreage is held by production, and it comprises 100% non-federal lands.

Buying Rockcliff would incredibly raise TG Natural Resources' operations, with the company producing almost 330 net MMcf/d as of June 2022 from the Haynesville formation, the company admits on its website.

Japan's biggest city gas supplier is in the midst of a portfolio reshuffle targeted at moving resources to growth areas. In October, Tokyo Gas agreed to sell its stakes in a portfolio of four Australian LNG projects for $2.15 billion to a unit of U.S. investment firm EIG.

As the conflict in Ukraine halted gas supplies to Europe and led European countries to import record volumes of LNG cargoes, this strained global supplies and increased prices.

Not possessing a rich amount of resources, Japan has been working to diversify from Russia's Sakhalin project, which estimates for 9% of Japan's total LNG imports of 74.3 million tonnes a year.

Japanese companies signed several deals on December 28 to get LNG supplies, with a preliminary agreement lasting up to 10 years with Oman LNG and a 20-year deal with U.S.-based Venture Global. Moreover, Japan imported 7.1 million tonnes of LNG from the United States in 2021, estimated for 9.5% of its total imports.

On January 4, Tokyo Gas shares decline by 5.07% at the midday break in Tokyo trading.