(Quantum, 15.Dec.2023) — Rockcliff Energy II LLC, a portfolio company of Quantum Energy Partners, announced the entry into a definitive agreement with TG Natural Resources LLC (TGNR), in which TGNR will acquire 100% of the membership interests in Rockcliff for $2.7bn, prior to customary adjustments (the “Transaction”).
Rockcliff is a premier upstream natural gas company focused on developing the East Texas Haynesville shale. With field headquarters in Longview, Texas, the company has a footprint in five Texas counties, operating more than 200,000 net acres with more than 1.3 Bcf/d of gross operated natural gas production.
Alan Smith, CEO of Rockcliff said, “We are extremely proud of the business we have built at Rockcliff over the past eight years, becoming one of the premier private natural gas companies in the United States. The amazing growth we have been able to achieve, taking gross production from approximately 100 MMcf/d at our initial acquisitions in 2017 to over 1.3 Bcf/d today, is a testament to the tireless efforts and perseverance of the entire Rockcliff team. The continued support of our partners at Quantum – who have shared our vision from day one to position Rockliff as an industry-leading natural gas producer – has played an essential role in our exceptional growth and commercial success.”
Craig Jarchow, CEO of TGNR said, “On behalf of Tokyo Gas America and Castleton Commodities International, I want to congratulate Alan Smith and the Rockcliff team as well as Wil VanLoh and the Quantum team for building an impressive company. With this acquisition, TG Natural Resources is committed to leadership in the Haynesville Play, one of the world’s most important sources of clean natural gas. We will have nearly a century in rig-years of gross operated and non-operated drilling inventory in the Haynesville, not counting the important plays in the Bossier and Cotton Valley. TGNR has a strong track record of investing across commodity cycles and this acquisition positions the company for long-term success. Rockcliff has also made large investments in reducing methane emissions from their already very clean operations and we plan to continue to accelerate the drive to lower methane intensity in our combined operations.”
“The sale of Rockcliff will memorialize Quantum’s ninth successful partnership with Alan and other members of the Rockliff leadership team,” said Wil VanLoh, CEO of Quantum. “Partnering with passionate entrepreneurs to build businesses of significant scale and with industry leading economics such as Rockcliff has been a hallmark of Quantum’s success investing in the energy sector over the past 25 years. Through our partnership and collective efforts, we were able to identify a unique opportunity to transform the East Texas Haynesville into a major supplier of clean U.S. natural gas for LNG exports from the Gulf Coast.”
Akira Inukai, President, and Chief Executive Officer of Tokyo Gas America said, “In May 2017, we invested in Castleton Resources LLC, the predecessor of TGNR, and in Aug. 2020, we made Castleton Resources LLC a subsidiary. The Texas and Louisiana areas where TGNR owns assets are in close proximity to new LNG export terminals where future gas demand is expected to increase, and TGNR has been seeking to acquire superior assets in these areas. We are pleased to have acquired Rockcliff, which is located adjacent to the TGNR assets and therefore aligns very well with our overall growth strategy.”
The Transaction is expected to close by the end of the 2023, subject to customary closing conditions and regulatory approvals.
As of the date hereof, Rockcliff expects TGNR to assume its 5.50% Senior Notes due 2029 (the “Notes”), outstanding under the indenture, dated as of 4 Oct. 2021, by and among Rockcliff, the guarantors party thereto and U.S. Bank National Association, as trustee (the “Indenture”), and, subject to the applicable terms of the Indenture, for the Notes to remain outstanding upon closing of the Transaction. The consummation of the Transaction remains subject to customary closing conditions, and Rockcliff retains all rights under the terms of the Indenture.
This communication shall not constitute an offer to sell, or the solicitation of an offer to buy, any of the Notes or any other securities, nor shall there be any sale of the Notes or any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
Advisors
J.P. Morgan Securities served as financial advisors to Rockcliff and Vinson & Elkins LLP served as legal counsel to Rockcliff. Greenhill served as M&A advisor to TGNR. Goldman Sachs & Co. LLC and BofA Securities, Inc. served as financial advisors to TGNR on the M&A transaction. Kirkland & Ellis served as legal counsel to TGNR.
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