By Jessica Resnick-Ault

NEW YORK (Reuters] – Private equity companies are seeking to sell their land and businesses in the U.S.’ second largest producer formation. There, prices have risen along with rising global gas prices as well as booming U.S. liquefied natural gases (LNG) exports.

Andrew Dittmar of Enverus, director, said that four deals worth $1.65 million have already been struck with the Haynesville formations in Northwest Louisiana and East Texas so far this year. The Haynesville will produce an unprecedented 13.6 billion cubic foot per day (bcfd) next month. This is about 15% of U.S. Shale Gas output.

U.S. gasoline futures have reached 12 year highs. In Europe and Asia, prices are soaring even higher as buyers want to protect their supply in order to keep up with power demands.

The natural gas rally is a great opportunity for smaller firms to sell assets that they’ve held for more than three years. According to advisors, there are several major transactions, each valued at more than $1.5 billion to $3 billion. There is also the possibility of buyers seeking to acquire smaller assets from holders individually.

Private equity firms are the sellers, which waited to sell when prices plummeted last year during the coronavirus pandemic.

“They had a plan for a 2020 exit three-years before, but then it didn’t happen,” stated Brock Hudson (NYSE;), the managing director of Carl Marks Advisors. This investment bank provides operational and financial advisory services.

The gas futures market has rallied, reaching a peak of $6.280 in the last month. This is more than double the seasonal-adjusted 10 year average of $3.01414.

Pipelines that run from Haynesville to the Gulf Coast export hubs, including Sabine Pass (Louisiana) and Freeport (Texas), have additional capacity. The lines that run from Pennsylvania’s Marcellus shale are nearly full. The United States exports about 10 billion cubic yards of gas per day as LNG. Several companies expect to expand their capacity in the months ahead.

According to sources familiar with Rockcliff Energy’s Haynesville production, the firm is private equity backed and has over 1 billion dollars of production. It will be on the block before the year ends, people who are familiar with it say.

Rockcliff provided high-yield credit last month. This is a common move that companies make to strengthen their balance sheets prior to exploring strategic options such as selling the company. Rockcliff has not responded to inquiries for comment.

Reuters reported previously that Haynesville producers like GeoSouthern were already in the market.

Dittmar from Enverus stated that dollar-per-acre prices have increased substantially. Comstock purchased Haynesville producer Covey Park for $3,000 an acre, adjusted for production. The value of two transactions this year was nearly fourfold.

Gas production is a cheaper alternative to oil and is attracting many companies like Chevron Corporation (NYSE:) also expressed an interest in Haynesville.

Buyers have turned to the Haynesville as acreage deals became harder to come by in the Permian basin of Texas and New Mexico, said Ben Heinzelmann, president at Energy Domain, a marketplace for sellers to market their mineral, royalty, and non-operated working interests.  

Tellurian (NASDAQ) Inc, a gas exporter, says they could be buyers of any new or existing gas assets. This company plans to increase gas production at Haynesville in preparation of its Driftwood LNG Export Plant in Louisiana that will be constructed in March 2022.

Charif Souki is co-founder of Tellurian, a U.S. gas developer. He said that they are actively pursuing acquisitions upstream. “There are many Haynesville targets that make sense.”