The Daigas Group acquired shares in US shale gas developer Sabine Oil & Gas Corporation, completing the first acquisition of a US shale gas company by a Japanese company. Following the acquisition, the group has expanded its acreage and increased production by making the company a wholly owned subsidiary.
The Daigas Group entered the US shale gas development business in Texas in 2012 and invested approximately ¥20 billion amid the growing adoption of horizontal drilling and hydraulic fracturing technologies. However, the geological formations proved more complex than expected, resulting in low profitability and a ¥29 billion extraordinary loss in 2013. The uncertainty surrounding the unfamiliar Pearsall Formation was a contributing factor, and the experience highlighted the importance of selecting high-quality acreage and making data-driven decisions.
While visiting approximately 100 companies in search of new opportunities, the group encountered Sabine Oil & Gas Corporation in August 2017 and began negotiations to acquire part of the company’s assets, which had a track record of stable production in the surrounding area. In June 2018, the group acquired a 35% interest, building a relationship of trust, and in July 2019 signed an acquisition agreement, completing the first acquisition of a US shale gas company by a Japanese company.
Making the company a wholly owned subsidiary enhanced the Daigas Group’s creditworthiness and strengthened its financing capacity. The delegation of authority to the local team and close coordination among senior executives secured operational agility. The acreage expanded from approximately 500 square kilometers as of July 2018 to approximately 2,100 square kilometers by the end of 2025, while price hedging was used to stabilize earnings. Production increased from approximately 1.7 million tonnes at the time of the acquisition to approximately 3.9 million tonnes in 2025, with approximately 4.0 million tonnes planned for fiscal 2026.
Going forward, the group aims to balance stable gas supplies with decarbonization by continuing to acquire promising new acreage against a backdrop of rising US energy demand and expanding demand for LNG exports. Sabine Oil & Gas Corporation plans to pursue sustainable business growth while renewing its organization.