Chevron is in talks to sell the Texas assets to Tokyo Gas for up to $1 billion

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Chevron is in talks to sell its East Texas natural gas assets to Tokyo Gas, three people familiar with the discussions said, as the Japanese utility seeks to expand its access to abundant U.S. fuel reserves.

The companies have been in negotiations for months over a potential deal for Chevron’s portfolio in the Haynesville shale, a prolific gas-producing basin that straddles Texas and Louisiana.

The assets include 72,000 acres of mostly undeveloped land. It was not immediately clear how much gas the land is believed to hold. The deal could be valued at up to $1 billion, the people said.

If completed, the deal would strengthen Tokyo Gas’ position in US shale, the world’s largest source of gas, as it seeks to secure supplies to Japan, which relies heavily on fossil fuel imports to meet its needs energetic.

For Chevron, the West’s second-biggest supermajor, it would be another step in its multibillion-dollar divestment program as it seeks to close a controversial $53 billion deal for Hess, its largest acquisition in its history .

Chevron and Tokyo Gas did not respond to requests for comment.

A person involved in the process said it was unclear whether the deal would be completed and that a rival bid could emerge.

Tokyo Gas established a foothold in the Haynesville Basin last December with a $2.7 billion deal for Rockcliff Energy. It produces about 1.3 billion cubic meters per day of gas there, next to a cluster of liquefied natural gas terminals — both existing and planned — in the Gulf of Mexico.

In February, the Japanese group agreed to buy a 49% stake in Arm Energy, a North American trading and marketing group, and has made no secret of its appetite for further expansion in the US gas business.

Dan Pickering, chief investment officer at Pickering Energy Partners, said the deal “would make absolute sense.”

“It’s a definitive acquisition for Tokyo Gas, which is already the number four producer in the basin, and a logical divestment of a non-core asset by Chevron,” he said.

Chevron aims to offload $10 billion to $15 billion of non-core assets by 2028 as part of a strategy to “optimize the global energy portfolio” by focusing on higher-yielding producing areas high, including the Permian Basin and Kazakhstan.

It said in a March filing with the Securities and Exchange Commission that it is “evaluating strategic opportunities” for its Haynesville acreage.

On Monday it agreed a $6.5 billion deal to sell stakes in a number of tar sands and shale assets to Canadian Natural Resources.