Chevron Corporation has finalized the sale of a 70% stake in its East Texas gas assets to TG Natural Resources LLC (TGNR), a joint venture between Tokyo Gas Co., Ltd. and Castleton Commodities International LLC (CCI), for $525 million.

The transaction involves a $75 million cash payment and a $450 million capital carry, designed to fund the development of the Haynesville shale assets. Chevron will retain a 30% non-operated working interest in the joint venture with TGNR, along with an overriding royalty interest.

Chevron anticipates generating over $1.2 billion in value from this deal, based on current Henry Hub natural gas prices, through the multi-year capital carry, retained working interest, and royalty interest. This financial projection underscores the company's strategic approach to maximizing returns while optimizing its asset portfolio.

The divestiture supports Chevron's previously announced plan to sell $10-15 billion in assets by 2028. This strategy aims to focus on core operations and enhance capital efficiency, allowing the company to allocate resources to high-return projects and emerging energy sectors.

TGNR, the acquiring entity, will significantly expand its presence in the Ark-La-Tex region with this acquisition. The deal adds over 250 gross drilling locations to TGNR's existing Haynesville inventory, extending its inventory life beyond 20 years at the current development pace. This expanded footprint positions TGNR as a dominant player in the Haynesville shale play.

Craig Jarchow, CEO of TGNR, expressed enthusiasm for the partnership with Chevron, highlighting the operational synergies between the acquired assets and TGNR's existing holdings. He anticipates realizing over $170 million in synergies during the asset's development, further enhancing the transaction's value.

The Haynesville acreage acquired by TGNR is relatively undrilled and held by shallower production, mitigating potential parent-child well interference and enhancing future production efficiency. This characteristic adds significant value to the acquired assets, ensuring long-term productivity.

Chevron's decision to retain a minority stake and royalty interest reflects its confidence in the long-term potential of the East Texas gas assets. The joint venture structure allows Chevron to maintain upside potential while accelerating the development of a non-core asset through a capital-efficient approach.

Tokyo Gas, a major player in Japan's energy sector, brings its financial strength and long-term vision to the partnership. CCI, a global energy commodity merchant, contributes its expertise in marketing, trading, and infrastructure development.

This transaction represents a significant consolidation in the Haynesville shale play, with TGNR emerging as a key player, while Chevron continues to focus on its strategic divestiture program.