First foray into the US shale gas industry! Japan's largest power generator JERA is reportedly planning a $1.7 billion acquisition of GEP Haynesville II assets.

According to sources familiar with the matter, Japan's largest power generation company JERA is in deep negotiations to acquire American natural gas production assets for about $1.7 billion. This is the latest case of an Asian country investing in the U.S. Energy Corp. industry. Sources say that after banks sought bids in recent weeks, JERA emerged as the highest bidder for the GEP Haynesville II assets. GEP Haynesville II is a joint venture between GeoSouthern Energy, backed by Blackstone (BX.US), and pipeline operator Williams Companies (WMB.US). This deal would mark JERA's first entry into shale gas production and give them more control in the supply chain as one of the world's largest liquefied natural gas (LNG) buyers. This is strategically significant as Japan prepares for a surge in electricity demand from data centers due to the artificial intelligence boom. Sources say that the Japanese company outbid other competitors, including several other U.S. Energy Corp. companies. However, they caution that the deal is not final yet and GEP may still turn to other bidders or even cancel the sale altogether. GEP Haynesville II is one of the top producers in the Haynesville shale basin in Texas and Louisiana, which is one of the largest natural gas producing regions in the U.S. It is unclear if GEP has other assets outside of the leased blocks in Louisiana. The Haynesville shale basin has been highly sought after due to its proximity to existing and planned LNG export terminals along the U.S. Gulf Coast. Investors are betting that more new facilities approved by the Trump administration will further boost activity in the basin. According to consultancy firm Rystad Energy, GEP Haynesville II is expected to have an average daily production of around 317.5 million cubic feet by 2025, doubling to nearly 614 million cubic feet by 2028. Due to a lack of domestic production capacity, Japan has heavily relied on oil and gas imports. Since the energy market was disrupted by the Russia-Ukraine conflict, Japan has been seeking to increase supply from foreign allies. President Trump's push for more U.S. Energy Corp. exports in negotiations with major trading partners has also increased interest from Asian-led buyers in American natural gas. Earlier this month, a trade agreement between the U.S. and Japan included Japan committing to annually purchase $7 billion worth of energy from the U.S. JERA was established as a joint venture between Tokyo Electric Power Company and Chubu Electric Power Company, and has been expanding its presence in the U.S. LNG sector this year, including signing an MOU last week to potentially source supply from a $44 billion LNG export project in Alaska. Reports earlier indicated that Japan had hired consultancy firm Wood Mackenzie to evaluate a proposed 800-mile Alaskan natural gas pipeline and LNG plant, suggesting that Japan is considering supporting the project.