The Blackstone Group is going deeper into the natural gas business, with a $1.2 billion deal to buy into a Louisiana shale field.
Blackstone, the giant private equity firm, said on Thursday that it would buy a 50 percent stake in a large section of the Haynesville Shale, an underground rock formation located in Louisiana and eastern Texas. The stake, owned by Royal Dutch Shell, comprises more than 107,000 net acres in Louisiana, Blackstone said.
The deal is the latest example of private equity firms betting on natural gas, amid a surge in production. In recent months, Apollo Global Management agreed to pay about $1.8 billion for 360,000 acres and other assets in Alberta, and TPG paid $1.8 billion for 124,000 acres of developed and undeveloped fields in Wyoming.
Blackstone has found several ways to ride the natural gas boom. The firm in 2012 partnered with an oil producer to invest in offshore energy assets in the Gulf of Mexico, and it also invested $2 billion that year in Cheniere Energy Partners, which is developing a way to ship liquified natural gas overseas.
For the Haynesville deal, Blackstone is investing through an exploration and production company that it recently created, called Vine Oil & Gas, along with its Blackstone Energy Partners arm. Vine, based in Dallas, is led by Eric Marsh, who formerly was a senior executive at the energy producer Encana Corporation.
Encana has years of experience with the Haynesville Shale. The company says it acquired its first leases there in 2005, drilled its first vertical wells in 2006 and then signed a 50-50 joint exploration agreement with Shell in 2007. It is Shell’s stake in the joint venture that Blackstone is now acquiring.
“We are pleased to acquire and develop a significant, strategic, and top-tier position in the core of the Haynesville Shale, a premier North American unconventional dry gas play located next to multiple growing sources of demand and an area where we have operated extensively before,” Mr. Marsh said in a statement.
Blackstone formed Vine earlier this year, in a bet on Mr. Marsh and his operating team. Vine intends to grow into an independent company that partners with other companies in drilling for oil and natural gas, according to Blackstone.
“Eric is an incredibly talented operator,” Angelo Acconcia, a managing director of Blackstone Energy Partners, said in a statement. “He and his team are uniquely situated to contribute significant operational expertise to these assets as well as future opportunities.”
The Haynesville deal, subject to regulatory approval, is expected to close in the fourth quarter. Blackstone and Vine were advised by Evercore and Kirkland & Ellis.