Deal expected to generate more than 100 billion won in annual operating profit from 2028 while strengthening North American LNG sourcing.
Posco International is acquiring a US shale gas asset for $550 million, in a deal expected to generate more than 100 billion won ($72 million) in annual operating profit from 2028, while expanding its natural gas business from production, LNG liquefaction and trading.
The trading and energy arm of Posco Group said Thursday that it signed an agreement Monday to take over a 100 percent stake in shale gas assets owned by a subsidiary of Chord Energy Corp., Texas-based exploration and production company.
The assets are located in the Marcellus basin in Pennsylvania, one of the most productive shale gas regions in the US. They will be owned through Posco International’s US subsidiary and a separate special-purpose company. The transaction is expected to be completed in November.
To finance the transaction, Posco International said Monday its US subsidiary, Posco International E&P USA, would raise 532.9 billion won through a rights offering. The parent company will also provide 266.1 billion won in loans to the subsidiary.
The acquisition includes 1,305 producing wells and 701 undeveloped wells, bringing the total to 2,006. The asset holds about 36 billion cubic meters of resources, including approximately 6.2 billion cubic meters of prospective resources.
In the first half of this year, the assets produced about 3.5 million cubic meters of gas per day, equivalent to roughly 1 million metric tons of LNG annually.
For Posco International, this deal goes beyond simply increasing gas production.
Because the assets are already producing, the company can start generating sales and cash flow as soon as the deal closes, without having to make the heavy upfront investment usually needed to develop a new gas field.
“This is a proven asset that is already in production, Kim Dong-il, head of Posco International’s exploration and production business, said during an investor briefing Wednesday. “The biggest advantage is that it can contribute to earnings immediately after the acquisition by securing gas sales volume and cash flow, without large-scale development investment.”
The asset generated about $80 million in earnings before interest, taxes, depreciation and amortization last year, while EBITDA reached about $70 million in the first quarter of this year.
The company expects the acquired assets to generate more than 100 billion won in annual operating profit in 2028.
Han Seung-hoon, an analyst at Shinhan Securities, said the acquisition could expand the company’s LNG trading opportunities by strengthening its North American sourcing base.
“With greater destination flexibility for North American LNG, the company will be able to adjust volumes between imports to Korea and spot-market sales depending on prices and supply-demand conditions, creating more trading opportunities,” said Han.
The acquisition comes as US natural gas take on a growing role in global energy markets. The company expects that increased LNG export capacity, combined with surging electricity use from AI data centers and semiconductor facilities, will push US gas demand higher over the coming years.
sahn@heraldcorp.com
