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Tokyo Gas sells TVL LLC to Grayrock Energy for $255mn and reallocates its US gas portfolio

By selling its US subsidiary TVL LLC, active in the Haynesville and Cotton Valley formations in Louisiana, to Grayrock Energy for $255mn, Tokyo Gas pursues a targeted rotation of its upstream assets while strengthening, through TG Natural Resources, its exposure to major US gas hubs supporting its LNG value chain.

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Japanese group Tokyo Gas Co., Ltd. has completed the sale of its US subsidiary TVL LLC to Grayrock Energy for $255mn. TVL LLC owns upstream gas exploration and production assets in the Haynesville and Cotton Valley formations, located in Louisiana within the Ark-La-Tex region. This transaction marks a targeted divestment rather than a general withdrawal from the US gas market, reinforcing Tokyo Gas’s dynamic management of its upstream portfolio.

Strategic reorganisation in US upstream gas

TVL LLC is part of a broader structure built by Tokyo Gas in the US through TG Natural Resources LLC (TGNR), formed following the 2020 acquisition of Castleton Resources. The divested assets span approximately 315,400 net acres in the Haynesville/Cotton Valley. By selling TVL LLC, Tokyo Gas reduces its exposure to a specific asset pocket while reinforcing its positions in core production hubs.

Tokyo Gas’s “Compass Transformation” strategy for 2023–2025 and 2026–2028 emphasises capital reallocation to high-value segments, particularly the liquefied natural gas (LNG) chain. This strategic focus is supported by enhanced positions in American shale gas assets.

Major investments maintained in shale gas

The sale of TVL follows two major acquisitions by TGNR: Rockcliff Energy II for approximately $2.7bn in 2023 and 70% of Chevron’s East Texas gas assets for $525mn in 2025. With over 400,000 net acres and a production rate of 1.3 billion cubic feet equivalent per day, TGNR is now a central pillar in Tokyo Gas’s US gas strategy.

Grayrock Energy, a private operator active in Texas and Oklahoma, is strengthening its position in the Haynesville/Cotton Valley through this deal. TVL’s producing assets offer potential synergies with existing Grayrock holdings, paving the way for refinancing or future divestment.

Capital discipline and growing shareholder pressure

The TVL LLC divestment comes as Tokyo Gas faces increasing pressure to improve capital efficiency. In spring, the group announced a net income target of ¥131bn for FY2026, alongside plans for share buybacks and dividend increases. It also revealed plans to divest approximately ¥100bn in assets, including real estate.

The entry of US fund Elliott Management into the capital structure has accelerated this portfolio reshaping. The transaction with Grayrock Energy demonstrates Tokyo Gas’s willingness to monetise non-core assets while maintaining its ambitions in the US gas market, particularly through synergies between shale production and LNG value chains.

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