Castleton buys $1B in Anadarko assets, expands East Texas footprint

After the deal closes, Castleton Commodities will own over 160,000 acres of leasehold in the East Texas Haynesville formation, one of the largest shale gas plays in the US. Anadarko photo.

Castleton betting on LNG exports

By Catherine Ngai

NEW YORK, Nov 18 (Reuters) – Castleton Commodities International LLC on Friday announced the purchase of more than $1 billion in assets from Anadarko Petroleum Corp, in the commodity trader’s latest move to expand its East Texas footprint.

As a result of the acquisition, the Stamford, Connecticut-based trader will own over 160,000 net acres of leasehold, also known as working or operating interest, in East Texas.

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Castleton announced more than a year ago that it had acquired working interests in a number of oil and gas wells from EDF Trading Resources LLC in East Texas, as well as acreage in various counties. In 2014, it also acquired a gas processing plant in New Mexico from Anadarko.

The growth in East Texas could be a strategic choice as demand for natural gas is rising given the start of liquefied natural gas exports from the lower 48 U.S. states earlier this year, according to Sandy Fielden, director of oil and products research for Morningstar.

East Texas is home to the Haynesville formation, one of the largest U.S. shale gas plays, with gas production of roughly 5.9 billion cubic feet per day.

“It’s a giant bet on gas prices improving based on incremental demand,” Fielden said.

The acquisition would increase Castleton’s daily net production in East Texas to more than 320 million cubic feet equivalent per day.

Craig Jarchow, president of Castleton’s oil and gas unit, said in a statement that the company remains focused on growing and diversifying its upstream and midstream assets.

Castleton’s expansion comes as its competitors have been selling assets recently. Vitol Group in September sold its crude oil unit in the Permian Basin to Sunoco Logistics Partners for $760 million. That deal includes a crude oil terminal and other pipelines.

Vitol’s chief Ian Taylor told Reuters last month that physical oil assets in the United States appear to have become too pricey, as trading houses have been crowded out of potential purchases.

In 2015, Morgan Stanley – a major player in the physical oil markets for nearly three-decades – completed the sale of its physical oil business to Castleton.

(Reporting by Catherine Ngai; Editing by Tom Brown)