Quantum Private Equity Scores Again, With Rumored $4.6B Sale Of U.S. Shale Gas Reserves To Japan

New year, new deals for $19 billion private equity shop Quantum EP and CEO Wil VanLoh.

Quantum Private Equity Scores Again, With Rumored $4.6B Sale Of U.S. Shale Gas Reserves To Japan

Drilling for gas in the Marcellus shale. AFP via Getty Images

New year, new deals for $19 billion private equity shop Quantum Energy Partners and CEO Wil VanLoh. Last month Quantum portfolio company Tug Hill Operating sold to natural gas giant EQT EQT for $5.2 billion. Quantum had invested more than $1 billion into Tug Hill since 2014. Now this week comes another big deal, with Tokyo Gas reportedly set to pay $4.6 billion for Rockcliff Energy, which Quantum backed with $350 million in 2016. The rumored deal was first reported by Reuters. Tug Hill's operations were based in the Marcellus shale of Pennsylvania and West Virginia. Whereas Rockcliff's assets appear to be entirely within approximately 270,000 acres in the Haynesville shale gas fields of far east Texas — from which it produces some 1.4 billion cubic feet per day (the fourth-biggest privately owned oil and gas producer by volume, according to Oil & Gas Investor). Though natural gas prices have started the year soft (at $3.7 per thousand cubic feet, down 50% since June 2022), it's been a good time to be a seller of natural gas fields — with prices spiking over the last year as the world scrambled to replace blockaded flows from Russia.

Rockcliff's land in East Texas is prime location for supplying liquefied natural gas export terminals on the Gulf Coast. Which is precisely what Tokyo Gas is going after. Japanese energy giants like Inpex and Jera have recently made multi-billion-dollar deals to secure LNG supplies from the likes of Venture Global and Freeport LNG. Yet in the Rockcliff deal, Tokyo Gas aims to further up the value chain, to own in-ground reserves.

Quantum CEO Wil VanLoh. Quantum Energy Partners Quantum's Wil VanLoh, 53, cofounded the private equity company in 1998, and runs the show since cofounder Toby Neugebauer left in 2016. Quantum has $19 billion under management and has run 8 funds with 120 portfolio companies. VanLoh and Rockcliff's founder Alan Smith go way back. According to old news reports and SEC documents, Smith first teamed with VanLoh in 2003 on a startup Chalker Energy Partners, which they sold for $250 million in 2006. Next Smith ran Quantum Resources Management, an affiliate which ran a $1.2 billion fund buying mature assets. It was chaired by investor Donald D. Wolf. They spun out QR Energy LP as a public company, which in 2014 they sold to Breitburn for roughly $2 billion in shares and cash.

VanLoh has scored plenty of other big exits, including the 2019 sale of Oryx Midstream for $3.6 billion, and the 2020 sale of Parsley Energy ($4.5 billion) and 2021 sale of DoublePoint ($6.4 billion), both to Pioneer Natural Resources PXD . Not every deal has been a winner; Quantum-backed Linn Energy went bankrupt in 2016 after piling up too much debt buying old oil fields before prices crashed.

It's unclear who owns how much of what, but VanLoh has an impressive track record and his control over Quantum and stakes in portfolio companies likely makes him a billionaire. He also runs QL Capital Partners, and teams with Global Reserve at the $300 million-plus Quantum Innovation Fund, investing in low-carbon startups. He lives in Houston.MORE FROM FORBESThe Biggest Winners In 2022's Energy RollercoasterBy Christopher HelmanMORE FROM FORBESFor $6.4 Billion, These Two Young Tycoons Just Sold Their Oil Company To Pioneer Natural ResourcesBy Christopher Helman