Banpu makes first investment in US shale

Banpu Plc, Thailand’s largest coal miner, said on Wednesday it had spent US$112 million to buy a 29.4% stake in the Chaffee Corners Joint Exploration Agreement (JEA), a shale gas operation in the US state of Pennsylvania.

The company said in a statement the deal was its first in the US  upstream gas business and was part of its strategy to balance its heavy exposure to the Asian market.

JEA is 65.4%-owned and operated by Talisman Energy Inc and located in the northeast section of the Marcellus Shale belt, the largest source of natural gas in the United States, it said.

Banpu’s investment represents proved reserves of 156 billion cubic feet of dry natural gas and target net output of around 21 million cubic feet per day for 2016, the company said.

The gas is sold entirely to the US domestic market, mainly for power generation.

Many energy firms have been forced to write down the value of their US shale gas operations due to the slump in oil and gas prices.

Banpu said it had appointed Anon Sirisaengtaksin, the former chief executive of PTT Exploration and Production Plc, as a director and to advise on its upstream gas strategy.

The company has sought to diversify into the power business to help balance the impact of weak coal prices. Banpu aims to boost its power generating capacity to 4,300 megawatts by 2025, including 800 megawatts of renewables.

Banpu has coal mines in Indonesia, Australia, and China and has interests in power plants in Laos, China and Japan.

Banpu shares rose one baht, or 5.62%, to close at 18.80 baht, according to the Stock Exchange of Thailand.

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