Citadel invests $1 billion in US natural gas

Citadel, a major hedge fund led by Ken Griffin, has announced a significant expansion in the US natural gas market. The company will acquire assets from Paloma Natural Gas LLC in a deal valued at around $1 billion. This purchase will give Citadel access to valuable acreage and producing assets, although the firm will not be directly managing them. Citadel is already a top trader of physical natural gas in the United States. However, this move into the drilling and production side is less common for hedge funds. Recently, the firm has seen large profits from commodities trading, especially in natural gas, earning at least $4 billion annually from this sector for the past three years. The interest in natural gas is growing, fueled by rising US exports and increased energy needs from data centers and artificial intelligence. Other companies, like Gunvor Group and Mercuria Energy Group, are also seeking to invest in US gas production. Citadel has been working in the physical trading space since 2014, establishing one of the largest physical natural gas businesses in North America. Their team, led by former Morgan Stanley commodities chief Jay Rubenstein, previously invested in companies like Ultra Petroleum Corp, now known as PureWest Energy. The Haynesville shale basin, where Paloma holds significant mineral acres, is particularly attractive due to its location near future export terminals. The US is expected to increase its LNG export capacity significantly in the coming years, indicating continued growth in the natural gas market.