Sumitomo Corp. acquires more US shale gas acreage

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Sept. 1 -- Rex Energy Corp. entered into a joint venture agreement with Sumitomo Corp. subsidiary Summit Discovery Resources II LLC, to sell and transfer interests valued at $140.4 million in its Marcellus shale assets in Pennsylvania.

Sumitomo will pay $88.4 million in cash upon closing and an additional $52 million in the form of a drilling carry for the assets, which include 12,900 net acres, certain producing Marcellus shale wells, and associated midstream assets.

In addition to funding its own share of drilling obligations, Sumitomo also agreed to fund 80% of Rex Energy's remaining share of drilling and completion costs until the $52 million drilling carry is fully utilized.

In Butler County, Pa., Rex Energy said it will sell a 15% nonoperated interest in 42,200 gross (41,100 net) acres to Sumitomo for $61.6 million, or $10,000/net acre.

Rex Energy also agreed to sell 30% of its interests in 20 Marcellus shale wells within the Butler County area, including 11 wells in progress, for $19.1 million.

In addition, Rex Energy will sell 30% of its interest in Keystone Midstream Services LLC, a midstream JV with Stonehenge Energy Resources LP, and its existing refrigeration plant for $3.9 million.

In Rex Energy's Marcellus shale JV project areas operated by Williams Production Appalachia LLC, Rex Energy said it will sell 20% of its interests in 44,200 gross (22,100 net) acres for $35.9 million, or $8,115/net acre.

Additionally, Rex Energy will sell 20% of its interests in 19 Marcellus shale wells in the Williams JV areas, including five wells in progress, for $5.7 million, and 20% of its interests in the Williams JV midstream assets for $822,000.

Under the agreement, which is expected to close this month, Rex Energy also will sell 50% of its interests in 4,600 net acres in Fayette and Centre Counties for $18.5 million, or $8,115/net acre.

Second project
Sumitomo’s purchase marks the Japanese trading house's second shale gas project in the US, following its involvement since last year in development and production at a field in Texas.

Late last year, Sumitomo Corp. said it will pay an estimated ¥40-50 billion to acquire a 12.5% interest in the Fort Worth basin Barnett shale project from Carrizo Oil & Gas Inc. Sumitomo may decide later to take an additional 12.5% stake (OGJ Online, Dec. 15, 2009).

In February, Kazuyuki Onose, general manager of Sumitomo's exploration and production business department, said the Japanese firm will continue to take part in shale gas projects by sharing part of the initial costs, especially as US firms appear to be selling off assets (OGJ Online, Feb. 2, 2010).

Japanese trading companies are jumping into shale gas development on growing demand for new energy sources.

Earlier this month, Penn West Energy Trust (PWE) agreed to form a 50-50 JV with Mitsubishi Corp. to develop PWE’s shale gas assets in the Cordova Embayment area (OGJ Online, Aug. 24, 2010).

In February, reports said that Mitsui E&P USA LLC will earn a 32.5% interest in 100,000 net acres held by Anadarko Petroleum Corp. in the Marcellus shale gas play in north-central Pennsylvania for $1.4 billion (OGJ Online, Feb. 16, 2010).

Contact Eric Watkins at hippalus@yahoo.com.

Related Articles

Rex purchases 207,000 net acres from Shell in deal that increases Appalachian leasehold

10/16/2014 Rex Energy Corp. has signed a $120 million deal to acquire 207,000 net acres prospective to the Marcellus, Upper Devonian Burkett, and Utica shales...

Rex Energy to acquire Marcellus, Utica acreage

08/14/2014 Rex Energy Corp., State College, Pa., has agreed to acquire 100% interest in 208,000 gross acres prospective for the Marcellus, Upper Devonian-Burk...

Rex Energy names vice-president

11/14/2008 Rex Energy Corp. has named Bernard J. Ulincy vice-president, land manager.

Rex Energy appoints vice-president of drilling

05/02/2008 Rex Energy Corp. has appointed James Watson vice-president of drilling for its Appalachian basin region.

Rex Energy names Ottaviani senior vice-president

08/14/2007 Rex Energy Corp. has named William L. Ottaviani senior vice-president of reservoir engineering.
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Cognitive Solutions for Upstream Oil and Gas

When Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected