Chevron to buy Marcellus acreage from Chief

By OGJ editors
HOUSTON, May 4
-- Chevron Corp. will expand its acreage holding in the Marcellus shale gas play of the eastern US with the purchase of gas properties from Chief Oil & Gas LLC, Dallas, and Tug Hill Inc., a private investment firm in Fort Worth.

The primary asset covered by the purchase agreement is a lease position of 228,000 net acres, mainly in the southwestern part of the play in southern Pennsylvania.

Chief and Tug Hill will retain 125,000 acres of Marcellus shale leasehold in Bradford, Susquehanna, Tioga, Sullivan, and Wyoming counties of northeastern Pennsylvania. Chief said it plans to remain active in the play.

Chevron entered Marcellus shale development with the acquisition, closed in February, of Atlas Energy, Pittsburgh, for $3.2 billion plus assumption of $1.1 billion debt (OGJ, Nov. 15, 2010, Newsletter).

That acquisition included 486,000 net Marcellus acres and a 49% interest in Laurel Mountain Midstream LLC, which owns more than 1,000 miles of gas pipelines and gathering lines in the region.

Chevron became operator of a Marcellus joint venture Atlas formed earlier last year with an affiliate of Reliance Industries Ltd., Mumbai, assuming the acquired company’s 60% interest.

The Chief-Tug Hill purchase aligns with Chevron’s plans “to acquire early-in-life assets with long-term organic growth potential,” said George Kirkland, vice-chairman. Over the last year, the company has acquired nearly 5 million net acres of shale-gas assets in the US, Canada, Poland, and Romania.

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