Shell reshuffles US shale assets in two major deals

Royal Dutch Shell PLC has agreed to two separate transactions in which it will exit its Pinedale and Haynesville onshore gas assets in exchange for $2.1 billion in cash and acreage in the Marcellus and Utica shale regions.

In one deal, Shell will sell its 107,000 net acres in the Haynesville of North Louisiana, along with associated field facilities and infrastructure, to Blackstone affiliates Blackstone Energy Partners and Vine Oil & Gas LP, Dallas, for $1.2 billion in cash.

Vine, formed by Blackstone earlier this year, is an exploration and production company targeting US shale and led by Eric Marsh, a former executive vice-president of Encana (OGJ Online, Oct. 2, 2013).

The transaction encompasses 418 producing wells, 193 of which are Shell-operated. Gross production from Shell’s assets, as of July 1, totaled 700 MMscfd of dry gas, with the company’s net working interest share totaling 250 MMscfd.

The agreement is effective July 1 and expected to close in the fourth quarter. Shell says it will continue to operate in Louisiana through its downstream, retail, midstream, and New Orleans-based deepwater operations.

In another deal, Shell will acquire 155,000 net acres in the Marcellus and Utica areas of Pennsylvania and receive a cash payment of $925 million from Ultra Petroleum Corp., Houston, in exchange for Shell’s 19,000 net acres of leasehold interest in the Pinedale of Wyoming, including associated gathering and processing contracts.

The Pinedale assets encompass 1,108 gross wells and associated facilities, and an average of 0.7% overriding royalty interest in 11,500 acres. Shell’s second-quarter net production from Pinedale totaled 190 MMscfd of dry gas. Ultra’s first-half net production from the Marcellus and Utica assets averaged 109 MMscfd.

Shell will receive 63,000 net acres in the Marshlands area as well as 92,000 net acres in the Tioga area of mutual interest (AMI), an unincorporated joint venture with Ultra, giving Shell 100% interest in Tioga AMI.

The agreement is effective Apr. 1 and expected to close this year.

Ultra says the deal with Shell will increase its net proved reserves by 1.8 tcfe and expand company-operated production to 82% from 62%.

Shell’s recent shale activity

Marin Odum, Shell Upstream Americas director, meanwhile explained the deals from his company’s perspective: “With this announcement we are adding highly attractive exploration acreage, where we have impressive well results in the Utica, and divesting our more mature, Pinedale and Haynesville dry gas positions.”

Shell has recently been involved in a flurry of deal activity relating to its shale assets.

In June, company affiliate East Resources Inc. and an unnamed private company sold 48,000 net acres in the Marcellus and 27,000 net acres in the Utica to units of start-up American Energy Partners LP. The transactions totaled $1.75 billion (OGJ Online, June 9, 2014).

Notably, East Resources was acquired in 2010 by Shell for $4.7 billion during Shell’s large-scale venture into US unconventional oil and gas (OGJ Online, May 28, 2010).

In May, the company sold 100% working interest in 106,000 net acres in the Eagle Ford to Sanchez Energy for $639 million (OGJ Online, May 21, 2014).

Two months earlier, Shell divested its acreage position in the Mississippi Lime in Kansas, its Utica position in Ohio, and a portion of its acreage in the Sandwash Niobrara basins in Colorado (OGJ Online, Mar. 7, 2014).

Related Articles

Total joins global climate initiatives

11/20/2014 Total SA, in what it describes as a consolidation of its efforts to address climate change, will support initiatives of the United Nations Global C...

IHS: ‘Tight-oil test’ under way in US amid lower oil prices

11/20/2014 The vast majority of potential US tight-oil production growth remains economical in the current crude oil price environment, according to a recent ...

Apache to sell Louisiana, Anadarko assets for $1.4 billion

11/20/2014 Houston independent Apache Corp. has agreed to sell noncore southern Louisiana and certain Anadarko basin assets in two separate deals for a combin...

AFPM: Oregon’s proposed low-carbon fuel standard unconstitutional

11/20/2014 Oregon’s proposed low-carbon fuel standards (LCFS) program is unconstitutional, the American Fuel & Petrochemical Manufacturers said in comment...

MARKET WATCH: Crude oil futures prices rangebound

11/20/2014 US light, sweet crude oil prices remained below $75/bbl Nov. 19 on the New York market, while analysts and traders focused on the upcoming meeting ...

Bids spike in Northern Alaska lease sales

11/19/2014 Alaska’s Division of Oil & Gas received 356 bids on 298 tracts in its 2014 Northern Alaska area-wide lease sales, trumping the 92 bids received...

NOIA, API studies list benefits of more federal OCS leasing

11/19/2014 Offshore oil and gas leasing in the eastern Gulf of Mexico and on the US Atlantic and Pacific coasts could create more than 838,000 American jobs a...

Freeport LNG nears construction phase

11/19/2014 Freeport LNG Expansion LP expects later this month to close on financing and begin construction on the first two trains of its natural gas liquefac...

Petrobras initiates start-up of units at Abreu e Lima refinery

11/19/2014 Petroleo Brasileiro SA (Petrobras) has received permission to commission units at its Abreu e Lima refinery (Rnest) at the port of Suape, near Reci...

White Papers

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Increase Equipment Uptime Through Robust Enterprise Asset Management

Whether you operate in the Upstream Drilling and Exploration sector, the Midstream distribution sector...
Sponsored by

Continuous Improvement for Maintenance with Robust Reporting and Analytics

You should have real-time, anywhere access to more relevant and comprehensive data to help manage and ...
Sponsored by

Enterprise Asset Management Solution for Movable Assets in the Oil & Gas Industry

Drilling and exploration companies face several challenges in effectively managing assets both offshor...
Sponsored by

Supporting HSE Needs for Oil & Gas Through Effective Asset Management Practices

The Oil & Gas industry is constantly being challenged to find, extract and deliver cheaper an...
Sponsored by

Sesam for subsea design analysis

With the exponential growth in the subsea sector, a new set of challenges now face the industry. Mostl...
Sponsored by

Is the gas delivery system you’re looking at able to meet your power generation needs: a hydraulic engineer’s perspective

The hydraulic characteristics, and system response to demands and supplies, of natural gas pipelines a...
Sponsored by

Available Webcasts



Optimizing your asset management practices to mitigate the effects of a down market

When Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST



On Demand

Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

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