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

WAFWA: Aerial survey finds lesser prairie chicken population grew

07/06/2015 A recent range-wide aerial survey found the lesser prairie chicken population rose 25% from 2014 to 2015, the Western Association of Fish & Wil...

Production ramps up from Sunrise oil sands project

07/06/2015 Husky Energy Inc., Calgary, reported that 25 well pairs are now on production at its Sunrise oil sands project in northeastern Alberta. Steaming is...

Buru awarded onshore Canning licenses

07/06/2015 Buru Energy Ltd., Perth, and Mitsubish Corp. have been granted two production licenses for Ungani oil field in the onshore Canning basin of Western...

Cenovus sells royalty business for $3.3 billion

07/06/2015 Cenovus Energy Inc., Calgary, inked an agreement to sell its wholly owned subsidiary Heritage Royalty LP to Ontario Teachers’ Pension Plan for gros...

CERI: Energy, operational efficiencies possible in Canadian oil, gas

07/06/2015 Measures can be taken by operators in the expanding resource-intensive Canadian oil and gas sector to improve both energy efficiency and operationa...

AGL Energy to scale back upstream gas operations

07/06/2015

Gas retailer AGL Energy Ltd., Sydney, says it will exit the oil business and massively scaling back its upstream gas operations.

Macondo settlement seen ‘positive’ for BP

07/06/2015 BP Exploration & Production Inc.’s recent agreement to settle federal and state claims related to the 2010 Macondo blowout and spill improves t...

The price of oil and OPEC-history repeating?

07/06/2015 The world oil market today is characterized by a standoff between the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC producers a...

Earth model assists Permian asset valuation

07/06/2015 Laredo Petroleum Inc.'s Permian-Garden City asset is an unconventional resource play with more than four potential stacked zones covering a 1,700 s...
White Papers

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

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
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

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