Shell acquires U.S. Shale assets in $4.7 billion deal
Royal Dutch Shell, the Anglo-Dutch oil and gas producer, said Friday that it had struck a deal to buy most of the assets of East Resources for $4.7 billion in cash, moving into the coveted sector of natural gas contained in shale deposits.
As part of the deal, Shell will obtain new positions in “high potential” U.S. shale gas acreage, in the Marcellus and Eagle Ford plays, according to a statement today.
Shell is catching up with Exxon Mobil Corp. and BP Plc in snapping up unconventional gas reserves in anticipation prices for the cleaner-burning fuel will recover as governments curb carbon dioxide emissions. The Marcellus Shale, which stretches into New York, may hold 262 trillion cubic feet of recoverable gas, making it the biggest known deposit of the heating and power-plant fuel, the U.S. Energy Department estimates.
“The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth,” said Peter Voser, chief executive of Shell, calling the East Resources assets “the premier shale gas play in the Northeast U.S.”
Shell is getting 1.05 million acres of so-called tight gas properties in North America, in the northeastern states and the Rockies, which will make up most of the 1.3 million gas acres it is acquiring on the continent this year, and which it expects will produce 16 trillion cubic feet of gas in total.
“The U.S. tight gas resource base has allowed it to become self-sufficient in natural gas supply long-term,” said Jason Kenney, oil and gas analyst at ING in Edinburgh. “A couple of years ago that wasn’t the case. The technological boundaries have been pushed back.”
The Shell announcement comes in the wake of the BP oil leak in the Gulf of Mexico, and as the oil and gas industry is subject to increasing scrutiny.