Shell divests U.S. onshore gas assets in Pinedale/Haynesville, adds acreage in Marcellus/Utica
HOUSTON -- Shell today announced two separate transactions whereby the company will exit its Pinedale and Haynesville onshore gas assets, in exchange for approximately $2.1 billion in cash, plus additional acreage in the Marcellus and Utica shale areas in Pennsylvania.
In one agreement, with Ultra Petroleum, Shell will acquire 155,000 net acres in the Marcellus and Utica areas in Pennsylvania, and will receive a cash payment of $0.925 billion from Ultra, in exchange for 100% of Shell' s Pinedale asset in Wyoming, including associated gathering and processing contracts, subject to closing.
In a separate agreement, with Vine Oil & Gas LP and its partner Blackstone, Shell has agreed to sell 100% of its Haynesville asset in Louisiana, including associated field facilities and infrastructure, for $1.2 billion in cash, subject to closing.
"We continue to restructure and focus our North America shale oil and gas portfolio to deliver the most value in the longer term. 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," said Marvin Odum, Shell' s Upstream Americas Director.
The Shell net production from Pinedale in second-quarter 2014 was 190 MMscfd of dry gas (32,000 boed). During first-half 2014, Ultra' s net production from the assets Shell is acquiring in Pennsylvania averaged 109 MMscfd (19,000 boed).
"We first entered the Pinedale Anticline in 2001, and I am proud of our operational excellence, community engagement, and leadership in responsible energy development over that time," said Odum.
Shell' s Pinedale asset (which includes 19,000 net acres of leasehold interest, 1,108 gross wells and associated facilities, and an average of 0.7% overriding royalty interest in 11,500 acres) will be exchanged for cash and Ultra' s 100% interest in the Marshlands area (63,000 net acres), as well as its entire interest (92,000 net acres) in the Tioga Area of Mutual Interest (AMI), an unincorporated JV with Shell. After completion of this transaction, Shell will have a 100% interest in the Tioga AMI. The agreement is effective April 1, and is expected to close this year.
Shell' s Haynesville asset includes 107,000 net acres in northern Louisiana. The transaction includes 418 producing wells, 193 of them operated by Shell. As of July 1, the gross production from the Haynesville asset was approximately 700 MMscfgd of dry gas, with Shell' s net working interest share at approximately 250 MMscfd (43,000 boed). The agreement is effective July 1, and is expected to close in the fourth quarter.
"We very much appreciate the support we have had in north Louisiana, and we will continue to operate in the state, as we have for decades, through our downstream, retail, midstream, and New Orleans-based deep-water operations," said Odum.