Deals brings in $2.1 billion, additional acreage to Shell Oil Co.

HOUSTON — Shell Oil Co. announced a pair of deals Thursday morning in which it will give up onshore natural gas assets in Wyoming’s Pinedale and Louisiana’s Haynesville fields in exchange for $2.1 billion cash and additional acreage in Pennsylvania.

The company characterized the deal as one in which it would give up maturing assets in exchange for acreage that has promising exploration possibilities.

Its the latest step in a series of transactions Shell has taken this year to shake up its North American, onshore portfolio as its faced disappointing results in shale plays here.

In one deal,  Shell gets 155,000 net acres in Pennsylvania’s Marcellus and Utica shales and $925 million cash from Houston-based exploration and production company Ultra Petroleum. In exchange, Ultra Petroleum will receive 100 percent of Shell’s Pinedale asset in Wyoming.

Shell has been active in the Pinedale since 2001. Its assets there include 19,000 net acres of leasehold interest and more than 1,100 gross wells and associated facilities. From Ultra Petroleum, it will receive a combined 155,000 net acres in two separate parts of Pennsylvania, one of which involved an existing joint venture with Shell.

In a separate deal, Shell will sell 100 percent of its Haynesville assets in Louisiana to Dallas-based exploration and production company Vine Oil & Gas LP, which was formed by private equity firm Blackstone earlier this year.  Vine Oil & Gas will pay Shell $1.2 billion in cash for those assets.

Shells Haynesville assets include 107,000 net acres in North Louisiana, as well as 418 producing wells, of which 193 are operated by Shell.

“We continue to restructure and focus our North America shale oil and gas portfolio to deliver the most value in the longer term,” Shell Oil Co. President Marvin Odum said in a statement. “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.”

The deals marked the third big U.S. onshore sale for Shell this week.

On Tuesday, Pennsylvania-based Rex Energy announced it had entered a deal with SWEPI LP, a Shell subsidiary, to purchase a 100 percent interest in 208,000 gross acres for assets in Pennsylvania and Ohio for $120 million cash.

The moves are in line with a strategy Shell announced in March, in which it said it would try to divest from some North American shale projects and reduce spending in its Upstream Americas unit — which covers operations in North and South America — by 20 percent. That announcement followed a year in which it took a $900 million loss in its North and South American upstream operations.

The company has said it will try to exit several unconventional plays including the Eagle Ford as well as shale plays in the Rocky Mountain region and the Mississippi Lime in Kansas and Oklahoma. Meanwhile, it’s working to grow its presence in the Permian Basin.

In May, Shell announced it would sell all of its operating assets in the Eagle Ford to Sanchez Energy Corp. for $639 million as part of its restructuring plan, and in September 2013, it pulled out of the Mississippian Lime in Kansas. The company has also sold assets in the Utica shale in Ohio and the Sandwash Niobrara basins in Colorado.

Deals brings in $2.1 billion, additional acreage to Shell Oil Co. Deals brings in $2.1 billion, additional acreage to Shell Oil Co. Reviewed by luis on 8/14/2014 Rating: 5

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