Shell concentrating its Marcellus holdings, sells off other shale assets



Royal Dutch Shell, which has been reshuffling its shale gas portfolio in the U.S., announced three major deals this week, one of which adds 155,000 acres to its hot spot in northeastern Pennsylvania where the company is among the first to bet on the Utica Shale.

The Dutch energy giant, whose subsidiary SWEPI LP controls about 900,000 acres in Pennsylvania, has been developing Marcellus gas in northeastern and Central Pennsylvania under a joint venture with Houston-based Ultra Petroleum Corp.

The two companies also have a joint venture in the Pinedale Anticline, another gas-rich formation in Wyoming.

On Thursday, Shell announced it will sell its Pinedale assets to Ultra for $925 million and gain 155,000 net acres in the Marcellus and Utica shales in Tioga and Potter counties. The areas also come with about 100 million cubic feet of daily natural gas production.

The transaction is expected to close in the third quarter.

Marvin Odum, Shell’s upstream Americas director, touted the company’s Utica interests in northeastern Pennsylvania while commenting on the deals.

Most operators tapping the Utica — which lies below the Marcellus — are doing so either in eastern Ohio, where the Utica is rich with liquids, or in Western Pennsylvania, where the play is mostly dry but prolific.

Shell is the only operator drilling Utica wells in Tioga County in northeastern Pennsylvania.

The company said it has “completed a comprehensive evaluation of this highly attractive exploration area,” according to spokeswoman Destin Singleton.

According to data posted by the Pennsylvania Department of Environmental Protection, Shell has drilled 18 Utica wells in Tioga, and at least 26 in other parts of the state.

This year alone, Shell drilled 14 wells in Tioga, both Marcellus and Utica, and plans to drill more before the end of the year. The Utica emphasis comes from the company’s promising results there, Ms. Singleton said.

“We have strong individual well production rates from our initial exploration wells there, and those numbers have remained stable for several months,” she said. “In fact, our early results are on par with some of the better Utica wells in the emerging dry gas sweet spots in southeast Ohio.”

Elsewhere in the U.S., Shell is shedding shale gas holdings.

The company announced Thursday it is selling all of its Haynesville Shale assets in Louisiana to Vine Oil & Gas LP and Blackstone for $1.2 billion in cash. The assets include 418 producing wells, 193 of them operated by Shell.

On Tuesday, Shell agreed to sell to State College-based Rex Energy Corp. 208,000 acres in Butler, Armstrong, Beaver, Lawrence, Mercer and Venango counties in Pennsylvania, and in Columbiana and Mahoning counties in Ohio. Shell will get $120 million for the deal.

Anya Litvak: alitvak@post-gazette.com or 412-263-1455.

First Published August 14, 2014 10:56 AM

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