Shell buying more shale gas reserves

[dan_s]

This tells me that the majors see the long-term potential of natural gas becoming a larger percentage of the U.S. energy mix. - Dan

Shell buys US shale gas company East Resources for $4.7B
Oil & Gas Journal - Published: May 28, 2010

Royal Dutch Shell PLC plans to buy East Resources Inc., a major owner of shale gas holdings in the northeast US, for $4.7 billion from East Resources' private equity investor Kohlberg Kravis & Co., its sole financial advisor Jefferies & Co., and East Resources itself.

The purchase is another example of ‘super majors’ getting into the US unconventional gas game.

European super oil company, Royal Dutch Shell will purchase Warrendale, PA-based East Resources, which produces oil and gas equivalents of 10,000 barrels of oil per day from primary operations in the Marcellus shale, with cash.

Shell began gathering US tight gas assets in 2001, and has expanded production to 140,000 boe/d in 2009. It expects to reach 400,000 by 2020. In North America, Shell owns 3.6 million acres of tight gas acreage.

Privately-held East Resources owns and operates more than 2,500 producing oil and gas wells in New York, Pennsylvania, West Virginia, and Colorado and had been exploring drilling programs in Wyoming.

According to Jefferies & Co., the transaction represents:

· The largest energy-industry corporate M&A transaction in 2010 to date

· The largest transaction in the Marcellus Shale to date

· The largest upstream oil and gas transaction in the Appalachian Basin to date

· The seventh major oil company to publicly announce a transaction in the US shales
For the deal to close, it must first be approved by regulators.