Shell Steps Up with Shale Purchase

Europe’s largest energy producer, Royal Dutch Shell, has expanded its holdings of U.S. shale gas by agreeing to buy East Resources Inc. for $4.7 billion in cash from Kohlberg Kravis Roberts & Co., Jefferies & Company and privately held East Resources itself.

East Resources owns and operates more than 2,500 oil and gas wells that produce oil and gas equivalents of 10,000 barrels of oil per day, mostly in Marcellus Shale where East has been operating for 25 years. Shell said that the acquisition brings “new positions in high potential US shale gas acreage, in the Marcellus and Eagle Ford plays.”

Shell’s purchase follows Exxon Mobil’s acquisition of XTO Energy Inc. for $30 billion in December 2009. Total SA expanded its gas presence in January with its $2.25 billion purchase of U.S. assets from Chesapeake Energy Corp.  Other multinationals recently establishing a presence in the booming US unconventional gas market include Statoil, Mitsui & Co and Reliance Industries.

Shell CEO Peter Voser said the acquisition fit with plans to "grow and upgrade the quality of Shell's North America tight gas portfolio."
 “The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth, by deploying Shell’s technology and capabilities on a large scale.”

Shell also stated that it has bought further mineral rights from private landowners in the shale gas-rich area of southern Texas for about $1bn.

Source: Royal Dutch Shell