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Shell in $2.1B North American Portfolio Restructuring Move - Analyst Blog

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In a move to restructure its North American shale portfolio, European oil major Royal Dutch Shell plc ( RDS.A ) announced that it has entered into agreements to sell its position in the mature Pinedale and Haynesville acreage. The deals would fetch about $2.1 billion in cash for Shell, in addition to properties in the promising Marcellus and Utica shale plays.

Shell has entered into an agreement with the natural gas producer Ultra Petroleum Corporation ( UPL ) to sell all of its Pinedale acreage in Wyoming, in addition to associated gathering and processing contracts. In exchange, Shell would receive $925 million in cash and about 155,000 net acres of Ultra Petroleum's Marcellus and Utica properties in Pennsylvania. The transaction is expected to close this year and has an effective date of Apr 1.

Net production from the Pinedale assets in the second quarter was 190 million standard cubic feet per day (mmscf/d) of dry gas. On the other hand, net production from the properties that Shell is acquiring in Pennsylvania was 109 mmscf/d in the same time period.

Shell has also signed a deal with Vine Oil & Gas LP and an affiliate of Blackstone Group L.P. ( BX ), which involves sale of the company's entire Haynesville acreage in Louisiana, in addition to field facilities and infrastructure. The agreement is for a cash consideration of $1.2 billion. The transaction has an expected closure in the fourth quarter of the year and is effective from Jul 1.

The Haynesville assets, spread across 107,000 net acres in north Louisiana, had a gross production of about 700 mmscf/d of dry gas as of Jul 1. The deal involves 418 producing wells, of which 193 are operated by Shell.

Shell has been actively divesting its stressed investments under its North America portfolio restructuring plan and intends to focus more on exploration activities in liquid-rich shale resources and tight gas acreages.

Currently, Shell has a Zacks Rank #3 (Hold). Meanwhile, one can consider better-ranked players from the integrated energy space like Sasol Ltd. ( SSL ), which sports a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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