Dutch major Royal Dutch Shell (NYSE: RDS) announced it will acquire Marcellus shale-gas assets through the purchase of the principal subsidiaries of Terrence Pegula’s Pennsylvania-based East Resources Inc. and its private-equity investor Kohlberg Kravis Roberts & Co. for $4.7 billion in cash. The acquisition is the largest corporate M&A transaction in 2010, and the largest transaction in the Marcellus shale to date.
Shell will acquire East Resources’ E&P operations, most of the company’s holdings and related businesses. The acquired assets comprise a total 1.05 million net acres, 650,000 net acres of which are highly contiguous Marcellus rights in Pennsylvania, West Virginia and New York. Production, primarily natural gas, is approximately 60 million standard cu. ft. of gas equivalent per day (10,000 barrels of oil equivalent (BOE) per day).
Shell chief executive Peter Voser says, “We are enhancing our worldwide upstream portfolio for profitable growth…with an objective to grow and to upgrade the quality of Shell’s North American tight-gas portfolio. East Resources’ management have built an excellent organization, with high-quality assets in the Marcellus, which we are pleased to have as our centerpiece as we enter the premier shale-gas play in the northeastern U.S.”
Voser also says that the Dutch oil major plans to divest its noncore positions in North America.
East Resources’ president and chief executive Terrence Pegula says, “The sale of the company to Shell will ensure that the capital needed to develop East’s significant Marcellus shale holdings will be available. Shell’s entry into the region should benefit Pennsylvania, West Virginia and New York, through significant new capital investment, new jobs and new business opportunities.”
Pegula founded East Resources in 1983, and is one of the largest leaseholders in the Marcellus. The company also holds more than 100,000 net acres in the Niobrara shale in the Rockies.
East Resources has a partnership with Anadarko Petroleum Corp., Houston, (NYSE: APC) and Ultra Petroleum Corp., Houston, (NYSE: ULP) in the Marcellus.
The sale is expected to close in two phases, the first of which is slated for completion by late summer. The second phase, which includes the sale of East Resources’ West Virginia business, is expected to close in late 2010.
Jefferies & Co. is sole financial advisor to East Resources. Jefferies previously advised East Resources in its June 2009 convertible preferred equity investment from Kohlberg Kravis Roberts. Vinson & Elkins LLP is advisor to Shell.
Recommended Reading
Utica Oil’s Infinity IPO Values its Play at $48,000 per Boe/d
2025-01-30 - Private-equity-backed Infinity Natural Resources’ IPO pricing on Jan. 30 gives a first look into market valuation for Ohio’s new tight-oil Utica play. Public trading is to begin the morning of Jan. 31.
The Private Equity Puzzle: Rebuilding Portfolios After M&A Craze
2025-01-28 - In the Haynesville, Delaware and Utica, Post Oak Energy Capital is supporting companies determined to make a profitable footprint.
Artificial Lift Firm Flowco’s Stock Surges 23% in First-Day Trading
2025-01-22 - Shares for artificial lift specialist Flowco Holdings spiked 23% in their first day of trading. Flowco CEO Joe Bob Edwards told Hart Energy that the durability of artificial lift and production optimization stands out in the OFS space.
Haslam Family Office: ‘We Need Hydrocarbons’
2025-01-29 - The managing director of HF Capital—the office for Tennessee's Haslam family—says that as long as oil, gas and other energy sources are lacking capital, there’s an investment opportunity.
EON Enters Funding Arrangement for Permian Well Completions
2024-12-02 - EON Resources, formerly HNR Acquisition, is securing funds to develop 45 wells on its 13,700 leasehold acres in Eddy County, New Mexico.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.