Royal Dutch Shell has sold its shale-gas assets in the Appalachian Basin of Pennsylvania for $541 million as it moved to reorganize its global business as it prepares for the recovery from the oil price slump.
Shell said it reached an agreement with the New York Stock Exchange-listed US energy company National Fuel Gas Company and its subsidiaries, Seneca Resources, National Fuel Gas Midstream and NFG Midstream Covington, to sell its acreage.
The transaction includes the transfer of 450,000 net leasehold acres across Pennsylvania, with around 350 producing Marcellus and Utica wells in Tioga County and associated facilities.
The current net production is 250 million standard cubic feet of natural gas per day.
The transaction also includes the transfer of the Shell-owned and operated midstream infrastructure.
The sale is subject to regulatory approvals and expected to close by end of July 2020.
Shell said it was still interested in shale resource investment, though was seeking more profitable assets.
The Anglo-Dutch company explained that the NFG Marcellus and Utica shale transaction was part of divesting non-core assets and in line with Shell’s Shales strategy which focusses on development of higher margin, light tight oil assets.
“Divesting our Appalachia position is consistent with our desire to focus our Shales portfolio,” said Wael Sawan, Upstream Director at Shell.
“While we maximize cash in the current environment, our drive for a competitive position in Shales continues,” added Sawan.
“It is a core part of our Upstream portfolio along with the Deep Water and Conventional oil and gas businesses,” he said.
Shell’s latest results show that first-quarter profits had almost halved from a year ago, but the natural gas and LNG division still managed to maintain stable earnings as sales increased.
The company’s quarterly LNG sales rose 9 percent to 19 million tonnes from 17.51MT in the same three months of 2019.
However, Shell’s overall quarterly earnings dropped by 48 percent to $2.75 billion from $5.29Bln in the same three months of 2019, reflecting the lower prices.