• Natural Gas News

    Shell Sheds US Shale Assets for $541mn


The deal covers Shell's assets in Pennsylvania.

by: Joseph Murphy

Posted in:

Natural Gas & LNG News, Americas, Top Stories, Americas, Premium, Corporate, Exploration & Production, Investments, Companies, Europe, Royal Dutch Shell, News By Country, United States

Shell Sheds US Shale Assets for $541mn

Shell has struck a deal to sell its Appalachia shale gas business in the US for $541mn to local energy firm National Fuel Gas Co (NFG), the Anglo-Dutch major reported on May 4.

The transaction comprises Shell's operations in northern and western Pennsylvania, where it extracts around 250mn ft3/d (2.7bn m3/yr) of gas from the Marcellus and Utica formations. It also includes Shell's owned and operated midstream infrastructure.

The sale is due to close by the end of July and will be backdated to January 1 2020. NFG, which distributes gas in northwestern Pennsylvania and western New York, will be able to settle up to $150mn of the purchase price using its common stock at an adjusted price of $38.97 per share. But if it takes this option, it will have to make two $15mn contingent payments in 2021 and 2022, depending on market conditions.

"Divesting our Appalachia position is consistent with our desire to focus our shales portfolio," Shell's upstream director Wael Sawan said. "While we maximise cash in the current environment, our drive for a competitive position in shales continues. It is a core part of our upstream portfolio along with the deep water and conventional oil and gas businesses."

The divestment will bolster cash resources at Shell, which swung to a loss in the first quarter on the back of weaker oil and gas prices and lower sales. It also slashed its dividend by 66%.