This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Royal Dutch Shell Sheds U.S. assets for $2.1B

HOUSTON ( The Deal) -- As part of its massive divestiture program under new CEO Ben Van Beurden, Royal Dutch Shell (RDS.A) said Thursday it agreed to sell oil and natural gas properties in the U.S. for $2.1 billion.

Newly formed Vine Oil & Gas LP and Blackstone Group (BX) affiliate Blackstone Energy Partners said they agreed to acquire natural gas properties in Louisiana's Haynesville field from Shell affiliates SWEPI LP and Shell Gulf of Mexico Inc. for $1.2 billion. Ultra Petroleum (UPL) said it agreed to acquire Shell's Pinedale field properties in western Wyoming for $925 million in cash and its 155,000 net acres in the Marcellus and Utica shales in Pennsylvania.

"We continue to restructure and focus our North America shale oil and gas portfolio to deliver the most value in the longer term," Shell upstream Americas director Marvin Odum said in a statement. "With this announcement we are adding highly attractive exploration acreage, where we have impressive well results in the Utica, and divesting our more mature Pinedale and Haynesville dry gas positions."

Simmons & Co. International said that, not including the Marcellus property trade, Ultra is paying around $30,000 per barrel of oil equivalent per day, in line with the most recent comparables in the area (for instance, Jonah transactions by Linn Energy LLC and TPG). If value is given to the divested properties or adjusting for the 100 million cubic feet equivalent per day given up from the Marcellus acreage, the deal looks slightly more expensive.

"Regardless, we believe it is a good transaction for a company looking to consolidate and reduce troublesome NE [northeast] gas exposure," the firm said.

Blackstone formed Dallas-based Vine earlier this year to become a large shale development company. Eric Marsh, previously a senior executive with Encana Corp., leads Vine.

"We are pleased to acquire and develop a significant, strategic and top-tier position in the core of the Haynesville Shale, a premier North American unconventional dry gas play located next to multiple growing sources of demand and an area where we have operated extensively before," Marsh said in a statement.

Ultra Petroleum said it expects to close the deal in the third quarter and finance it by issuing new debt at the subsidiary and parent level.

Ultra said the Pinedale assets produce 189 million cubic feet equivalent per day of natural gas and condensate. As a result of the transaction, Ultra will operate 1,577 gross wells, or about 68% of the Pinedale field.

The deal boosts its net proved reserves by 1.8 trillion cubic feet equivalent, increases its proved reserve value by $1.8 billion, shifts its natural gas production sold in higher priced western markets to 92% from 76%, expands its company operated production to 82% from 62% and improves control of capital allocation to higher returning Pinedale assets.

"This transaction is a strategic repositioning of our portfolio for improved returns, increased reserves, higher value markets, increased operatorship and increased control of capital allocation," Ultra chairman and CEO Michael Watford said in a statement.

The Marcellus Shale properties Ultra is trading are operated by Shell, leaving Ultra with 91,000 net acres within its joint venture with Anadarko Petroleum (which it doesn't operate), Simmons said.

Angelo Acconcia, managing director of Blackstone Energy Partners, who oversees oil and gas investments, led the Haynesville deal. Blackstone senior managing director and Blackstone Energy Partners CEO David Foley also worked on it.

Evercore Partners Inc.'s Shaun Finnie advised Blackstone and Vine on the Haynesville deal while Kirkland & Ellis LLP provided legal counsel, including Andy Calder, Anthony Speier, Bill Benitez, Will Bos, David Castro and Jay Ptashek.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7870 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs