Shell to buy East Resources for $4.7 billion to expand shale assets

Royal Dutch Shell Plc, Europe's largest oil company has today agreed to buy East Resources, a US natural-gas explorer with focus on the Marcellus shale and Eagle Ford play for $4.7 billion in cash as more and more oil majors show keen interest in the North American shale-gas acreages.

Pennsylvania-based privately held East Resources is an explorer and developer of natural gas and crude oil and operates more than 2,500 oil and gas producing wells in New York, Pennsylvania, West Virginia, and Colorado.

East Resources owns a total of 1.05 million net acres (4,250kms) of acreage, mainly in the Appalachian basin and is one of the largest Marcellus shale acreage holders with 650,000 highly contiguous net acres located mainly in Pennsylvania.

East Resources also has in excess of 100,000 net acres (400kms) in the Rockies, in the prospective Niobrara shale play. The Marcellus acreage is almost 100 per cent operated with high average working interest and with access to pipeline infrastructure.

Shell is closing up on Exxon Mobil Corp and BP Plc in unconventional gas reserves acquisitions in expectation of a likely recovery in the clean fuel's prices as governments move to cut carbon dioxide emissions. According to the US Energy Department estimates, the Marcellus Shale, stretching into New York, may hold 262 trillion cubic feet of recoverable gas, which would make it the biggest known deposit of the heating and power-plant fuel.

This acquisition will be the second-biggest oil and gas deal this year, after British Petroleum acquired oil and gas assets in Brazil, the Gulf of Mexico and Azerbaijan of Devon Energy in March for $7 billion. (See: BP to buy Devon Energy's LatAm, Azerbaijan oil and gas assets for $ 7 billion)