EOG Resources to sell 180,000 acres of shale fields in the US

EOG Resources, one of the largest independent oil and natural gas companies in the US, yesterday said that it plans to sell non-core shale assets in the US in order to fund its drilling and development activities in its more lucrative fields.

While releasing its 2Q results, Houston-based EOG Resources said, "We plan to sell certain non-core North American producing natural gas assets, as well as acreage in both natural gas and liquids plays, to execute the drilling and development of our suite of outstanding horizontal oil drilling opportunities,'' said Mark Papa, chairman and CEO of EOG.

Speaking to analysts during a conference call, Papa said that the company plans to sell a total of about 180,000 acres of shale fields in the US, of which 117,000 acres will be in the Eagle Ford Shale in South Texas, 51,000 acres in the Marcellus Shale in Pennsylvania, where Mumbai-headquarterd Reliance industries has  a stake and 15,000 acres in the Haynesville Shale in Texas and Louisiana.

Apart from shale assets, EOG also plans to sell its Canadian shallow gas assets that produce 170 million cubic feet per day.

EOG's estimated net proven natural gas reserves were 8,898 Bcf and estimated net proven crude oil, condensate and natural gas liquids reserves were 313 million barrels for a total of 10,776 Bcfe as of 31 December 2009.

Approximately 75 per cent of EOG's reserves on a natural gas equivalent basis are located in the US, 16 per cent in Canada, 9 per cent in Trinidad and less than 1 per cent in the UK North Sea and China.

Recently announced deals for the US shale assets have fetched around $14,000 an acre. The planned sale of 180,000 acres by EOG are expected to be valued at around $2.5 billion.

Reliance Industries Ltd (RIL) is making a series of acquisitions in the US shale assets as it currently accounts for 15 to 20 per cent of US gas production.

The US shale gas production is expected to quadruple in the coming years and companies across the globe are increasingly looking at investing in shale gas assets.

This week, Reliance Industries Ltd (RIL) acquired a 60-per cent stake in a Marcellus Shale acreage in Central and Northeast Pennsylvania from US-based Carrizo Oil & Gas Inc, for around $392 million - it's third such acquisition so far this year. (See: Reliance in new 60:40 shale gas joint venture in US)