World Business

Shell buys US gas assets from East Resources for $4.7b

(Agencies)
Updated: 2010-05-28 16:02
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Royal Dutch Shell Plc, Europe's largest oil producer, agreed to buy most of the assets of closely-held East Resources Inc for $4.7 billion in cash, expanding its portfolio of US unconventional gas deposits.

East Resources owns and operates more than 2,500 producing oil and gas wells in New York, Pennsylvania, West Virginia, and Colorado and is actively exploring drilling programs in Wyoming, according to its website. It has been operating in the Marcellus Shale Area for 25 years.

Companies from India's Reliance Industries Ltd to Japan's Mitsui & Co are spending billions of dollars on drilling to dislodge natural gas from shale -- sedimentary rock composed of mud, quartz and calcite. Shell expects its share of gas in total output to rise to 52 percent in 2012.

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"They've seen others take material positions in US gas, and this is one way they can also play a part in that business," said Jason Kenney, head of oil and gas research at ING Commercial Banking in Edinburgh.

The acquisition is the second-biggest oil and gas deal this year, after BP Plc's acquisition of deepwater assets from Devon Energy Corp for $7 billion in March, according to Bloomberg data.

"We are enhancing our world-wide upstream portfolio for profitable growth, through exploration and focused acquisitions, and through divestment of non-core positions," Chief Executive Officer Peter Voser said in a statement today.

Exxon Mobil Corp, the biggest US oil company, agreed in December to buy XTO Energy Inc, the country's largest natural gas producer, for $31 billion to gain control of shale-gas assets.