Shell has reached an agreement with US-based National Fuel Gas Company and its National Fuel subsidiaries to sell its Appalachia shale gas position for $541 million in cash, subject to closing adjustments, effective 1 January 2020.
The sale is subject to regulatory approvals and expected to close by end of July 2020. The transaction includes the transfer of approximately 450,000 net leasehold acres across Pennsylvania, with approximately 350 producing Marcellus and Utica wells in Tioga County and associated facilities. The current net production is about 250 MMscf/D. Also included in the deal is the transfer of the Shell-owned and -operated midstream infrastructure.
The deal is part of divesting noncore assets in line with Shell's shales strategy which focuses on development of higher margin, light tight-oil assets.
"While we maximize 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 deepwater and conventional oil and gas businesses," said Wael Sawan, upstream director at Shell.
National Fuel said the acquisition builds upon its diversified, integrated business model, with upstream and midstream assets that are geographically contiguous and synergistic to existing Tioga County operations, and firm transportation capacity on its Empire Pipeline system.