Thursday, August 14, 2014

It's Official: Shell is Out of the Haynesville Shale

Blackstone Group, LP announced today that it has acquired Royal Dutch Shell's Haynesville Shale interests for $1.2 billion.  Shell sold its rights to 107,000 net acres prospective for the Haynesville Shale that it owned as a JV partner of Encana.

Blackstone, which is a ginormous investment entity that is best known for its private equity operations, acquired the acreage through its subsidiary Blackstone Energy Partners in partnership with operator Vine Oil and Gas.  Vine is a Dallas-based company that was set up by Blackstone earlier this year with the intent of developing shale assets and is operated by a former Encana executive, Eric Marsh.  Mr. Marsh is likely familiar with the quality of the Haynesville assets from his Encana days.

Look for more deals from this partnership and others.  These are good times for private equity firms and independent operators to sweep up cast-off assets at reasonable prices.  At approximately $11,215 per acre for proven Haynesville acreage, I'd say Blackstone did alright.  As part of its yard sale, Shell also sold off assets in the Wyoming Pinedale to Ultra Petroleum in exchange for $925 million cash and 155,000 acres in the Marcellus and Utica Shales.

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