The New York-based multinational private equity company, Blackstone Group, is said to be in talks to acquire Royal Dutch Shell’s stake in a massive Haynesville shale gas field in Louisiana, the Wall Street Journal reported today, quoting sources close to the company.
If the deal goes through, it is believed it could value Shell’s stake in the asset at more than $1 billion. Blackstone would buy the stake in a joint venture that owns more than 350,000 acres in the Haynesville Shale formation in northern Louisiana and East Texas. Shell initially bought the stake in 2007 in partnership with Encana Corp.
The deal would be a yet another in a string of massive gas sell-offs whereby large oil and gas companies trim their non-core assets acquired back in the time when gas prices were high. With gas prices low, gas and oil majors increasingly abandon expensive unconventional resources, focusing on the conventional oil and gas deposits that are cheaper to exploit. Earlier this year, Shell made it clear that it was seeking to reduce its exposure to North American shale as it strove to improve its financial performance.
Meanwhile, the WSJ reports, private-equity firms have been buying these assets with specific views on how to wring profits from them, such as locking in gains with hedging, improving operations or combining them with other nearby assets.
Blackstone’s current holdings include a plant in Louisiana that it’s building with Cheniere Energy Inc. (LNG), Bloomberg reports, to export liquefied natural gas. The facility, the first to win government approval to export from the Gulf Coast , is scheduled to come on line in 2016.
Article continues below this message
Have your opinion heard with Shale Gas International
We accept interesting, well-written opinion and analysis articles of up to 1,500 words, that offer unique insights into the shale industry. The articles cannot be overtly promotional in nature and need to fit into at least one of our content categories.
If accepted, the article must be exclusive to Shale Gas International website and cannot appear on any other websites, publications, etc. Each article may contain up to three links to external websites relevant to the content discussed in the piece.
If you would like to contribute to Shale Gas International website, please contact us at: editor[at]mw-ep.com