Shell sells US Appalachia assets to subsidiaries of National Fuel

Oil major Royal Dutch Shell subsidiary SWEPI LP has sold its Appalachia shale gas position to Seneca Resources and NFG Midstream Covington, which are subsidiaries of US energy company National Fuel Gas (NFG).

The deal, which comprises the oil major’s integrated upstream and midstream gathering assets in Appalachia, is valued at about $541m in cash.

In May, SWEPI LP signed an agreement with National Fuel Gas Company and its subsidiaries, Seneca Resources, National Fuel Gas Midstream, and NFG Midstream Covington, to sell its Appalachia shale gas position.

The deal includes the transfer of approximately 450,000 net leasehold acres across Pennsylvania, with about 350 producing ‘Marcellus and Utica’ wells in Tioga County and other associated facilities.

It also includes Shell-owned and operated midstream infrastructure in Appalachia.

National Fuel Gas Company president and CEO David P Bauer said: “The closing of the largest acquisition in our 118-year history marks an exciting time for the company, and leaves us well-positioned for the long-term.

“With the integration of these high-quality, contiguous assets in one of the most prolific areas of Appalachia into our existing operations, we expect to generate meaningful free cash flow in our upstream and midstream businesses.

“Additionally, we have executed a financing strategy which further strengthens our balance sheet and maintains our investment grade ratings, reinforcing the strong foundation of our business as we move into the future.”

In October 2016, Royal Dutch Shell agreed to sell about 206,000 net acres of non-core oil and gas properties in Western Canada to Tourmaline Oil for approximately $1.03 billion.