Sanchez to Acquire Shell's Eagle Ford Stake
“The timing and location of the transaction are optimal given that our operations in the neighboring Eagle Ford areas just a few miles to the east where we have developed increased technical expertise, cost savings, and production gains on a scale that puts our oil and gas manufacturing operations at the leading edge of our industry,” Sanchez commented.
“With the addition of this acreage, we have substantially increased our drilling inventory – positioning Sanchez Energy to be a leading low-cost producer in the Eagle Ford for years to come.”
The sale, which is effective Jan. 1 of this year, is expected to close at the end of this year’s second quarter, Shell said in a May 21 press release.
Shell has previously divested its acreage position in the Mississippi Lime play in Kansas, its position in Ohio’s Utica shale and part of its acreage in Colorado’s Sandwash Niobrara basins.
The company plans multi-year programs to restructure both of its oil products and North America’s resource play portfolios, and plans to be much more selective on growth opportunities in both areas. While Shell has a rich opportunity set that it has built up in both areas over the past few years – a good position to be in – the company is capital constrained, said Shell Chief Executive Ben van Beurden.
“Shell has approximately $80 billion of capital employed combined in oil products and North Americas resources plays, and the financial performance there is frankly not acceptable,” van Beurden said at Shell’s Annual General meeting May 20, according to a statement. “These two businesses have been the largest drag on Shell’s profitability in 2013.”
The company has announced so far this year over $4.5 billion of asset sales from its non-core portfolio, with divestments for 2014 and 2015 combined expected to reach $15 billion, van Beurden said.
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