Francesca Steele: May 28, 2010
Royal Dutch Shell has agreed to buy East Resources, the US natural gas explorer, for $4.7 billion (£3.2 billion).
The Amsterdam-based oil and gas giant said that it had struck a deal with East Resources and its private equity investor Kohlberg Kravis Roberts to acquire subsidiaries which own substantially all of the business.
East Resources has more than 650,000 acres in the Marcellus shale, a rock formation running from West Virginia to New York, which is said to contain vast amounts of natural gas. It produces the equivalent of almost 10,000 barrels of oil a day.
The deal is pending regulatory approval.
Shell said that it had also acquired 250,000 acres of mineral rights in the Eagle Ford shale in South Texas and would be the only operator in the area.
Peter Voser, the chief executive, said: East Resources management have built an excellent organisation, with high-quality assets in the Marcellus, which we are pleased to have as our centrepiece as we enter the premier shale gas play in the northeast US.
The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth by deploying Shells technology and capabilities on a large scale.
Last month Shell reported a 49 per cent increase in first quarter profits after cost-cutting drive that led to the loss of 5,000 jobs last year, with another 1,000 to come this year.
Results were also bolstered by the start of two big oil and gas projects on the island of Sakhalin in Russia and at Parque das Conchas 70 miles (110 kilometres) off the coast of Brazil.
These added 120,000 barrels of oil to Shells daily production, helping to lift its average output by 6 per cent to 3.59 million barrels per day. The increase has helped to reverse Shells seven years of declining production.royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com