Chevron Continues Aggressive Expansion into Marcellus Shale in PA – Buys Leases for Additional 228K Acres from Chief Oil & Gas
In February of this year, Chevron completed a $3.58 billion purchase of Atlas Energy Inc. (headquartered in Moon Township, PA) with gas leases for 622,000 acres in the Marcellus Shale. Chevron is on the move again announcing yesterday it is acquiring an additional 228,000 acres of Marcellus Shale gas leases from Chief Oil & Gas, primarily in southwestern PA. Although Chief is selling off its southwestern PA gas leases, it plans to remain active with its remaining 125,000 acres of gas leases in northeastern PA.
From the Chevron press release:
Chevron Corporation has announced today that it has agreed to acquire oil and gas assets, primarily 228,000 net leasehold acres, in the Marcellus Shale from Chief Oil & Gas LLC and Tug Hill, Inc. Terms of the transaction, which is expected to close before the end of the second quarter, were not disclosed.
George Kirkland, vice chairman, Chevron Corporation, said, "This opportunity is aligned with our strategy to acquire early-in-life assets with long-term organic growth potential. Over the last year, Chevron has acquired nearly five million net acres of shale gas assets in the United States, Canada, Poland and Romania."
"This expansion of our shale gas portfolio gives us additional high-quality resources with strong growth potential, as well as proximity to and synergy with existing operations," said Gary Luquette, president of Chevron North America Exploration and Production Company.
The acreage, which is principally located in southern Pennsylvania, will give Chevron an estimated five trillion cubic feet of additional natural gas resource in its Marcellus Shale operations.(1)
From the Chief Oil & Gas press release:
Chief Oil & Gas LLC and Tug Hill, Inc. today announced they have entered into an asset purchase and sale agreement to sell certain natural gas properties in the Marcellus Shale to Chevron Corporation. The sale assets include approximately 228,000 net acres located primarily in the southwestern part of the Marcellus Shale.
"We are pleased to enter into this agreement with Chevron and feel it is an excellent addition to their recently acquired Atlas Marcellus position," said Chief’s President and CEO, Trevor Rees-Jones. "After the sale of these properties, Chief and Tug Hill will have approximately 125,000 acres of Marcellus leasehold, focused in the Bradford, Susquehanna, Tioga, Sullivan and Wyoming counties of northeastern Pennsylvania. We are enthusiastic about the increased potential of the northeast Pennsylvania area as the U.S. makes a transition to using home-grown, clean-burning natural gas as the primary fuel of the future," said Rees-Jones.
"Chief will maintain its regional office in Wexford, PA as well as its office in Lycoming County. Chief’s midstream subsidiary, Chief Gathering, will not be affected by the sale and will maintain its field office in Lycoming County and continue to develop its planned pipeline infrastructure in Pennsylvania," Rees-Jones continued.
Since 2007, Chief Oil & Gas has drilled 131 wells in the Marcellus Shale and will remain an active operator developing this world class field. Chief plans to exit 2011 as operator of 3 rigs drilling in the Marcellus Shale, not counting non-operated interests owned in leases and units being drilled by multiple rigs operated by others.(2)
(1) Chevron Press Release (May 4, 2011) – Chevron Announces Agreement to Acquire Marcellus Shale Acreage
(2) Chief Oil & Gas Press Release (May 4, 2011) – Chief Oil & Gas Announces Agreement To Sell A Portion Of Its Marcellus Shale