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Chevron beds down in Marcellus

Supermajor U-turn boosts shale-gas portfolio

THE US’ Chevron is pushing ahead with its plan to take substantial positions in global shale plays, buying 228,000 acres in the Marcellus play from Chief Oil & Gas and Tug Hill.

The supermajor declined to give financial details of the deal, saying only that it will close by the end of the second quarter. Previous deals in the Marcellus – one of the hottest shale plays in North America – have been completed at around $14,000 per acre, according to Reuters.

The acreage, most of which is in southern Pennsylvania, will add an estimated 5 trillion cubic feet (CF) of natural gas to Chevron’s reserves cache.

Company vice-chairman George Kirkland 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 5 million net acres of shale-gas assets in the US, Canada, Poland and Romania.”

Chevron made its debut in the Marcellus in November last year, buying Atlas Resources in a $4.3bn cash-and-debt deal. At the time, Atlas held reserves of about 9 trillion cf. Its portfolio included 486,000 net acres in the Marcellus, as well as substantial holdings in the Utica Shale and the emerging Collingwood Shale play.

The Atlas deal and today’s Marcellus buy mark something of a U-turn from the supermajor. In June last year, chief executive John Watson was cautious about unconventionals, telling the Financial Times in an interview that he thought many shale-gas projects carried too high a price tag to warrant the investment. He added: “We haven’t yet seen the returns [from shale-gas projects]”.

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