HOUSTON—Coinciding with the purchase and sale agreement between Royal Dutch Shell affiliates and a partnership of Dallas-based Vine Oil & Gas LP and Blackstone Energy Partners for 107,000 acres of natural gas fields, Houston-based Ultra Petroleum Corp. has struck a similar deal. The company is buying Shell’s interest in the Pinedale natural gas field in Wyoming for $925 million in cash and a swap of 155,000 net acres in Pennsylvania’s Marcellus Shale.
Shell’s Pinedale field properties, which it’s trading through its SWEPI LP affiliate, currently produce approximately 189 million cubic feet equivalent per day of natural gas and condensate. Adding the Shell assets to its existing investments in the region, ULP will operate approximately 1,577 gross wells, or about 68% of the Pinedale field, following the deal’s closing.
“This transaction is a strategic repositioning of our portfolio for improved returns, increased reserves, higher value markets, increased operatorship and increased control of capital allocation,” says Michael D. Watford, ULP’s chairman, president and CEO.
Specifically, it will increase ULP’s net proved reserves by 1.8 trillion cfe, increase the company’s proved reserve value by $1.8 billion, expand its company-operated production from 62% to 82% and shifts its corporate percentage of natural gas production sold in higher priced western markets to 92% to 76%. It also means a shift from what Watford terms “the less attractive Marcellus assets” to the higher-returning Pinedale assets.
Watford said Thursday that ULP would increase its Wyoming operating rigs from four to eight over the next 18 months. He added that his company is banking on natural gas prices going back up, according to the Houston Business Journal.