Royal Dutch Shell plc, through its subsidiary SWEPI LP, has reportedly inked a purchase and sale agreement with the American energy company, National Fuel Gas (NFG) to sell its midstream and upstream assets in Pennsylvania. The deal valuation apparently, has been finalized at USD 541 million. The amount is subject to closing adjustments that are projected to decrease the consideration provided at closing to around USD 500 million.

As per the terms and conditions of the agreement, NFG has the option to offer up to USD 150 million of its stocks to Shell at the price of USD 38.97/Share.  Following the transaction, NFG will acquire more than 200,000 net acres in Tioga County with total natural gas reserves of around 710 Bcf.

At closing, all these assets are anticipated to have flowing net production from Utica as well as Marcellus shale formations of around 215-230 MMcf/d with 86.5% of net revenue interest and shallow base declines. Moreover, the company will also acquire water handling infrastructure which presently aids Shell’s Tioga County production operations.

Speaking on the move, David P. Bauer, President and Chief Executive Officer of NFG said that the acquisition of Shell’s assets in Appalachia would provide the company with high and a unique strategic opportunity to advance its integrated development approach in this region.

Mr. Bauer added that Shell’s high-quality assets are a perfect fit for the NFG’S diversified business model and offer meaningful synergies with present operations.

As per sources, Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are serving as financial advisors for NFG while Jones Day and Ellis LLP are acting as legal advisors for the company. The sale of assets is subject to regulatory approvals and is anticipated to close by 31^st July 2020. The deal was effective from 1^st January 2020.

Source Credit - https://www.globenewswire.com/news-release/2020/05/04/2027069/0/en/National-Fuel-to-Acquire-Shell-s-Integrated-Upstream-and-Midstream-Assets-in-Pennsylvania.html