Royal Dutch Shell plans to sell its 106,000-acre stake in the Eagle Ford shale formation in South Texas, the Wall Street Journal reported on Sunday.
Shell’s decision comes after it took a $2.2 billion charge against its U.S. shale business in August.
Major oil companies have struggled in oil-and-gas rich regions such as the Eagle Ford, where smaller energy firms have thrived. BG Group (BG.L) and BHP Billiton (BHP.AX) (BLT.L) have also taken impairment charges against their U.S. shale assets.
Shell told the Journal that Eagle Ford holdings did not meet the company’s targets for size and profitability.
The stake “offers a valuable growth opportunity for another experienced operator,” Shell spokeswoman Kelly op de Weegh told the paper. (link.reuters.com/cyb53v)
Shell representatives could not immediately be reached for comment by Reuters outside of regular business hours.
The company will continue to operate its 150 production wells in the Eagle Ford while allowing potential buyers to review technical data on the holdings, the Journal reported. The value of the assets wasn’t clear, it said.
Writedowns by Shell and some other majors are a sign they came to the shale boom late in the day, overpaying for lower-quality and less well-explored assets – not that the shale revolution is stuttering, according to a Reuters Breakingviews column published in August.
REUTERS
