Shell Builds Eagle Ford Shale Acreage Position

Shell entered the Eagle Ford in a big way over the past two years. The company has built a 250,000 acre Eagle Ford Shale position in South Texas. Representatives are also quoted as saying the company spent a little over $1 billion ($4,000 per acre) to put the position together. The largest lease Shell operates includes the Harrison Ranch where Shell was rumored to have spent close to $10,000 per acre for the over 100,000 acre ranch in Dimmit County, TX. The latest quote saying Shell spent a little over $1 billion for the 250,000 acres means the $10,000 per acre for Harrison Ranch was just a rumor or that Shell acquired the other 150,000 acres at a price low enough to round down to $1 billion. Either way, the company has put together a respectable position to build on its other unconventional gas positions in the US Lower 48. The company has operated a tight gas position in the Pinedale Field of Sublette County, Wyoming and Marcellus Shale gas assets acquired when the company completed the Shell - East Resources acquisition mid-year 2010.

" 'We've been growing our business there, mostly through exploration," said Marvin Odum, president of Shell Oil Co. "If something becomes available, I guarantee we'll be looking at it.'"He said he expects the Henry Hub natural gas price to hover between $4 and $8 per million British thermal units in the next decade, and at a tighter $4 to $6 in the next two years."

"Those levels have prompted producers to seek more lucrative oil, trading near $100 a barrel on the New York Mercantile Exchange. Shell is in the race too with its acquisition last year of about 250,000 net acres of mineral rights in the Eagle Ford, and Odum said early drilling results at a handful of wells were 'very encouraging' and should show solid results in six months."

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