Shell's Eagle Ford acreage is on the figurative auction block. The company plans to sell over 106,000 acres and more than 190 gross producing wells targeting the play.
Unlike many other companies, Shell's Eagle Ford position simply hasn't met internal targets for size and profitability.
Shell leased more than 200,000 acres in South Texas from 2008-2011, but has evidently been selling off chunks or letting leases expire over the past two years. The current announcement relates to the company's single largest lease holding in Dimmit County, TX. Shell is rumored to have made Dan Harrison an Eagle Ford billionaire when the company paid ~$10,000/acre in signing bonuses for his 106,000 acre Piloncillo Ranch.
“My guess would be Shell hopes to raise more than $2 billion in the sale.”
Shale plays have proven difficult for the super-majors. Plays like the Bakken, Eagle Ford, and Marcellus are dominated by independent operators. Smaller operators have often leveraged their companies to the success of shale plays. Those smaller companies (independents) have to make the shale plays they invest in profitable or they shrink. The super majors like Shell have significant investments around the globe and can try something and walk away if it doesn't perform as well as other investments.
Based on recent acreage transactions, this acreage should sell for ~$10,000/acre or more plus the value of production. My guess would be Shell hopes to raise more than $2 billion in the sale.
Shell has 192 wells producing in the Eagle Ford and reports gross production of approximately 32,000 boe/d (Fuelfix interview).