EOG selling nearly a quarter of its Marcellus acres
EOG Resources Inc., the natural gas company that state environmental officials rebuked last month over a runaway well in Clearfield County, is unloading nearly a quarter of its Marcellus Shale acreage in Pennsylvania.
EOG Resources Inc., the natural gas company that state environmental officials rebuked last month over a runaway well in Clearfield County, is unloading nearly a quarter of its Marcellus Shale acreage in Pennsylvania.
The Houston company disclosed to investors Friday that it has put 180,000 acres of oil and gas acreage in Texas, Louisiana, and Pennsylvania up for sale. The offering includes 51,000 acres in Bradford County, the most active area in northern Pennsylvania for Marcellus drilling.
Mark G. Papa, EOG's chairman and chief executive, said the company had spent $1.7 billion in recent years leasing the drilling rights in several prime shale-gas formations and had accumulated more acreage than it could manage.
"So we're going to monetize a bit of this acreage" by selling those leases, he said. He said the proceeds would be used to reduce debt.
After several years of frenzied leasing activity, Marcellus operators are consolidating their holdings - accumulating contiguous acreage, selling or swapping some leases with other operators, or forming partnerships, sometimes with big international investors.
EOG had considered forming a joint venture to operate its excess acreage, Papa said, "but instead decided on an outright sale because it's cleaner and less complicated."
The sale is unrelated to EOG's regulatory dustup with the Pennsylvania Department of Environmental Protection over a June 3 blowout of a well in Clearfield County. DEP fined EOG and a drilling company $400,000 over the incident, when a well spewed gas and wastewater for 16 hours before it was brought under control.
The Clearfield County incident merited only a footnote in the company's quarterly earnings filing, which was posted Friday and reported $1.4 billion in revenue for three months and $60 million in profits. EOG has resumed normal operations in Pennsylvania after arriving at an agreement with the DEP.
EOG has 230,000 net acres in Pennsylvania, mostly in a 50-50 joint venture with Seneca Resources Corp. As of June, it had drilled 64 wells in Pennsylvania and had permits to drill 100 more, according to the DEP.
Several exploration companies, including EOG and Chesapeake Energy Corp., say they are shifting more of their resources to drilling in formations that yield oil or natural gas liquids, which now fetch substantially higher prices than natural gas.
The Marcellus acreage in northern Pennsylvania produces "dry" natural gas that contains few liquid fuels, such as butane and propane, which need to separated before the gas is piped to distribution companies. Natural gas is used primarily for electrical power generation and home heating.
