BP Deals for U.S. Shale Gas

UK super major BP Plc. (BP) intends to make a deal with privately held Lewis Energy Group for the expansion of its U.S. shale-gas operations, as per news published in upstreamonline.com. The transaction value of this deal is expected to be worth $150 million to $200 million. 

BP will acquire a 50% stake in 80,000 acres of the Eagle Ford Shale play in the southeastern part of Texas held by Lewis Energy. BP will shell out $4,000 to $4,500 per acre. 

Major energy companies are showing significant interest towards the Eagle Ford Shale play, which is currently treated as a rapidly developing oil and gas field. While ConocoPhillips (COP) holds properties in this play, Chesapeake Energy Corp. (CHK) is looking to expand its position as well. 

With an uptrend in the economic conditions, many large integrated energy companies have been keen to acquire smaller independent U.S. producers or their properties. BP's move is the latest in a series of deals that have brought major oil companies into U.S. shale gas. 

While the ExxonMobil (XOM) − XTO Energy (XTO) deal is a recent prominent example, Total’s (TOT) acquisition of a quarter of Chesapeake's Barnett Shale operations in Texas is also significant in this space. 

BP has been establishing a strong position in the U.S. shale gas and applying advanced technology for getting more out of the wells it is drilling. However, we are concerned about the North American natural gas outlook and don’t think a modest increase in the gas price is going to do much to tighten up the supply position in the North American gas market.

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