Calgary-based Enerplus Corp. is selling a portion of its Marcellus Shale interests in Pennsylvania, Maryland and West Virginia to an undisclosed buyer for US$575 million.
The sale would allow the former income trust fund to enhance its ability to control the pace and level of capital spending in the Marcellus and other ventures going forward. Enerplus converted to a dividend-paying corporation on Jan. 1.
"The sale of a portion of our nonoperated leases captures a significant gain for Enerplus and improves our financial flexibility and ability to pursue our capital investment strategies," CEO Gordon Kerr said. "We are retaining a concentrated, meaningful position in this top tier shale play."
The transaction, expected to be completed by the end of June, includes stakes in about 91,000 net acres in southwest and central Pennsylvania, Garrett County in Maryland and northern West Virginia. Current total production averages about 5.4 MMcfe/d.
Following the sale Enerplus would retain all of its nonoperated acreage in northern Pennsylvania's Bradford, Susquehanna, Lycoming, Columbia, Tioga, Wyoming and Sullivan counties, as well as operated acreage in Clinton County, PA; Garrett County, MD; and Preston County, WV.
Land to be retained in the Marcellus includes ownership in close to 110,000 net acres that at the end of 2010 were estimated to hold 2.3 Tcfe of natural gas contingent resource and 92 Bcfe of proved plus probable natural gas reserves. Of the total reserves about 60% would be operated by Enerplus.
Proceeds from the sale would "more than eliminate" current bank debt, Enerplus said. The producer now plans to review its capital spending and production guidance for 2011.
Enerplus first entered into the Marcellus in 2009 through a joint venture with Chief Oil & Gas LLC by buying a 30% stake in 552,000 gross acres (see Daily GPI, Aug. 21, 2009). Enerplus has since increased its Marcellus holdings to more than 200,000 net acres (see Daily GPI, Sept. 24, 2010).
Although the Enerplus buyer is undisclosed, Chevron Corp. in May tacked on 228,000 net acres to its Marcellus holdings in a transaction with Chief and partner Tug Hill Inc., for an undisclosed sum (see Shale Daily, May 5). Some analysts estimated that Chevron may have paid $1.25-1.6 billion for the assets.
When the Chevron purchase is completed, which also is expected, like the Enerplus sale, to be by the end of June, Chevron said it would have an additional 5 Tcf in the play.