It has been stated by Royal Dutch Shell PLC that it will be buying East Resources Inc. This announcement was made on Friday. East Resources is a U.S. natural-gas explorer and it will be bought for $4.7 billion.
Warrendale is a Pa.-based East Resource and is known as one of the most prominent competitor in natural-gas exploration area termed as Marcellus Shale and covers 1.25 million acres from West Virginia to New York.
This step of purchase will extract good returns for private-equity firm Kohlberg Kravis Roberts & Co. About 11 months ago, this Company invested $350 million in East Resources for a substantial stake.
The sale will also benefit East Resources Chief Executive Terrence Pegula, founder of the Company, who still heads the same. The purchase also encompasses mineral rights in the Eagle Ford Shale in South Texas.
As it is predicted that the demand for gas will elevate in coming years, Companies are entering intense business in the field, despite natural gas prices remaining low.
It is also known that Marcellus is in demand because of “big production and comparatively low costs” that resulted in increasing valuable.
In recent years, Shell has made many deals in the North American gas market. It includes buying Canada's Duvernay Oil Corp. in 2008 and also associating itself with Encana Corp.
North American natural gas presently contributes 7.8% of global oil and gas production of Shell.