Chevron, the second-largest U.S. oil company, is boosting its footprint in the Marcellus Shale by purchasing drilling and development rights for another 228,000 acres from closely held Chief Oil & Gas and Tug Hill Inc. Financial terms of the transaction were not disclosed.
Analysts estimate that Chevron paid $1.6 billion for the Marcellus acreage because the amount of gas reserves involved are roughly half that of the $3.2 billion Atlas Energy deal Chevron struck earlier this year, according to the Wall Street Journal. Chevron said the new deal complements the acquisition of Atlas.
California-based Chevron (CVX) will gain an estimated five trillion cubic feet of additional natural gas resource in its Marcellus Shale operations, the company said in a statement. The deal is expected to close before the end of the current quarter.
In the past year, Chevron has acquire five million shale acres in the U.S., Canada, Poland and Romania. Chevron expects natural gas prices to increase in the coming years as demand increases and production declines.