Royal Dutch Shell plc Acquires New Positions in US Tight Gas

THE HAGUE, The Netherlands, May 28, 2010 /PRNewswire-FirstCall/ -- Royal Dutch Shell plc ("Shell") (NYSE: RDS.A) (NYSE: RDS.B) continues to build a leading portfolio in North America tight gas, with new positions in high potential US shale gas acreage, in the Marcellus and Eagle Ford plays.

Shell has agreed to acquire subsidiaries which own substantially all of the business of East Resources, Inc ("East Resources") for a cash consideration of $4.7 billion, from East Resources, and its private equity investor Kohlberg Kravis Roberts & Co. and its advisors Jefferies & Company. The transaction is subject to certain regulatory approvals. East Resources is a privately-owned business with its primary activity focused on the Marcellus shale, in the northeastern US. East Resources has some 650,000 net acres (2,600 square kilometers) of highly contiguous, operated acreage in the Marcellus, and 1.05 million net acres (4,250 square kilometers) of acreage overall. East Resources has some 60 mmscfe/d (10,000 barrels oil equivalent per day) of production, predominantly in natural gas, with substantial medium-term growth potential.

In addition, as part of its on-going acreage build strategy, Shell has acquired ~250,000 net acres (1,000 square kilometers) of mineral rights in the Eagle Ford shale play, in South Texas, in 2010. These undeveloped acreage positions are in the liquids rich window of the Eagle Ford play. Shell will be the operator in this highly contiguous acreage, and will be able to integrate these new assets into its existing South Texas operations, where Shell has been active for many years.

Shell's Chief Executive Officer Peter Voser commented: "We are enhancing our world-wide Upstream portfolio for profitable growth, through exploration and focused acquisitions, and through divestment of non-core positions. These acreage additions form part of an on-going strategy, which also includes divestments, with an objective to grow and to upgrade the quality of Shell's North America tight gas portfolio."

Voser continued: "East Resources' management have built an excellent organization, with high quality assets in the Marcellus, which we are pleased to have as our centrepiece as we enter the premier shale gas play in the north east US. The opportunity now is to consolidate our tight gas portfolio, divest from non-core positions across North America, and to invest for profitable growth, by deploying Shell's technology and capabilities on a large scale."

Notes for Editors

Shell in North America tight gas

Shell's activities in US tight gas began in 2001, with acreage purchases in the Pinedale Anticline in Wyoming, where the use of innovative multi-well production pads and reservoir fracturing technology has led to rapid production growth, a competitive cost structure, and reduced environmental footprint. Following the success of Pinedale, Shell has more recently expanded its tight gas acreage positions in South Texas, in the Haynesville play in Texas/Louisiana, and in Western Canada, through the 2008 acquisition of Duvernay.

Shell's 2009 North America tight gas production was some 140,000 boe/d (810mmcfe/d), an increase of 62% from 2008 levels, from a 3.7 billion boe (21 tcfe) resources base. Continued focus on operating efficiency has resulted in competitive costs, with Shell's cash operating costs in North America tight gas at less than $2/mcfe in 2009.

Prior to today's announcements, Shell projected that its North America tight gas production could reach more than 400,000 boe/d (>2.3 bcfe/d) by 2020, subject to annual investment rates. The addition of the East Resources, Inc and the Eagle Ford acreage will enhance this growth potential, bringing Shell's total North America tight gas position to some 3.6 million acres.

East Resources

East Resources is a Pennsylvania-based oil and gas company. It is engaged in the exploration and development of natural gas and crude oil with emphasis on the Marcellus shale play.

East Resources owns a total of 1.05 million net acres (4,250 square kilometres) of acreage, mainly in the Appalachian basin and is one of the largest Marcellus shale acreage holders with some 650,000 highly contiguous net acres located mainly in Pennsylvania. East Resources also has in excess of 100,000 net acres (400 square kilometres) in the Rockies, in the prospective Niobrara shale play. The Marcellus acreage is almost 100% operated with high average working interest and with access to pipeline infrastructure.

Eagle Ford transactions

Shell has acquired ~250,000 net acres (1,000 square kilometres) of highly contiguous acreage in the Eagle Ford shale, in a series of transactions with private landowners this year. These positions are in the gas condensate and oil windows. They will be operated by Shell with a high working interest, and are located close to Shell's existing South Texas acreage, offering the potential for operating synergies. Drilling has already commenced on acreage from the first of these 2010 transactions.

Cautionary Note

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SOURCE Royal Dutch Shell plc