Mitsui & Co., Ltd. announced that it, through its subsidiary Mitsui E&P Texas (MEPTX), has entered into a definitive agreement with the U.S. oil and gas development company, SM Energy Company (SME), to acquire a 12.5% working interest in SME’s Eagle Ford property in Texas, USA.
The agreement was signed on June 29, 2011 and the closing of the transaction is expected during the 3rd quarter 2011, after the satisfaction of customary conditions.
This project, which currently produces oil, natural gas and natural gas liquids which are sold mainly in the Texas market, will allow for the drilling of more than one thousand wells over the next decade. Furthermore, MEPTX will enter into an Area of Mutual Interest with SME concerning the area of Mitsui’s acquired interests to jointly acquire new leases to further expand its business.
Although the development of shale formation had been considered to be uneconomical in the past, due to recent technological advances and innovations, low cost shale gas development and production has become practicable in recent years. In addition, in these days, shale oil development is growing sharply. The Eagle Ford Shale is located in Texas, USA, whose oil demand is one of the highest in the country, and produces valuable products with high liquid contents, and is considered to be one of the most attractive shale plays in the United States along with the Marcellus Shale where Mitsui also has its stake. We expect that this project, which includes technically and financially capable partners, will become a core business base for Mitsui providing cash flow and profit over the long term.
Mitsui has expanded its shale oil/gas portfolio in the Unites States and Poland, and aims to expand shale business into other countries leveraging its global network and the knowledge acquired through these projects. Mitsui has positioned its energy and mineral resources business as a strategically significant business area and will continue to acquire attractive oil and natural gas assets in order to establish a more robust and well-balanced business portfolio.
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Source: Mitsui & Co, June 30, 2011;