Blackstone Said to Be in Talks to Buy Shell Gas-Field Stake

Aug 10, 2014 7:21 pm ET

(Updates with Cheniere relationship in final paragraph.)

Aug. 10 (Bloomberg) -- Blackstone Group LP, the private- equity firm led by billionaire Stephen Schwarzman, is in advanced talks to acquire Royal Dutch Shell Plc’s 50 percent stake in a shale-gas field in Louisiana, according to a person familiar with the matter.

Blackstone would pay about $1.2 billion for Shell’s half- interest in the Haynesville formation, the person said. The deal would follow a parade of gas-acreage sales by oil companies including Shell and Apache Corp. to investors as they trim holdings amassed when natural-gas prices were higher.

The New York-based PE firm would buy the stake in a joint venture that owns more than 350,000 acres in the Haynesville Shale formation in northern Louisiana and East Texas, according to the Wall Street Journal, which first reported the talks earlier today. Shell, based in The Hague, struck a deal to explore the field in 2007 in partnership with Encana Corp., the newspaper reported.

Christine Anderson, a spokeswoman for Blackstone, and Destin Singleton, a spokeswoman for Shell, declined to comment. Blackstone is the world’s largest manager of alternative assets including private-equity, hedge funds and real estate.

Blackstone, which has bankrolled refineries and off-shore drilling projects, avoided investing in gas late last decade, when prices rose to more $13 per million British thermal units. It has recently gathered positions in the Marcellus gas formation in Pennsylvania, Bloomberg News reported in March. Gas futures recently traded for about $4 per million Btu, according to data compiled by Bloomberg.

Blackstone’s holdings include a plant in Louisiana that it’s building with Cheniere Energy Inc., through a venture called Cheniere Energy Partners LP, to export liquefied natural gas. The facility, the first to win government approval to export from the Gulf Coast, is scheduled to come on line in 2016.