Shale oil hasn’t always been Royal Dutch Shell Plc’s best friend, but they’re working on the relationship. Shell is said to have bid, with partner Blackstone Group LP, on a portfolio of US shale assets BHP Billiton Ltd. wants to sell for about $10 billion. If it wins, the Anglo-Dutch oil major could exceed its goal of doubling its American onshore output, according to JPMorgan Chase & Co. That would boost the unit’s free cash flow — currently on track to grow by $2 billion by 2025 — and turn around a shale portfolio that is currently “mid-lower ranked,” analysts from the bank including Christyan Malek said in a report.
At the heart of Shell’s shale problem has been the lack of a coherent strategy, according to the report. It has irregularly
acquired various bits of US acreage, including a large
stake in the low-cost and highly desirable Permian.
In the Permian’s Delaware basin Shell was pumping fewer than 100,000 barrels a day per 1,000 feet (300 meters) of well length in the first 30 days of production — about 20 percent lower than the industry average at the time. In contrast, shale specialist EOG Resources Inc.’s wells in the same area were about
50 percent more productive.