DealZone

Gulf closed, Shell points to shale

While Royal Dutch Shell could well have been working on its $4.7 billion cash deal to buy privately held East Resources before the BP blowout on April 20, the deal could become a beacon for others looking trying to figure out how to expand away from sucking crude through deepwater rigs and towards natural gas and solid land.

The deal raise Shell’s daily gas production in North America by about 7.5 percent and give it access to a swathe of the Marcellus Shale (pictured left), the northeastern U.S. rock formation that is a crucial source of future U.S. gas production.

Shale gas accounts for between 15 percent and 20 percent of U.S. gas production, but is expected to quadruple in coming years, touching off a scramble among producers large and small for access to resources.

Analysts said the deal would put pressure on Shell’s balance sheet, which is already stressed with other projects. If that’s true, and Shell saw a need to move quickly, perhaps environmentalists worried about what shale projects mean to the land will have another thing to blame on BP’s disaster in the gulf.

from India Insight:

Third time’s the charm for Mukesh Ambani

Mukesh Ambani(UPDATE: Reliance Industries has gained an overseas foothold by agreeing to pay $1.7 billion to form a joint venture with U.S.-based Atlas Energy. India's largest-listed firm will pick up a 40 percent stake in Atlas's operations in the booming Marcellus Shale)

The ruthless efficiency and smooth execution that marked Reliance Industries' development of the world’s largest refining complex in western India and its vast gas fields off the country's east coast has eluded the top-listed Indian firm during its recent attempts at overseas takeovers.

Nevertheless, Mukesh Ambani, the world’s fourth-wealthiest man and the chairman of Reliance, is known for his doggedness and is unlikely to backpedal on his overseas ambitions after being rebuffed by two overseas firms -- bankrupt petrochemicals maker LyondellBasell and oil sands firm Value Creation.

We got gas!

Hot on the heels of Consol Energy’s agreement to buy Dominion Resources’ Appalachian natural gas properties for $3.48 billion in cash, a source tells us Indian energy major Reliance Industries wants to team up with Atlas Energy to develop gas operations in the same hot area of the U.S.: Marcellus Shale.

Independent oil and gas company Atlas has been seeking a partner for its operations in the energy-rich region, and Reliance has been hungry for a deal for months, having been rebuffed twice in efforts to take over foreign firms.

Atlas’s core Marcellus position consists of 266,000 acres largely in southwestern Pennsylvania. The Marcellus Shale spans parts of Pennsylvania, West Virginia and New York and could hold enough natural gas to satisfy U.S. demand for a decade, according to some geologists.

Spring time for debt in Consol, PVH deals

Apparel company Phillips-Van Heusen agreed to buy fashion brand Tommy Hilfiger from London-based Apax Partners in a cash and stock deal for about $3 billion to boost its presence in Europe and Asia. It expects to use $3.05 billion debt, $385 million cash at hand, $200 million perpetual convertible preferred stock and $200 million from a common stock offering to finance the deal and refinance certain other debt.

Consol Energy agreed to buy Dominion Resources Inc’s Appalachian natural gas properties for $3.48 billion in cash, giving Consol a leading position in the growing Marcellus Shale field. It too is going to the debt markets to finance the deal, though for how much exactly is not yet known, Consol’s shares fell more than 9 percent after it said it would issue $4 billion in debt and equity to fund the purchase and development of the property.

Do two deals announced in one day make a trend? Maybe only in a blog, though CNBC’s David Faber also noted the rising use of borrowing. But it is at least probably safe to say that debt finance is appearing healthier than it has in months. With the Federal Reserve expected to say tomorrow it is ready to keep money cheap for months to come, the prospects for more of the same are looking bright.