A Royal Dutch Shell plc subsidiary has agreed to sell its Appalachia shale gas position for $541 million to National Fuel Gas Co. — and its subsidiaries, Seneca Resources Company LLC, National Fuel Gas Midstream Company LLC and NFG Midstream Covington LLC. The transaction, subject to closing adjustments and regulatory approvals, has an effective date of Jan. 1, 2020 and is expected to close by end of July 2020.

The deal is intended to be paid in cash, but National Fuel has the option to provide up to $150 million of NFG common stock at an at an adjusted price of $38.97 per share, with the balance paid in cash.

The transaction includes the transfer of approximately 450,000 net leasehold acres across Pennsylvania, with approximately 350 producing Marcellus and Utica wells in Tioga County and associated facilities. The current net production is about 250 million standard cubic feet per day. The transaction also includes the transfer of the Shell owned and operated midstream infrastructure.

The transaction is part of divesting non-core assets and in line with Shell’s Shale strategy, which focusses on development of higher margin, light tight oil assets.

“Divesting our Appalachia position is consistent with our desire to focus our Shales portfolio,” Shell Upstream Director Wael Sawan stated. “While we maximize cash in the current environment, our drive for a competitive position in Shales continues. It is a core part of our Upstream portfolio along with the Deep Water and Conventional oil and gas businesses.”

Shell, however, remains committed to Pennsylvania. Its Pennsylvania Petrochemicals Complex brings new growth and jobs to the region, with up to 6,000 construction workers involved in building the new facility and an expected 600 permanent employees when completed.