The Blackstone Group is reportedly in talks to acquire Royal Dutch Shell’s 50 percent stake in a 335,000 acre Louisiana and East Texas shale field.
The asset would be valued at $1.2 billion, Bloomberg said Sunday.
Neither Blackstone nor Shell would comment on the deal.
Blackstone, a private-equity group led by billionaire Stephen Schwarzman, would be purchasing a 50 percent share in a joint venture between Shell and Alberta-based Encana.
The acres are located in the Haynesville play, a shale formation that spreads from the northwestern point of Louisiana and the northeastern border of Texas into the southwestern corner of Arkansas.
In 2007, Shell entered into a 50-50 joint venture with producer, marketer and transporter Encana to explore Haynesville.
According to the Louisiana Department of Natural Resources, the Haynesville Shale area produced 2.07 trillion cubic feet, or about 5.67 billion cubic feet per day, of gas in 2012.
However the department estimates that production fell by 30 percent in 2013 to 3.97 Bcf/d and may continue to decline, Platts said.
Shell announced in March that it would reduce its shale holdings to boost profits.
Shell sold 106,000 acres in the Eagle Ford shale formation to Texas-based Sanchez Energy for $639 million in May.
Blackstone has been busy growing its energy holdings.
In March, Blackstone formed Alta Energy Partners with Texas-based shale gas developer Alta Resources.
Blackstone committed to investing $1 billion through the partnership to acquire and develop unconventional oil and gas assets in the US.
Blackstone also holds a liquefied natural gas export facility in Louisiana with Texas-based Cheniere Energy.
The facility is set to begin operations in 2016.