THE WALL STREET JOURNAL: Chief Oil & Gas Eyes Future Sale: "In August, Royal Dutch Shell PLC bought up leases for 25,000 acres, marking the first entry by a so-called supermajor into the field. Shell was rumored to be interested in Chief earlier this year...": Posted Wednesday 16 November 2005

Chief Oil & Gas LLC, a Dallas-based privately held natural gas producer with considerable operations in the Barnett Shale field, plans to put itself up for sale by the end of the year, according to a company spokeswoman. Industry observers say this could spark a consolidation phase in the red-hot Barnett Shale.

The company is the third-largest producer of gas in the Barnett Shale, located outside Fort Worth, Texas. The Barnett Shale field has quickly become one of the largest gas-producing regions in the U.S. and has drawn the interest of some of the world's largest oil companies. Chief produces 120 million cubic feet a day of gas and has 230,000 acres under lease in the area. The company could fetch upwards of $1 billion, according to industry observers.

The company plans to hire an investment bank by the end of the month to begin soliciting buyers, says Chief spokeswoman Kristi Gittins.

There is expected to be a lot of interest in the company. Production in the Barnett Shale has grown quickly and further growth appears likely. In August, Royal Dutch Shell PLC bought up leases for 25,000 acres, marking the first entry by a so-called supermajor into the field. Shell was rumored to be interested in Chief earlier this year, but Ms. Gittins said they have not made any overtures.

"The Barnett Shale is one of the most attractive unconventional gas plays in the U.S.," says Shannon Nome, an oil and gas analyst with J. P. Morgan. "Anybody who is anybody in natural gas would have to at least take a look. I doubt it will go cheap."

Oil industry observers say potential buyers could include a large independent producer such as Devon Energy Corp., the largest producer in the Barnett, or an international integrated giant such as Shell.

If a large integrated company acquires Chief, the acquisition could put several publicly traded companies with large Barnett Shale operations in play. These include XTO Energy Inc., EOG Resources Inc. and Quicksilver Resources Inc.

Write to Russell Gold at russell.gold@wsj.com