By Angel Gonzalez    Of DOW JONES NEWSWIRES 
 

HOUSTON (Dow Jones)--Mergers and acquisitions in the North American energy sector are once again on fire, spurred in part by independent producers' mad rush to drill for natural gas from shale.

Many independent companies--called this because they only produce oil and gas and don't sell fuel--are selling non-strategic acreage or striking partnerships because they need drilling capital in order to keep their leases from expiring. A lot of international energy companies are interested in what independents such Chesapeake Energy Inc. (CHK) and Southwestern Energy (SWN) hold, especially when natural gas-shale assets are up for sale.

Since mid-January, the pace of deals "has become really intense, really fast," said Robin Fredrickson, a partner at law firm Vinson & Elkins who specializes in oil and gas transactions. And shales, tight rock formations that have yielded an unexpected natural gas bounty, are "the hot play," she added.

Fredrickson was one of the lead attorneys in Devon Energy Corp.'s (DVN) $7 billion sale of assets in Brazil, Azerbaijan and the U.S. Gulf of Mexico to BP PLC (BP, BP.LN), announced last week. That deal, although consisting mostly of oil assets, also had its origin in the national obsession with unconventional gas: Oklahoma City-based Devon, a pioneer in shale drilling, wanted to focus its spending in that sector.

On Monday, Petrohawk Energy Corp. (HK) announced the sale of its interest in a Louisiana field for $320 million, part of an effort to shift development capital to the Eagle Ford and Haynesville shales, located in Texas and Louisiana, respectively. In early March, Dow Jones Newswires reported that BP struck a joint-venture deal with privately-owned independent Lewis Energy Group worth at least $160 million for acreage in the Eagle Ford shale.

Many independent producers had "eyes bigger than their stomach" when snapping up shale leases a few years ago, said Bob Fryklund, vice president for industry relations at IHS, a global consultancy.

Most leases last about three years unless they are in production, and drilling is expensive; but energy companies are reluctant to let those acres go, because they have significantly gone up in value amid shale's newfound popularity. A typical acre in the Marcellus shale, which spans several northeastern states including Pennsylvania and parts of New York, leases for $8,000, up from $4,000 last year.

"You don't want to risk that the next time it goes out, it goes up to $16,000 [an acre]," Fryklund said.

Hence, the ongoing scramble for deals. In 2009 and so far in 2010, there have been $60 billion in shale-related deals, Fryklund said--most of which is represented by Exxon Mobil Corp.'s (XOM) agreement to buy XTO Energy Inc. (XTO), which is the most significant investment an international oil company has made in the emerging sector. The Exxon deal was announced last December.

Another factor that facilitates deal making is the relative stability in commodity prices. The wild gyrations seen at the beginning of the recession made potential investors freeze in their tracks, but now it appears that natural-gas prices have stabilized at around $5 per million British thermal units. "That's putting people in a position to make some moves," Fryklund said.

-By Angel Gonzalez, Dow Jones Newswires; 713-547-9214; angel.gonzalez@dowjones.com