Chevron Deals for Gas Producer

Wednesday, November 10, 2010 @ 04:11 PM gHale


Chevron Corp. will end up paying $4.3 billion to pick up natural gas producer Atlas Energy Inc.
This will mark Chevron’s entry into the rich shale gas fields in the eastern part of the U.S.
Chevron will pay $3.2 billion in cash and stock and then assume debt of $1.1 billion, officials said.
San Ramon, CA-based Chevron is the latest major oil company to make a big acquisition in the natural gas sector, following Exxon Mobil and Royal Dutch Shell. Moon Township, PA-based Atlas is a big player in the Marcellus shale of Western Pennsylvania.
Energy companies rushed to tap America’s large reservoirs of natural gas hidden in shale rock formations, using new drilling technologies that have brought down the cost of production. Up until now, Chevron hadn’t made any significant moves to explore in the region,
Despite enormous supply and weak consumption, natural gas should be in high demand in coming years because it’s plentiful throughout the U.S. and produces fewer emissions compared with other fossil fuels.
Chevron said it also has made recent moves to acquire shale gas wells in Poland, Romania and Canada. Its natural gas business spans the globe with holdings in Africa, Australia, Southeast Asia, the Caspian region, Latin America and the U.S.
Atlas was attractive because of its expansive ownership of wells in the Marcellus Shale area, which spreads across parts of New York, Pennsylvania, Ohio, West Virginia and Virginia, said George Kirkland, Chevron vice chairman. He said the relatively low production costs and proximity to natural gas markets in the Northeast make the deal “a compelling investment.”
The deal also includes natural gas assets in the Utica shale area. Chevron expects to gain 850 billion cubic feet of proven natural gas reserves that can produce 80 million cubic feet of natural gas per day. It also will take a 49 percent stake in Laurel Mountain Midstream LLC, a company that owns natural gas gathering lines in the Marcellus region.



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