Chevron to buy Atlas, gain Marcellus foothold

By OGJ editors
HOUSTON, Nov. 9
-- Chevron Corp. has agreed to acquire Atlas Energy, a Pittsburgh independent producer with a major land position in the Marcellus shale gas play, for $3.2 billion cash plus assumption of debt of $1.1 billion.

Chevron will acquire a gas resource estimated at 9 tcf, including 850 bcf of proved reserves, and about 80 MMcfd of production.

Atlas Energy’s Appalachian basin assets include 486,000 net acres in the Marcellus shale, 623,000 net acres in the Utica shale, and a 49% interest in Laurel Mountain Midstream LLC, which owns more than 1,000 miles of intrastate gas pipeline and gathering lines in the Marcellus play.

Atlas Energy also has production from the Antrim shale in Michigan and 100,000 net acres in the Collingwood-Utica shale.

Chevron will become operator of the Marcellus joint venture Atlas Energy formed in April with an affiliate of Reliance Industries Ltd., Mumbai, and will assume the acquired company’s 60% share of the venture. Reliance will still fund 75% of the operator’s drilling costs up to $1.4 billion (OGJ Online, Apr. 21, 2010).

Before completion of the deal, Atlas Energy will distribute units of Atlas Pipeline Holdings LP to shareholders and acquire a 49% interest in Laurel Mountain Midstream from the pipeline partnership for $403 million. It will sell all investment partnerships, 175 bcf of gas reserves, and certain other assets to Atlas Pipeline Holdings for $30 million in cash and $220 million in new units in the pipeline partnership.

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