Consol Energy to buy Dominion's Appalachian assets
Consol Energy Inc. plans to buy Appalachian exploration and production assets from utility Dominion Resources Inc. for $3.475 billion, tripling Consol’s Marcellus shale gas lease holdings.
By OGJ editors
HOUSTON, Mar. 15 -- Consol Energy Inc. plans to buy Appalachian exploration and production assets from utility Dominion Resources Inc. for $3.475 billion, tripling Consol’s Marcellus shale gas lease holdings.
The transaction will add 1.04 tcf of proved gas reserves to Consol, which already has 1.9 tcf of proved reserves. Closing is expected by Apr. 30, subject to regulatory approvals and customary closing conditions.
Consol, a coal and gas company in Pittsburgh, said the Dominion acquisition substantially increases its gas reserves and production capacity. Consol subsidiary, CNX Gas, operates Consol’s existing gas business. Upon completion of the transaction, Consol’s gas business is expected to account for as much as 35% of its total revenue.
Dominion's E&P business is an active driller in Pennsylvania and West Virginia, where Dominion owns about 500,000 acres in the Marcellus shale.
Consol plans to acquire a total of 1.46 million oil and gas acres from Dominion along with over 9,000 producing wells that are expected to produce more than 41 bcf of gas equivalent in 2010.
J. Brett Harvey, Consol president and chief executive officer, said Consol expects its 2010 gas production will reach 100 bcf—double its annual gas production in 2005.
"Not only is our Appalachian footprint growing wider with this transaction, but more importantly, it is growing deeper as we substantially increase our opportunities to extract incremental value through stacked pay zones of surface assets, coal, coalbed methane, shale gas, and conventional gas assets,” Harvey said.