CONSOL Strengthens Position in Marcellus Shale with $3.475B Deal
CONSOL has closed on its previously announced agreement to acquire Dominion Resources for approximately $3.475 billion in cash.
"We are very pleased to be able to complete the transaction within the time-frame we outlined," said J. Brett Harvey, CONSOL Energy president and chief executive officer. "We believe this to be a strategically compelling addition to our business, which ultimately provides CONSOL Energy with a stronger position in natural gas to complement our already leading position in coal production in the Eastern United States."
To fund the purchase of the properties and to cover fees and initial development costs, CONSOL Energy, in recent weeks, raised $2.75 billion by means of a senior notes offering and $1.83 billion by means of a public offering of more than 44 million shares of its common stock.
As a result of the acquisition, CONSOL Energy becomes the largest and among the fastest growing producers of natural gas in the Appalachian basin. Importantly, the acquisition will give CONSOL Energy a leading position in the strategic Marcellus Shale fairway by tripling its development assets to approximately 750,000 acres with the addition of Dominion's approximately 500,000 Marcellus Shale acres in Pennsylvania and West Virginia.
CONSOL Energy expects its natural gas business to account for as much as 35 percent of its total annual revenue. The acquisition increases its total proved gas reserves by more than 50 percent from 1.9 trillion cubic feet to approximately 3 trillion cubic feet and doubles its potential gas resource base to approximately 41 trillion cubic feet. CONSOL Energy acquires a total of 1.46 million oil and gas acres from Dominion, along with more than 9,000 producing wells that are expected to produce more than 41 Bcfe in 2010, approximately 27 Bcfe of which will be imputed to CONSOL Energy between May 1, 2010 and the end of the year.