Chevron paying $4.3B for Atlas in shale frenzy

Nov 09, 2010 | 02:17 PM | Michael Cowden

Chevron Corp. plans to acquire Atlas Energy Inc. in a $4.3-billion deal aimed at securing the integrated energy company a "premier" position on the Marcellus Shale in southwestern Pennsylvania.

San Ramon, Calif.-based Chevron will pay $3.2 billion in cash for the Moon Township, Pa., oil and natural gas company and take on debt of roughly $1.1 billion.

Under the proposed deal, which remains subject to Atlas restructuring transactions, approval by Atlas shareholders and regulatory clearance, shareholders would receive $43.34 per share, a 36.6-percent premium to Monday's closing price of $31.72. Atlas shares closed at $42.50 Tuesday on Nasdaq.

The Marcellus Shale, stretching from Virginia to New York, is close to big East Coast natural gas markets, which proponents argue makes drilling there profitable even with low natural gas prices.

"All of our shareholders should benefit from this sale, and upon its completion Atlas will have achieved a return of well over 800 percent since its initial public offering less than six and a half years ago," Atlas chairman and chief executive officer Edward E. Cohen said in a statement.

"We are acquiring a company that has one of the premier acreage positions in the prolific Marcellus. The high-quality resource, competitive cost structure in the Marcellus, strong growth potential of the asset base and its proximity to premier natural gas markets make this targeted acquisition a compelling investment for Chevron," Chevron vice chairman George L. Kirkland said in a statement. Chevron also has invested in shale plays in Canada, Poland and Romania.....