Antero Resources Corp. of Denver will pay $552 million for the natural gas drilling rights on more than 205,000 acres, mostly in western Pennsylvania and West Virginia, to Dominion Resources.
Dominion Resources Inc. (NYSE: D), of Richmond, Va., said it will realize after-tax proceeds of about $325 million once the deal closes in late September.
Antero Resources is an independent exploration company.
The drilling rights are part of the Marcellus Shale, an underground natural gas deposit that covers about 54,000 square miles through parts of New York, Pennsylvania, Ohio and West Virginia.
Dominion will get a 7.5 percent royalty interest on future natural gas production from the acreage assigned to Antero.
"Assigning a portion of our drilling rights in the Marcellus Shale has a number of benefits for Dominion," said Thomas Farrell II, Dominion's chairman, president and CEO, said in a statement. "It allows us to lock in an immediate return from a valuable asset while preserving some upside potential through a royalty interest in future production."
Dominion also said it wants to build a pipeline to deliver gas from southwestern Pennsylvania to the East Coast.
Dominion's planned pipeline, called Dominion Keystone, would take natural gas from southwestern Pennsylvania to Chester County, Pa. It would connect to pipelines operated by Dominion, Spectra, Williams and NiSource.
Antero and a Dominion subsidiary would provide about 500 million cubic feet of gas per day to the pipeline, and about 1 billion cubic feet per day by the end of 2012, Dominion said.
Dominion said it will hold an open season for the pipeline from July 7 to Aug. 12 for other customers interested in the new capacity.
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