US energy giant Chevron Corporation (NYSE: CVX) reported that it would buy natural-gas producer Atlas Energy (NASDAQ: ATLS) for 4.3 billion dollars, becoming one of the last big oil companies to jump into the Marcellus shale field.
The California-based energy giant would pay 3.2 billion dollars in cash and the rest for the Atlas’s net debt. It will pay $43.34 per share or a 37 percent premium to Atlas\' closing price on Monday.
According to George Kirkland, Chevron’s vice chairman, the acquisition was the right opportunity for Chevron, enhancing its global shale gas position with the Atlas Energy assets. Argus Research analyst Phil Weiss said that Chevron did not have much of a U.S. presence in shale.
Atlas Energy has one of the premier acreage positions in the prolific Marcellus. The Pennsylvania-based company is a leading developer in the Marcellus Shale position in Pennsylvania.
Its assets in the Appalachian basin include 486,000 net acres of Marcellus Shale, 623,000 net acres of Utica Shale, a 49 percent interest in Laurel Mountain Midstream, and a joint venture.
Chevron will take advantages of high quality resource, competitive cost structure, proximity to premier natural gas markets, and strong growth potential of the asset base.
Natural gas prices have declined steeply in the past months due to rising output from Marcellus and other shale fields. The decline has driven numerous energy companies to eye on oil and other liquids production but prompt their natural gas drilling programs.
Chevrons’ move into the Marcellus follows acquisitions by Royal Dutch Shell and Exxon Mobil at the beginning of this year. Recently, Chevron bought into shale fields in Romania, Poland, and Canada.
With the $4.3 billion deal, the company will hold Atlas\'s 60 percent stake and serve as the operator of a joint venture in the Marcellus shale with Reliance Industries (RELI.BO).
Goldman Sachs & Co. served as Chevron\'s financial adviser in the deal while Jefferies & Co Inc and Deutsche Bank Securities Inc. are acting as financial advisors to Atlas Energy.
Skadden Arps Slate Meagher Flom LLP and Wachtell Lipton Rosen Katz served as legal advisors to Chevron and Atlas respectively.