Consol sells half its acres to Texas gas firm
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Only three months ago Consol Energy CEO J. Brett Harvey told shareholders that the Marcellus Shale was a "baby" in development that wouldn't pay true dividends for years to come.
On Thursday the company gave that baby a $3.4 billion growth spurt with a sale designed to turn the firm's slow-going Marcellus Shale natural gas production into immediately improved stock prices.
The Cecil-based energy company sold half of its 663,350 Marcellus Shale acres in Pennsylvania and West Virginia and half of its existing Marcellus wells to Noble Energy Inc., a Houston-based oil and gas firm. The companies have formed a joint development plan that will accelerate Consol's presence in the gas boom that has sprung up in the firm's own back yard and forced a fast diversification of assets.
After looking at the firm's expanse of land and seeing that the current pace would leave some wells untapped for decades, the company decided to move ahead and "bring that monetization forward to today," said Randy Albert, Chief Operating Officer of CNX Gas, Consol's gas division.
"We don`t believe in pushing off the value of those assets to the next generation," said Mr. Albert.
Current generations seemed to welcome the sale, with Consol shares closing at $42.59 on Thursday, up 17 cents on a day that was disastrous for most other publicly traded companies.
The deal reportedly will help Consol quadruple its number of rigs to 16 and meet its production target of 350 billion cubic feet of gas within the next four years.
That's an ambitious agenda for an energy company that made its name -- and still makes most of its money -- from coal.
Consol's holdings contain an estimated 7.4 trillion cubic feet of natural gas.
The new rigs will appear in northern West Virginia and southwestern Pennsylvania, in Westmoreland, Indiana, Greene and Washington counties.
First Published August 19, 2011 12:00 am
