Chevron to buy Atlas Energy in $4.3 billion deal
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Moon Township natural gas producer Atlas Energy Inc. is being acquired by Chevron Corp. for $4.3 billion in a deal that accelerates the involvement of major oil companies in the development of the Marcellus Shale.
The transaction will give Atlas Energy shareholders $38.25 cash per share plus units in Atlas Pipeline Holdings, L.P., a partnership controlled by Atlas Energy. Those units are valued at $5.09 per Atlas Energy share, bringing shareholders' consideration to $43.34 per share, a 37 percent premium over Monday's closing price.
Chevron will also assume $1.1 billion in Atlas Energy debt.
Chevron is the latest major energy company to make a big acquisition in the natural gas sector, following Exxon Mobil and Royal Dutch Shell.
Atlas is a big player in the Marcellus Shale of Western Pennsylvania and elsewhere.
Until now, Chevron hasn't made any significant moves to expand into America's vast underground shale deposits. It's waited while other energy companies have rushed to tap shale wells with new drilling technologies that can produce gas cheaper than before.
With natural gas prices continuing to languish, analysts say Chevron is striking at a time when it can get a good price for those assets.
"When the market is weak, that's when it's time to act," Argus Research analyst Phil Weiss said.
Despite enormous supply and weak consumption, natural gas is expected to be in high demand in coming years because it can be found all over the U.S. and produces fewer emissions compared with other fossil fuels.
The companies announced the agreement before the markets opened today. After the markets closed Monday, Atlas Energy released its third quarter results, which blew past analysts' estimates. The company posted profits of $16 million, or 20 cents per share, compared with a loss of $714,000, or 2 cents per share, a year ago. Revenues were $371 million, versus $339.8 million for the same period last year.
Analysts had projected profits of 6 cents per share.
News of the deal helped to send energy stocks upward today. In mid-afternoon trading, Range Resources' shares were selling for $42.84, up $2.11; EQT Corp., $40.40, up $1.85; Cabot Oil & Gas, $33.84, up $1.30; and Consol Energy, $41.85, up $1.24.
Atlas Energy's stock was at $42.37, up $10.65; Chevron's at $83.93, down 87 cents.
First Published November 9, 2010 7:54 am
