Consol to Buy Dominion's Drilling for $3.475 Billion

Monday, 15 Mar 2010 11:17 AM


  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink

Consol Energy Inc. said Monday it has agreed to buy Dominion Resources Inc.'s Appalachian exploration and production business for $3.475 billion, substantially increasing its natural gas reserves and production capacity.

Once complete, the coal and natural gas company said it will take a leading position in the strategic Marcellus Shale, a rock bed the size of Greece that lies about 6,000 feet beneath New York, Pennsylvania, West Virginia and Ohio. It is potentially the country's most productive natural gas source.

Consol, which is based in Canonsburg, Pa., near Pittsburgh, also said its natural gas business is expected to account for as much as 35 percent of the company's total revenue. It needs to raise about $4 billion to fund the acquisition and is targeting a mix of equity and debt, the company said.

The transaction, subject to regulatory approvals, is expected to close by April 30.

Consol shares fell $4.21, or 7.8 percent, to $50.13 in morning trading. Dominion shares rose 25 cents to $30.94 after touching a 52-week high of $40.29 earlier in the session.

Dominion's exploration and production business is one of the oldest and most active drillers in Pennsylvania and West Virginia. Dominion is based in Richmond, Va.

Consol will acquire a total of 1.46 million oil and gas acres from Dominion along with over 9,000 producing wells, the company said.

The acquisition is a "strategically compelling transaction" that will transform Consol into a "leading diversified energy company with a strong position in natural gas as well as coal," CEO J. Brett Harvey said in a news release.

Consol, which has operations in West Virginia, Virginia, Kentucky, Pennsylvania and Utah, has responded to tougher environmental regulations of coal mining by expanding its gas business. At the start of the year, Harvey told Wall Street that he considered mining a cash cow that would be tapped to fund increased production from CNX Gas. Consol owns more than 83 percent of CNX, which already has a sizable stake in the Marcellus shale as well as coalbed methane wells in Virginia.

"The investments in coal operations are primarily in the efficiency area to maintain our position as a low cost producer," Chief Financial Officer Bill Lyons said during the company's earnings conference call in January. "The investments in the gas company are focused on growth with emphasis on expanding our Marcellus Shale acreage position, increasing drilling, and increasing production."

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
Zip Code:
Privacy: We never share your email.
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

University Muzzles Free Speech

Friday, 19 Dec 2014 09:57 AM

Honestly, sometimes leftist thought police surprise even me, not so much with their unreasonableness, extremism, and tyr . . .

Christianity Under Fire Here at home

Tuesday, 16 Dec 2014 10:16 AM

Thought police act first, then investigate later.
 . . .

'Architect' Gruber's Admission Warrants Repeal

Friday, 12 Dec 2014 09:26 AM

Instead of using this space to pretend the newly released CIA "torture" report confirms that the United States is the mo . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved