Chevron To Acquire Atlas Energy

Chevron Corp. is acquiring Atlas Energy for $3.2 billion in cash and assumed pro forma net debt of approximately $1.1 billion.

The acquisition will provide Chevron with an attractive natural gas resource position primarily located in southwestern Pennsylvania’s Marcellus Shale.  The acquisition is subject to certain Atlas Energy restructuring transactions, approval by Atlas Energy shareholders and regulatory clearance.

“This acquisition is the right opportunity for Chevron,” said George Kirkland, Chevron vice chairman.  “We are acquiring a company that has one of the premier acreage positions in the prolific Marcellus. The high quality resource, competitive cost structure in the Marcellus, strong growth potential of the asset base and its proximity to premier natural gas markets make this targeted acquisition a compelling investment for Chevron.” He added, “The Atlas Energy assets further advance Chevron’s global shale gas position, complementing the company’s recent entrance into shale gas opportunities in Poland, Romania and Canada.”

“Atlas Energy brings to us a highly skilled team with strong operating experience and established land management capabilities, noted Gary Luquette, president for Chevron North America Exploration and Production. “This knowledge, together with Chevron’s technical expertise and global experience with large scale project developments, will create strong organizational synergies.”

When the transaction closes, Chevron is expected to gain Atlas Energy’s estimated nine trillion cubic feet of natural gas resource, which includes approximately 850 billion cubic feet of proved natural gas reserves with approximately 80 million cubic feet of daily natural gas production. The assets in the Appalachian basin consist of 486,000 net acres of Marcellus Shale; 623,000 net acres of Utica Shale; and a 49% interest in Laurel Mountain Midstream LLC, a joint venture which owns over 1,000 miles of intrastate and natural gas gathering lines servicing the Marcellus.  Assets in Michigan include Antrim producing assets and 100,000 net acres of Collingwood/Utica Shale.

Marcellus Joint Venture

In April 2010, Atlas Energy entered a joint venture to develop its Marcellus assets with a wholly-owned affiliate of Reliance Industries Limited.  Under the agreement, Chevron will assume Atlas Energy’s role as operator with 60% participation in the Marcellus joint venture, under the original agreement terms between Atlas Energy and Reliance.  Reliance will continue to fund 75% of the operator’s drilling costs, up to $1.4 billion.

Terms of Acquisition

Under the terms of the agreement, Atlas Energy shareholders will receive $38.25 in cash for each share of Atlas Energy stock and a pro-rata distribution of over 41 million units of Atlas Pipeline Holdings, L.P. following certain restructuring transactions to be completed immediately prior to the merger closing.  Based on AHD’s most recent closing price on Nov. 8, these units will have a value of $5.09 per Atlas Energy share. In the restructuring transactions, Atlas Energy will:

• Acquire a 49% interest in Laurel Mountain Midstream LLC from Atlas Pipeline Partners L.P. for a cash consideration of $403 million;

• Sell all interests in existing investment partnerships, 175 billion cubic feet of proved natural gas reserves, and certain other energy assets to AHD for a consideration of $250 million, comprised of $30 million in cash and $220 million in newly issued AHD units.





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