Consol acquires drilling rights from Dominion
Consol Energy Inc. will pay $190 million to Dominion Resources Inc. for drilling rights on land in West Virginia, the companies announced on Tuesday.
Dominion will let Consol drill on 90,000 acres it controls for storage fields in Lewis and Harrison counties. Consol said the deal could produce about 350 drilling spots, and about half of the land probably will have wet gas, meaning it contains other hydrocarbons such as ethane and propane that often fetch a higher price than natural gas.
Consol has acquired large tracts of drilling rights in the past year — including at Pittsburgh International Airport and Ryerson Station State Park — as it ramps up drilling operations. It sold five West Virginia coal mines last week to help it raise money to support a shift from coal mining to gas drilling.
“This transaction reinforces Consol Energy's commitment to being a leading natural-gas producer in the Appalachian Basin,” Chairman and CEO J. Brett Harvey said in a statement announcing the deal. “These parcels represent what could be the largest untapped contiguous acreage in the southern core of the Marcellus shale.”
Dominion, which sold Consol 500,000 acres for $3.5 billion in March 2010, got a commitment from Consol to be the anchor shipper on Dominion's transmission pipeline system as part of the deal. Dominion announced that it has commitments to ship 500,000 dekatherms per day of natural gas westward from West Virginia, half of which will come from the agreement with Consol.
In the next year, there is likely to be an increasing amount of gas shipped from the Marcellus shale westward, Robert W. Baird & Co. Inc. advised investors in notes about the deal.
Timothy Puko is a Trib Total Media staff writer. Reach him at 412-320-7991 or email@example.com.