Pennsylvania Services Corp. (PSC) acquired the 50% interest in Pennsylvania Land Resources Holding Co. LLC (PLR) for $126 million, allowing coal supplier parent company Alpha Natural Resources Inc. (ANR) to expand and control development of Marcellus Shale acreage, ANR said July 1. PLR is owned by EDF Trading Resources LLC (EDFTR).
PSC will be the sole owner and operator of PLR, which is a joint venture (JV) formed in May 2013 by EDFTR and PSC to support a concentrated gas resource in Greene County, Pa., in the “core of the core” of the Marcellus, ANR added.
Long laterals that maximize well productivity and returns will be used in the contiguous acreage. There is pipeline capacity nearby, the company said.
Drilling on the first pad will begin within the month, and by the end of next year’s first quarter, four wells should be completed, said Brian Sullivan, Alpha's executive vice president and chief commercial officer.
When PLR entered the JV in May 2013, it had 12,000 net acres, and has since more than doubled this amount and added two well pads with 14 permitted wells.
Kevin Crutchfield, Alpha Natural Resources’ chairman and CEO, stressed growth potential associated with the transaction. "Alpha has broad resource experience already in this basin and this acquisition positions us to derive exceptional future value from these gas assets and operational benefits with our existing coal operations,” said Kevin Crutchfield, ALR’s chairman and CEO.
PLR also controls rights to develop deeper gas resources elsewhere, including the deeper Utica Shale, on the majority of the leased acreage and several adjoining properties.
EDFTR is a subsidiary of EDF Trading, a market services provider for wholesale gas and power in the U.S. and Canada. EDF Trading is a subsidiary of Europe’s EDF Group, ADR said. When EDF exited North American upstream E&P, ALR acquired EDFTR’s interest.
BMO Capital Markets was Alpha's financial adviser and provided a fairness opinion.
Alpha Natural Resources Inc. is based in Bristol, Va.
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