Rice Energy agrees to purchase Alpha shale assets
CANONSBURG – Rice Energy Inc. said Tuesday it entered into a stalking horse asset purchase agreement with a subsidiary of Alpha Natural Resources, Inc. to acquire 27,400 acres of undeveloped Marcellus and Utica shale assets in Greene County, for $200 million.
According to a news release, Rice would acquire leasehold interest in the 27,400 acres, plus an additional 3,200 gross acres owned in fee that are leased to Rice Energy and currently generating royalty cash flow. In addition, the owned acreage includes rights to the deep Utica on 23,500 net acres.
“This prospective acreage acquisition is consistent with our strategy of acquiring core acreage with strong returns, an attractive lease expiry profile and undedicated midstream,” said Toby Rice, president and chief operating officer.
Rice noted the core acreage is directly adjacent to his company’s existing proved developed Marcellus position in Greene County and increases its inventory of low-risk, core dry gas Marcellus locations by 37 percent.
“Additionally, the producing royalty interests and the emerging deep Utica acreage provide a compelling mix of near-term cash flows and long-term significant resource potential,” Rice said.
Alpha filed to reorganize itself under Chapter 11 of the U.S. Bankruptcy code Aug. 3, 2015. Through the chapter 11 proceeding, Alpha is conducting a sale of these assets pursuant to section 363 of the Bankruptcy Code.
Rice Energy and Alpha intend for the proposed asset purchase agreement to constitute a “stalking horse bid” in accordance with the bidding procedures approved by the bankruptcy court; however, Rice Energy’s bid protections, such as certain break-up fees and expense reimbursements, are subject to court approval.
If Rice Energy’s “stalking horse bid” is approved by the bankruptcy court, Alpha may be required to hold an auction for these assets before it can consummate the acquisition. Consummation of the acquisition would be subject to Rice Energy’s being selected as the successful bidder in any such auction and bankruptcy court approval.
Southpointe-based Rice Energy is an independent natural gas and oil company engaged in the acquisition, exploration and development of natural gas and oil properties in the Appalachian Basin.