Tuesday, November 09, 2010

Atlas Hits A Gusher
Well, Atlas Energy Inc.'s stockholders hit a gusher.  Today Chevron acquired Atlas for $3.2 billion or $43.34 per share, a 37% premium over Monday's closing price.  Atlas stockholders will receive $38.25 in cash and $4.09 of units in Atlas Pipeline Holdings.  Chevron's attraction was all Atlas' acreage in the Marcellus Shale natural gas region, which spreads over Western New York, Western Pennsylvania, West Virginia and parts of Ohio.  Atlas controls 622,000 acres in the Marcellus Shale formation with 1 trillion cubic feet of natural gas reserves.  A  Bloomberg article quotes an RBC analyst who figures that Chevron paid $9,000 per acre.  Last spring Atlas entered into a joint venture with India's Reliance Industries, Ltd, at $14,000 per acre.  While not a direct comparison, Atlas contributes its Marcellus Shale lease interests to its limited partners at a value of $45,000 per acre. 

For many years Atlas tapped a network of independent broker / dealers to raise capital for limited partnerships, which in effect were a form of corporate finance for Atlas.   The Atlas oil and gas partnerships are long-lived programs, so I am guessing there must be some kind of plan to continue to manage or to liquidate these assets.  The syndication business is moving to Atlas Pipeline Holdings, so I am guessing Atlas will keep the pushing out its rich, sponsor-feed energy programs.  It looks like any  assets in Michigan and Marcellus Shale (some that are owned by partnerships) are staying with Atlas and will be managed by Chevron.  I have read through Atlas' 8-K discussing the acquisition, but other than what is stated above, there is not much more information.   This is a fluid situation that needs watching.

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