Introduction

The Energy Information Administration reviews mergers, acquisitions, and alliances by companies that are respondents to Form EIA-28 (Financial Reporting System (FRS)), or that result in a company that meets the FRS reporting criteria. The review is confined to a presentation of pertinent operating data of the companies and assets involved in the transaction. The FRS reporting criteria are 1 percent, or more, of U.S. crude oil and natural gas liquids, or natural gas production, or 1 percent, or more, of U.S. refinery crude oil distillation capacity.

Background

On November 9, 2010, Chevron Corporation and Atlas Energy Inc. announced that Chevron had agreed to acquire Atlas Energy for a total amount of $4.3 billion, including $3.2 billion of cash and the assumption of $1.1 billion of debt. The proposed transaction will pay Atlas stockholders a premium of approximately 20 percent relative to the closing stock price on November 8, 2010.^a The transaction, which exclusively involves U.S.-based assets, includes Atlas' wholly owned oil and gas production assets in the Appalachian Basin (including the Marcellus Shale), the Michigan Basin, and the Illinois Basin; jointly owned pipeline assets servicing the Marcellus Shale region; and a Marcellus production joint venture with Reliance Industries. Restructuring transactions concerning the pipeline and joint venture assets will immediately precede the closing of Chevron's acquisition of Atlas, subject to shareholder and regulatory approval.

According to published reports, the transaction allows Chevron to acquire "a company that has one of the premier acreage positions in the prolific Marcellus [Shale of southwestern Pennsylvania, which has a] ... competitive cost structure ... and proximity to premier natural gas markets."^b This transaction (in the absence of any divestitures) increases Chevron's U.S. natural gas production by 7 percent and its U.S. natural gas reserves by almost 38 percent.

^a According to The Wall Street Journal the closing share price was $31.72/share and the proposed transaction will pay $38.25/share. See Jarzemsky, Matt, "Chevron to Acquire Atlas Energy for $3.2 Billion," The Wall Street Journal (November 9, 2010).

^b Chevron Corporation, "Chevron Announces Agreement to Acquire Atlas Energy," (November 9, 2010). Available on the internet at http://investor.chevron.com/phoenix.zhtml?c=130102&p=irol-newsArticle&ID=1493777&highlight= (as of November 9, 2010).

URL: http://www.eia.gov/emeu/finance/mergers/cvx_atlas_index.html

File last modified: November 12, 2010

A PDF-format version (2 pages, 19 kilobytes) is also available

To be automatically notified via e-mail of updates to this report and to other Energy Finance products, go to the list-serve sign-up page, enter your e-mail address, select the box beside "Financial and Industry Analysis," and then press "subscribe." You will then be notified within an hour of any updates.