Alpha diversifies coal holdings into shale

ALPHA Natural Resources is seeking to leverage off its significant coal presence in Pennsylvania by controlling a highly economic natural gas development program composed of over 25,000 net acres and associated infrastructure in the Marcellus Shale.

Lou Caruana

Alpha subsidiary Pennsylvania Services Corporation (PSC) acquired the 50% interest in its natural gas exploration and production joint venture, Pennsylvania Land Resources (PLR) in a $US126 million transaction.

This makes PSC the sole owner and operator of the venture, Alpha Natural Resources Chairman and CEO Kevin Crutchfield said.

“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,” he said.

PLR also controls rights to develop gas resources located at other depths, including the deeper Utica Shale, on the majority of the leased acreage and several adjoining properties.

PSC initially formed the PLR joint venture in May 2013 to exploit a large, concentrated Marcellus Shale gas resource in Greene County, Pennsylvania.

The concentrated acreage position is considered to be in the “core of the core” of the Marcellus Shale, one of the most profitable natural gas plays in the US, and located adjacent to some of the most productive wells in the basin to date.

PLR's large, contiguous acreage position will allow efficient development of the resource with long laterals, maximizing both well productivity and returns. Significant existing pipeline capacity located adjacent to or crossing PLR's leased acreage also provides strong transportation optionality.

Alpha executive vice president Brian Sullivan said the company expects drilling on the first pad to begin in the next 30 days, with an estimated four wells completed by the first quarter of next year.

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