One of the U.S.’s largest coal-mining companies, Alpha Natural Resources, is growing its Marcellus Shale natural gas exploration operations.
The Bristol, Virginia-based company said July 1, it’s buying EDF Trading Resources’ share of their 50-50 joint venture for $126 million.
“We expect 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,” said Brian Sullivan, Alpha’s chief commercial officer.
PLR’s (the JV’s formal name, Pennsylvania Land Resources Holding) concentrated position when it entered into the joint venture in May 2013 was 12,000 net acres, which has since more than doubled. Additionally, two well pads have been constructed with a total of 14 permitted wells.
“Our current leasehold position gives us an immediate drilling inventory of more than 50 locations,” Sullivan added.
Alpha and EDF entered into the JV in May 2013 and pledged to develop more than 20,000 acres in southwestern Pennsylvania with at least six wells being drilled by the end of last year.
The buyout comes amid reports that Alpha has engaged consultants to help restructure its debt.
This isn’t Alpha’s first experience with shale. Its joint venture with Rice Energy yielded at least $100 million for the company when Canonsburg, Pennsylvania-based Rice took its company public last year.
The acquisition by Alpha demonstrates that despite depressed natural gas prices companies still see opportunity in drilling for natural gas in the Marcellus. It appears that Alpha is making a long-term strategic move to ensure the company’s viability.
Greene County is county that has considerable drilling over the last five years. The success of other E&P Companies in the county probably was factor in Alpha’s decision.