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Publish Date : 14-Apr-2016

The Canonsburg-based oil and gas company Rice Energy Inc. has made an announcement on its strategy to acquire the natural gas assets of the Virginia-based insolvent coal firm Alpha Natural Resources Inc. at an auction process.

The company has decided to pay $200 million for Alpha provided that no other bidders participate at the sale.

Rice Energy has also disclosed that it will sell 20 million shares of its stock for supporting its acquisition of the natural gas assets of Alpha, which the Virginia company earlier considered among its most valuable assets.

The Canonsburg firm previously had Alphas CEO on its Board of Directors.

The natural gas assets of Alpha comprise 27,400 undeveloped acres in Greene County with Marcellus and deep Utica shale rights, and almost 3,000 acres, which Rice has taken on lease.

Rice has disclosed on its website that the firm now controls the areas beside Alphas assets and has carried out substantial due diligence on the assets and the sale process generally, and thus, it has competitive advantage over others to acquire the oil and gas assets of Alpha.

Both the companies have history of partnership for a joint venture of other oil and gas properties in southwestern Pennsylvania.

Rice has revealed that it will use the stock sale proceeds for general purposes and maybe to support its capital budget plan for2017, in the event of its failure to secure the deal.

A different stakeholder of Rice, an associate of Natural Gas Partners, has also offered as much as 3.5 million shares in the sale.

The stakeholder now owns a 10.5% of common stock of Rice.

Rices stock closed at $16.66 a share on Tuesday. It has climbed 45% over the last month.

In last August, Alpha had filed for bankruptcy protection. The Virginia-based firm, which owns the Western Pennsylvania-based Cumberland Mine, received a $500 million worth of so-called stalking horse bid for its finest coal and gas assets from a debtor group in early 2016, paving way for a public auction for the same.

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