NEW YORK ― Oil and gas producer Noble Energy Inc. will pay $3.4 billion to Consol Energy Inc. to form a partnership to develop Consol’s properties in the Marcellus Shale.
The move is Noble’s first into the Marcellus shale, one of the largest natural gas fields ever discovered, and comes as natural gas prices slump below $4 per million British thermal units.
The rapid development of the field that spreads from West Virginia and Ohio across Pennsylvania and into New York has spurred environmental worries around the hydraulic fracturing used to produce the fuel.
A U.S. Department of Energy panel last week called for greater disclosure around that drilling technology.
Under the agreement, Noble will pay $1.07 billion for a 50 percent stake in coal and gas producer Consol’s 663,350 undeveloped acres and fund $2.13 billion of Consol’s drilling costs over an eight-year period.
That spending will be capped at $400 million per year, and drops off when gas prices are below $4.
Noble will also buy a 50 percent stake in Consol’s 70 million cubic feet per day of existing Marcellus production for $219 million.
Noble said Consol’s properties had proved reserves of 400 billion cubic feet equivalent (cfe) at the end of 2010, but are estimated to contain as much as 7.4 trillion cfe.
Net production for Noble could reach 600 million cfe per day in 2015 and is expected to grow into the next decade.
Shares of Consol rose 5.5 percent in premarket trading to $44.75.