Alpha Natural Resources, Inc.
) has entered into an agreement with Rice Energy to sell its 50%
stake in their Alpha Shale Resources Joint Venture ("JV") in
Marcellus to the latter.
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Per the transaction, Rice Energy will pay $300 million to Alpha
Natural Resources, which includes $100 million in cash and $200
million as common stock.
Rice Energy is a U.S.-based exploration and production
("E&P") company, focusing on the acquisition and development
of unconventional oil and natural gas assets. The company will
offer a portion of shares from its upcoming initial public
offering to Alpha Natural Resources as per the sales
Alpha Natural Resources had invested $30 million and committed
7,500 acres in the resource rich Alpha Shale JV in the Marcellus.
The swap of the stake with both cash and stock in the Rice Energy
IPO will lend substantial upside to Alpha Natural Resources. The
company can reinvest the proceeds toward its core coal business
with demand expected to rise in the near term from higher steel
Bristol, Va.-based Alpha Natural Resources, Inc., along with its
subsidiaries, extracts, processes and markets steam and
metallurgical coal in Virginia, West Virginia, Kentucky,
Pennsylvania and Wyoming.
In 2010, Alpha Natural Resources and Rice Energy jointly formed
the Alpha Shale Resources JV to develop the Marcellus natural gas
holdings in Greene County, Pa. The JV contributed roughly $6
million to Alpha Natural Resources' third-quarter 2013 earnings
before interest, tax, depreciation and amortization. The
aforesaid transaction will enable the company to accumulate funds
for its growth projects alongside the ownership right to Rice
Alpha Natural Resources currently has a Zacks Rank #2 (Buy).
Other stocks in the sector that are currently performing well
Bonanza Creek Energy, Inc.
), each with a Zacks Rank #1 (Strong Buy), and
Suncoke Energy Partners, L.P.
) with a Zacks Rank #2 (Buy).