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Atlas Shareholders Approve Chevron Merger

Atlas Energy Inc. shareholders have overwhelmingly approved a proposed $4.3 billion merger with Chevron Corp., Pittsburgh-based Atlas said Wednesday.

Approximately 99.7% of the votes cast at a meeting in Philadelphia were in favor of the merger, which is expected to close promptly, the company said.

Chevron, which had eschewed domestic shale plays in favor of the deepwater, in November offered to buy shale-savvy Atlas (see Shale Daily, Nov. 10, 2010). Upon closing, Atlas shareholders would receive $38.25/share in cash and a pro-rata share of a distribution of more than 41 million common limited partnership units of Atlas Pipeline Holdings LP.

Atlas has close to 486,000 net acres in the Marcellus Shale. It also holds an estimated 623,000 acres in the Utica Shale, as well as close to 370,000 acres in Michigan in the Antrim Shale and the Collingwood/Utica play (see Daily GPI, May 10, 2010). In addition, Atlas has about 120,000 acres in the Chattanooga Shale of Tennessee and 123,000 acres in the New Albany Shale.

Chevron would also gain Atlas' joint venture (JV) partnership in the Marcellus play that was put together last year with India's Reliance Industries Ltd. Chevron would assume the role of operator with 60% participation under the original agreement terms (see Daily GPI, April 23, 2010; April 12, 2010). Reliance would continue to fund 75% of the operator's drilling costs, up to $1.4 billion.

A 49% interest in the Laurel Mountain Midstream LLC, a JV with The Williams Cos., also is part of the transaction. The partners own more than 1,000 miles of intrastate and natural gas gathering lines servicing the Marcellus (see Daily GPI, June 3, 2009).

When the transaction closes, Chevron would gain an estimated 9 Tcf of gas resources from Atlas, including 850 Bcf of proved reserves and 80 MMcf/d of production.

Chevron recently greed to pay an extra 10 cents/share to nondirector shareholders of Atlas to settle a lawsuit challenging the proposed takeover (see Daily GPI, Feb. 10). Excluding the 4% of shares held by directors, the additional payment will add more than $7 million to Chevron's $4.3 billion offer. Following Chevron's offer, several Atlas shareholders sued, alleging that management breached fiduciary responsibilities by not obtaining the best offer. The lawsuits were combined, and a settlement was filed in a memorandum of understanding on Feb. 3, according to a regulatory filing by Atlas.

Reliance protested the merger, saying Chevron was never mentioned when it was negotiating its JV with Atlas, and suggesting it might make a counterproposal (see Daily GPI, Feb. 4).

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