Chevron Corp. could make a bigger push into U.S. unconventional plays once the acquisition of shale operator Atlas Energy Inc. is completed, CEO John Watson said Friday.

Last November Chevron offered Atlas $4.3 billion in a buyout (see Shale Daily, Nov. 10, 2010). When completed the mega-deal would hand the oil major a solid position in several U.S. shale plays: close to 486,00 net acres in the Marcellus Shale, 623,000 acres in the Utica Shale, 270,000 acres in the Antrim Shale, 100,000 acres in the Collingwood/Utica play, close to 120,000 acres in the Chattanooga Shale of Tennessee, and 123,000 acres in the New Albany Shale.

Atlas shareholders are expected to vote on the offer in March, and Watson, who's optimistic that the deal will be accepted, is looking ahead to integrating the operations into the California-based company.

Chevron won't have to wait long to see some production from the new shale operations. In addition to acreage, Chevron is acquiring an Atlas joint venture (JV) partnership in the Marcellus play with India's Reliance Industries Ltd. Under terms of the JV, Chevron would assume Atlas' current role of operator with 60% participation under the original agreement terms (see Daily GPI, April 23, 2010). Reliance would continue to fund 75% of the operator's drilling costs, up to $1.4 billion.

"We feel good about the Atlas acquisition," Watson said. "It's a low-cost resource base and we continue to feel good about the economics, given the carry...There's a favorable carry, and activity in the Marcellus would ramp up as had been done by Atlas and as was planned to be done...We will see more drilling activity there with the switch into a production-mode once Atlas and many of its employees are incorporated."

Although Chevron was slower than some of its peers in making an offer on U.S. shale resources, Watson hinted that the Atlas acquisition is not the last.

"When we talked about unconventionals last year, we indicated that we thought prices were, frankly, a bit high at that time. We have an active interest in shale gas properties and have been accumulating opportunities overseas in Poland, Romania, Canada..." Chevron is scheduled to drill its first shale well in Poland later this year, Watson said.

As 2010 progressed, "we saw values improve" in the United States, which led to the Atlas offer. It was the "kind of low-cost entry we were looking to make...The first order of business is to close that transaction...Having said that, we are in the business of acquiring assets. We do so through leases, through discovered resources [and] periodically through acquiring companies. That effort will continue if we see the right opportunities in shale."

As to when or where that right opportunity may be, Watson could not say.

"We try to be ahead of the game or wait for the right opportunity to acquire resources for the company, as the case may be."

Outsiders may not understand the economics of why the majors may have been slower to embrace shale.

"When you look at the unconventional business, it was developed by independents and smaller producers," Watson said. "There's a reason for that. A great deal of land work has to be done, farm-to-farm, property-owner to property-owner. In due course, Chevron had the opportunity to come in. We have something to offer from a technical point of view...and we will continue to look for new opportunities."