Dominion to Lease Marcellus Rights to Consolidated in West Virginia

   By Tess Stynes 
 

Dominion Resources Inc. (D) closed on deals with two natural-gas producers to lease about 100,000 acres of Marcellus share rights under several of its natural-gas storage fields in West Virginia.

Dominion expects the move to result in payments of about $200 million over nine years, as well as royalties.

Natural-gas and coal producer Consol Energy Inc. (CNX) acquired the gas drilling rights to nearly 90,000 of the acres, as well as gas rights in the Marcellus Shale and the Upper Devonian formations in the storage fields for as much as $190 million.

Dominion will retain the storage fields, but permit directional drilling into the much deeper Marcellus shale formation.

Dominion and Consol also agreed to a 15-year contract to transport 250,000 dekatherms a day from West Virginia to two pipeline interconnections in Ohio--one to the Texas Eastern pipeline and the other to the Rockies Express Pipeline--starting in November 2016. Dominion also has contracts with other producers to transport gas to interconnections in Ohio.

Noble Energy Inc. (NBL) , Consol's joint venture partner in the Marcellus Shale, is exercising its right to participate at a 50% level.

Dominion has also farmed out approximately 13,000 acres to Triana Energy LLC.

Dominion shares closed Monday at $63.74 and Consol shares closed at $37.10. Neither was active premarket.

Write to Tess Stynes at [e-mail]

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