The Price of Poker Just Went Up

Dominion has agreed to assign its Marcellus rights on 205,000 acres to privately held Antero Resources of Denver, Co. for $552,000 million. Considering the accompanying 7.5% royalty override to Dominion, this transaction represents the highest amount paid to any rights holder for access to the play. The previous high price for substantial acreage was XTO's $600 million deal for Linn Energy's 152,000 acres in the same Southwest PA/Northern WV region but that deal was an outright purchase of all rights and existing production, and included $50 million of infrastructure. During XTO's Q1 conference call, Chairman Bob Simpson estimated that net-net, they had paid about $1000/acre for the Marcellus. My estimate was $1500. In this one, Dominion retains all rights to existing production and all other formations and will still receive about $2700/acre in cash. Dominion played this hand beautifully.

In addition, Dominion is announcing the proposed development of Dominion Keystone, a pipeline project that would transport new natural gas supplies from the Appalachian Basin to markets throughout the eastern United States

Full Story at http://www.dom.com/news/gas2008/pr0630_print.jsp