Alpha to Sell Stake in Shale Venture for $300 Million

Alpha Natural Resources Inc. (ANR), the second-largest U.S. coal producer, agreed to sell a 50 percent stake in a shale-gas joint venture to Rice Energy for $300 million in cash and shares.

Alpha will get $100 million in cash and $200 million of stock in closely held Rice, which plans to hold an initial public offering, Bristol, Virginia-based Alpha said today in a statement. As part of the deal, Alpha Chairman and Chief Executive Officer Kevin Crutchfield will be entitled to join Rice’s board.

Alpha and Rice entered into the 50-50 venture in 2010 to develop a portion of Alpha’s natural gas holdings in the Marcellus shale formation in Pennsylvania.

“The transfer helps the company to crystallize the value of these assets sooner than expected,” Lucas Pipes, a New York-based analyst at Brean Capital LLC, said today in a note, referring to Alpha. He has a hold rating on Alpha’s shares.

Alpha rose 6.7 percent to $7.01 at 9:55 a.m. in New York.

Rice, a shale gas exploration and production company, announced plans to sell shares to the public in a separate statement today.

To contact the reporter on this story: Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.