Alpha to Sell Stake in Shale Venture for $300 Million

Alpha Natural Resources Inc., 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 rose 15 percent to $7.53 in New York, the biggest gain since October 2012.

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.

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

Massey Energy Co., a coal producer acquired by Alpha in 2011, agreed to pay $265 million to settle a suit brought by a Massachusetts pension fund accusing the company of making misleading disclosures about its safety record following a deadly mine blast in 2010, State Treasurer Steven Grossman’s office said today in a statement.

The agreement is subject to approval by the federal court in Beckley, West Virginia, Alpha said in a filing dated today.

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