Dominion, Antero Resources Amend Marcellus Shale Rights Agreement to 114,000 Acres

Dominion, Antero Resources Amend Marcellus Shale Rights Agreement to 114,000 Acres

Dominion announced that it is amending its agreement with Antero Resources, and will assign drilling rights to 114,259 acres in the Marcellus Shale prospect to Antero for about $347 million, or about $3,037 per acre, a higher value per acre than the prior agreement. Dominion expects to close the amended agreement on September 30.

The amount assigned is reduced from $552 million for 205,000 acres because of Antero’s difficulty in obtaining follow-on financing in the current market turmoil.

Dominion will still receive a 7.5 percent royalty interest on future natural gas production from the assigned acreage. Dominion will retain the drilling rights in traditional formations both above and below the Marcellus Shale interval and will continue its conventional drilling program on the acreage.

Dominion has drilling rights on 600,000 to 800,000 acres in the Marcellus Shale formation. The remaining acreage that was in the original agreement with Antero will now be included in the company’s effort to market additional Marcellus Shale acreage.

Antero remains one of the anchor tenants of the proposed Dominion Keystone pipeline, which is designed to transport Marcellus Shale production to market. Dominion continues to negotiate binding precedent agreements with potential customers following an open season that concluded in August.

The amended agreement has no effect on Dominion’s 2008 operating earnings guidance of $3.10 to $3.15 per share, nor on its 2009 operating earnings outlook of $3.30 to $3.45 per share.

Proceeds after tax are expected to be approximately $205 million. The company intends to use the proceeds initially to reduce outstanding short-term debt. Longer term, the proceeds are expected to partially offset previously announced equity issuances in 2009. Barclays Capital Inc. acted as financial advisor to Dominion on the transaction.

Dominion is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 27,000 megawatts of generation, 14,000 miles of natural gas transmission, gathering and storage pipeline and 6,000 miles of electric transmission lines. Dominion operates the nation’s largest natural gas storage facility with 975 billion cubic feet of storage capacity and serves retail energy customers in 12 states. For more information about Dominion, visit the company’s Web site at

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