Chevron buys Marcellus shale deposit owner Atlas Energy

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A core of shale
Image caption,
Chevron will get access to the Marcellus shale deposit - rock from which gas is a natural by-product

US energy giant Chevron has agreed to buy Atlas Energy for $4.3bn (£2.7bn).

Atlas owns a 60% stake in a joint venture with India's Reliance Industries to exploit the Marcellus shale gas deposit in Pennsylvania

It means Chevron has chosen to follow ExxonMobil and Shell, by entering the burgeoning US industry for shale - a rock deposit that produces natural gas.

Chevron will pay $3.2bn in cash and its own stock, and will also take over $1.1bn of Atlas' debts.

Atlas shareholders will receive a package worth $43.34 per share - a 37% premium to Monday's closing price.

This will include $38.25 per share in cash, as well as shares in a subsidiary of Atlas that will hold non-core gas assets, and that is being spun off as part of the acquisition deal.

Atlas' shares accordingly jumped 34% at the open of trade on Tuesday after the deal was announced.

Chevron's share price meanwhile dropped about 1%.

"We are acquiring a company that has one of the premier acreage positions in the prolific Marcellus," said Chevron's vice chairman, George Kirkland, in a press release.

Atlas owns 486,000 net acres of Marcellus shale, as well as 623,000 acres of Utica shale.

Chevron will now take over responsibility for the up to $1.4bn cost of Atlas' share of the bill for drilling the Marcellus deposit.

Atlas' chief executive was also upbeat about the deal, noting in a press release that shareholders will have enjoyed an 800% return on their investment since the company was first floated on the stock exchange six and a half years ago.

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