Atlas sold most of its assets in Pennsylvania’s Marcellus Shale in 2010 to Chevron Corp. for $4.3 billion. Its reemergence signals an attempt by Cohen to retake positions in oil and gas fields when other operators may be overextended and desperate to exit because of low commodity prices.
“The situation is really almost overwhelming,” Cohen, the company’s chief executive, said in a May 8 earnings call with analysts. “I would say that every single day we see a couple of possibilities and part of our skill, of course, is being able to choose the ones that we want to pursue.”
He said some larger operators want to sell noncore assets quickly. “They just want to get rid of it, and the deals you can make are sometimes, as we have demonstrated, amazingly good,” Cohen said.
Atlas in March announced it was acquiring 277 billion cubic feet of proven reserves from Carrizo Oil & Gas Inc. in the Barnett Shale for $190 million, or about 69 cents per thousand cubic feet. “You heard that correctly,” Cohen told analysts. “Sixty-nine cents per 1,000 cubic feet.”
The price it announced for the Titan assets Thursday is slightly higher, about 74 cents per thousand cubic feet of reserves, and the property contains fewer producing wells than the Carrizo acquisition so it will generate less immediate income.
The Barnett Shale near Fort Worth is where drillers pioneered the technique of combining hydraulic fracturing with horizontal drilling to tap into shale formations, a method that has revived the domestic oil and gas industry in the last decade.
But shale-gas drilling has become so successful that the market is oversupplied, and prices plummeted from about $4 last year to as low as $2 per thousand cubic feet, making wells unprofitable in formations like the Barnett, where drilling activity has slowed.
“This deal fits into a pattern we’ve seen, where bargain hunters can get assets and collect cash from the producing wells and try and wait it out until prices increase again,” Will Brackett, managing editor of the Powell Shale Digest.
Atlas in April announced it had acquired a 50 percent interest in a 14,500-acre leasehold in an Oklahoma oil and gas field for about $18 million from Equal Energy Ltd.
Contact Andrew Maykuth at 215-854-2947 or email@example.com or follow on Twitter @Maykuth