Alpha works out deal to sell natural gas assets in Pennsylvania

Coal producer Alpha Natural Resources on April 12 asked the U.S. Bankruptcy Court for the Eastern District of Virginia for approval to split off some gas assets in southwest Pennsylvania from a package of coal properties to be sold to Alpha creditors so they can be sold to another party.

Alpha wants to designate Rice Drilling B LLC (referred to as the “PLR Stalking Horse”) as the stalking horse bidder for the so-called “PLR Assets.”

In August 2015, Alpha and subsidiaries commenced their reorganization cases by filing voluntary petitions for relief under chapter 11. The court later approved an auction process for the company’s main coal mining assets in Wyoming and Pennsylvania, with Alpha creditors as the stalking horse bidder, that included the gas assets, which are associated with the Pennsylvania coal mining operations. But Alpha reserved the right to split off the gas assets from that sale package if it got a better offer for them.

PLR is in the business of exploring for, developing, producing and monetizing hydrocarbons, and owns oil and gas assets in Greene County, Pennsylvania. Debtor Cumberland Coal Resources LP is in the coal mining business, but operates on the same property as the PLR business and owns oil and gas rights in a tract of land containing approximately 93 acres in Greene County in the vicinity of PLR’s operations. PLR Holdco, a holding company owning real property and related assets, also owns oil and gas rights, or is vested with the oil and gas leasehold estate, in a number of tracts in Greene County.

The PLR Assets include, but are not limited to: (a) oil and gas property rights and related assets, including wells and pads, held by PLR; (b) oil and gas property rights held by Cumberland; and (c) oil and gas property rights, and several shallow conventional wells, held by PLR Holdco.

Alpha said it wants the court to approved a coordination agreement that would allow the eventual buyers of the coal assets here and the PLR assets to operate them cooperatively after the bankruptcy auctions.

Rice Drillling ius an affiliate of Rice Energy Inc., which is a publicly traded company with existing oil and gas operations in Greene County. The stalking horse bid it lodged is for $200 million in cash and other consideration.

Parties have until April 22 to object to the gas asset sale motion, with an April 26 hearing scheduled.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.