NEW YORK (CNNfn) - Statoil Energy Inc., a wholly owned U.S. subsidiary of Norwegian-owned Statoil, agreed Monday to sell its Appalachian natural gas properties to Equitable Resources for $630 million.|
The sale of Statoilís U.S. exploration and production business is the first step in its overall plan to divest its U.S. assets. Statoil Energy's remaining businesses -- power generation, energy trading and marketing -- will be offered for sale separately starting early next year.
Pittsburgh-based Equitable will acquire all of Statoilís natural gas production assets in the Appalachian area of the northeast U.S., making Equitable the largest natural gas producer in the area.
Statoil Energyís Appalachian properties include approximately 1.1 trillion cubic feet of proven gas reserves and 6,500 natural gas wells in West Virginia, Kentucky, Virginia, Pennsylvania and Ohio. Equitable's assets in the region include 6,100 natural gas and oil wells and approximately 930 billion cubic feet of gas reserves.
"The combination of these assets represents the best strategic fit we have seen in the market," Murry Gerber, Equitable's president and chief executive officer, said. "This combination significantly enhances our ability to serve the Northeast gas and electric markets."
While not specific on the payment details, Equitable said it plans to fund the transaction through a combination of debt financing and cash from certain asset sales. The acquisition is subject to closing conditions and regulatory approval.
Initially announced by Statoil in October, the sale is part of the Norwegian government-owned companyís overall effort to concentrate on four core business activities: exploration and production, European gas, energy marketing and petrochemicals.
Statoil, founded in 1972, had about 18,000 full-time employees as of Dec. 31. The company operates in Central and Eastern Europe, South America and the Far East.
Equitable shares fell 7/16 Friday to 33-3/8.