The Work

March 15, 2010 6:35 PM

Wachtell, Akin, Baker Botts Score on $3.48 Billion Energy Deal

Posted by Claire Zillman

Consol Energy Inc. plans to buy the Appalachian natural gas and oil exploration and production business of Dominion Resources for $3.48 billion. 

The all-cash transaction will increase Consol's total proved gas reserves by nearly 50 percent and give the Pittsburgh-based coal and natural gas company a leading position in the Marcellus shale fairway that stretches across West Virginia, Ohio, Pennsylvania, and New York. Natural gas accounts for nearly 35 percent of Consol's total revenue, according to The Financial Times.

As part of the deal, which is expected to close April 30, Consol will also receive 1.46 million oil and gas acres and over 9,000 producing wells from Dominion, a Richmond, Virginia-based energy company that operates the nation's largest natural-gas storage system.

The Marcellus shale region has attracted an increasing number of companies that are using new technology to produce gas from the untapped shale.

Consol turned to longtime outside counsel Wachtell, Lipton, Rosen & Katz as M&A counsel. Corporate partner David Katz led the Wachtell team. Katz was joined by partners Joseph Larson, Adam Shapiro, Eric Rosof, and Deborah Paul. 

Katz, who has advised Consol on corporate matters for about five years, says this is the biggest deal he's worked on for the company. "This is really a game-changer for Consol," he says. "Historically, the company has been known as a coal company, but this solidifies its foothold in the natural gas industry." 

The company tapped Akin Gump Strauss Hauer & Feld for the transaction's oil and gas matters. James Rice III, head of Akin Gump's firmwide energy and global transactions practice, led the firm's work for Consol. He worked alongside partners William Church, Jr., Lisa Gallerano, Paul Gutermann, Joseph Motes III, Bruce Simonetti, W. Thomas Weir, and Mark Zvonkovic. This is the first time Akin Gump has represented Consol on a major deal.

Rice says the deal's biggest hurdles were the sheer number of acres and wells involved and the fact that the Marcellus shale region has been so hotly contested of late. In mid-February, Akin Gump worked on Anandarko Petroleum Corporation's joint venture with Mitsui & Co. in the Marcellus shale. Rice says that two or three other deals in the Marcellus shale region were announced while the Consol/Dominion negotiations were underway.

Lexington, Kentucky-based Stoll Keenon Ogden handled title due diligence for Consol.

Baker Botts represented Dominion Resources, with partner Hugh Tucker leading the firm's work on the deal. Partners Steven Leifer, James Raborn, Mark Bodron, Mitch Lukin, and Greg Nelson rounded out the Baker Botts team. Tucker has represented Dominion since the early 1990s. In 2007 he helped the company divest $13 billion worth of assets. 

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