PPG to lease property at Natrium site to Gastar for Marcellus Shale drilling
PITTSBURGH, Feb. 28, 2011 – PPG Industries (NYSE: PPG) today announced that it has reached an agreement to lease property for development of Marcellus Shale natural gas resources at the company’s Natrium, W.Va., chemicals site.
Drilling rights on the PPG-owned property have been leased to Houston-based Gastar Exploration, Ltd. Gastar will have full responsibility for drilling and related activities on PPG property. More than 30 wells are planned, with construction and drilling activities expected to begin in the third quarter of this year. Personnel in Gastar’s northeast regional office in Clarksburg, W.Va., will manage its operations on the PPG property, and Gastar expects to hire additional personnel in the region to support on-site operations. PPG estimates the net present value of the future before-tax cash flows generated by this lease will total approximately $50 million over the life of the anticipated well development, which is estimated to be over 30 years. This includes an initial cash payment of approximately $10 million.
“When developed responsibly, Marcellus Shale resources represent a fantastic opportunity in our region to promote jobs and secure an abundant source of U.S.-based energy for our homes and our businesses,” said Michael H. McGarry, PPG senior vice president, Commodity Chemicals. “We are pleased to be working with Gastar Exploration on this exciting project and believe that this development continues to demonstrate PPG’s commitment to the long-term sustainability of our Natrium plant.”
Gastar Exploration’s President and CEO, J. Russell Porter, commented, “We are pleased to enter into this project and look forward to working with PPG’s staff to fully develop the Marcellus formation under their property. Along with our existing leasehold in Marshall and Wetzel Counties, these leases help Gastar create a large, contiguous block of acreage that can be efficiently and profitably developed for the benefit of PPG’s and Gastar’s shareholders.”
PPG's Natrium chlor-alkali and derivatives plant manufactures chemicals, primarily chlorine, caustic soda, muriatic acid and calcium hypochlorite, that have a wide variety of end-uses including water purification, paper and plastics production and as key building blocks for pharmaceuticals. Located along the Ohio River, the plant began operations in 1943. It currently employs about 515 people.
Gastar Exploration Ltd. is an exploration and production company focused on finding and developing oil and natural gas assets in North America. The company currently pursues a strategy combining deep natural gas exploration and development with lower risk shale resource development. The company owns and operates exploration and development acreage in the deep Bossier gas play of East Texas and Marcellus Shale play in West Virginia and Pennsylvania. The company also owns coalbed methane properties located in the Powder River Basin of Wyoming. For more information, visit www.gastar.com.
PPG Industries’ vision is to continue to be the world’s leading coatings and specialty products company. Founded in 1883, the company serves customers in industrial, transportation, consumer products, and construction markets and aftermarkets. With headquarters in Pittsburgh, PPG operates in more than 60 countries around the globe. Sales in 2010 were $13.4 billion. PPG shares are traded on the New York Stock Exchange (symbol: PPG). For more information, visit www.ppg.com.
Statements in this news release relating to matters that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 reflecting the company’s current view with respect to future events or objectives and financial or operational performance or results. The forward-looking statements contained herein include statements relating to the timing and extent of drilling activities and the estimated future before-tax cash flows generated by the lease. Actual events may differ materially from current expectations and are subject to a number of risks and uncertainties, including the cash flows actually generated by the lease and the other risks and uncertainties discussed in PPG Industries’ periodic reports on Form 10-K and Form 10-Q, and its current reports on Form 8-K filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date of their initial issuance, and PPG Industries does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.
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