Dominion closes deal on Marcellus Shale

Dominion will receive a 7.5 percent royalty interest on future natural gas production from the assigned acreage.

Dominion will receive about $205 million after tax and will use the money initially to reduce short-term debt. Longer term, the proceeds are expected to partially offset previously announced equity issuances in 2009.

Dominion said last week that it was slashing the size of the lease in West Virginia and western Pennsylvania because Antero Resources was having trouble getting financing due to the credit crunch. Dominion cut the lease from 205,000 acres for approximately $552 million.

Dominion has drilling rights on 600,000 to 800,000 acres in the Marcellus Shale formation, including the acreage assigned to Antero. Dominion is continuing to market additional acreage.

Barclays Capital Inc. acted as financial adviser to Dominion on the transaction.

Dominion shares rose 16 cents to $42.15 in trading Tuesday afternoon. The shares have traded between $38.63 and $49.38 over the past year.