The Denver-based, privately held Antero Resources Corp., has closed its acquisition of Marcellus shale rights only from integrated energy company Dominion, Richmond, Va., (NYSE: D) for approximately $347 million, resulting in after-tax proceeds of approximately $205 million to Dominion.

The assets include 114,259 acres largely in western Pennsylvania and West Virginia. Dominion controls drilling rights in the Marcellus shale formation an about 600,000 to 800,000 acres, including the acreage assigned to Antero. Dominion reports it expects to pursue similar transactions for additional acreage.

Antero paid approximately $3,037 per acre. Dominion will receive a 7.5% royalty interest on future production from the assigned acreage. Additionally, Dominion will retain the drilling rights in formations both above and below the Marcellus shale interval and will continue its conventional drilling program on the acreage.

As part of the drilling rights agreement, Antero Resources will join Dominion Exploration & Production as anchor tenants on the Dominion Keystone pipeline project being developed by Dominion. The two producers together are expected to provide approximately 500 million cubic feet per day to the pipeline, which would allow for transport of up to 1 billion cubic feet of gas per day by year-end 2012.

When announced in June, the deal was to involve 205,000 acres for $552 million. Dominion scaled back the sale “due to Antero's difficulty in obtaining follow-on financing in the current market turmoil.”

Dominion has 1.1 trillion cubic feet of gas reserves and about 9,000 producing wells in the Appalachian Basin. It has not booked any reserves for its Marcellus shale acreage. Dominion will use net proceeds to reduce outstanding short-term debt and to partially offset equity issuances in 2009.

Barclays Capital was advisor to Dominion.

Antero was formed by Paul Rady and Glen C. Warren Jr. and currently operates on 100,000 net acres in the Arkoma Basin’s Woodford shale and on 46,000 net acres in the Piceance Basin. The company received $1 billion of equity in August 2007 from Warburg Pincus, Yorktown Partners and Lehman Brothers Merchant Banking, now owned by Barclays. In 2005 it sold its No. 2 position in the Barnett shale to XTO Energy, Fort Worth, (NYSE: XTO) for some $1 billion in cash and stock.