updated 10/4/2005 8:26:47 AM ET 2005-10-04T12:26:47

Chesapeake Energy Corp. on Monday said it has agreed to buy natural gas producer Columbia Natural Resources LLC from parent Triana Energy Holdings LLC for $2.2 billion in cash.

Columbia is the fourth-largest natural gas producer in the Appalachian Basin and, with 4.1 million acres, the largest leaseholder in the area.

Chesapeake said it expects to acquire an estimated 2.5 trillion cubic feet of natural gas equivalent of proven and possible reserves. Currently, Columbia produces 125 million cubic feet of natural gas equivalent per day from properties in West Virginia, Kentucky, Ohio, Pennsylvania and New York.

Most of Chesapeake's reserves are onshore in Texas, Oklahoma and Kansas.

The company said it plans to spend about $200 million per year to develop Columbia's properties.

Chesapeake expects to finance the acquisition with cash and a combination of senior notes and equity securities.

The deal is expected to close by Dec. 15.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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