San Francisco -- Chevron Corp. reported Tuesday that it will buy Atlas Energy for $4.3 billion, gaining a big stake in a form of unconventional natural gas production that the nation's second largest oil company had been slow to embrace. Atlas specializes in wresting natural gas from underground shale formations in Pennsylvania and Michigan, a process whose fast-growing popularity has pushed America's natural gas production to historic highs. Chevron, based in San Ramon, has staked out smaller shale-gas positions in Colorado, Texas, Canada, Poland and Romania. But other major oil companies have done more. Exxon Mobil Corp. earlier this year bought XTO Energy for $41 billion to gain access to that company's resource base, estimated at 45 trillion cubic feet of shale gas, shale oil and coal-bed methane. Atlas, in contrast, holds 9 trillion cubic feet of resources, mostly in the Marcellus Shale formation in southwestern Pennsylvania. 'At some point, every major needs to have a position in this,' said Philip Weiss, an analyst with Argus Research. 'It's a pretty good deal for Chevron. I guess they finally decided they had a price that works.' Chevron will buy Atlas -- based in Pittsburgh, Penn. -- for $3.2 billion of cash and assumed pro forma debt of $1.1 billion. Atlas shareholders will receive $38.25 in cash for each share, plus a pro-rata share of a distribution of 41 million units of subsidiary Atlas Pipeline Holdings. Total compensation for each stockholder -- combining the cash and the distribution -- equals $43.34 per share, according to the company. Atlas shares closed Tuesday at $42.50, up 33 percent for the day in Nasdaq trading. Chevron's fell 1.46 percent to close at $83.56 on the New York Stock Exchange. 'This acquisition is the right opportunity for Chevron,' said Chevron Vice Chairman George Kirkland, in a prepared statement. 'We are acquiring a company that has one of the premier acreage positions in the prolific Marcellus.' The deal still requires the approval of Atlas shareholders and will be subject to review by federal regulators. Shale-gas production involves injecting high-pressure liquids into shale formations, fracturing the rock and freeing the gas. The process -- called hydraulic fracturing, or 'fracking' -- has helped boost domestic natural gas production to its highest level ever, with the United States pumping 26.2 trillion cubic feet of gas last year, according to the federal Energy Information Administration. Some analysts estimate the United States has a 100-year supply of natural gas, in part due to fracking. Rising production has pushed down natural gas prices, cutting them roughly in half between 2008 and 2009, according to the administration. While the lower prices are welcome news to consumers, environmentalists have questioned the safety of fracking, saying the process can contaminate drinking water. 