Reliance to invest $1.7 billion in JV with Atlas Energy
09 Apr 2010
Reliance Industries Limited will invest $1.7 billion in a joint venture with Atlas Energy Inc, under which the Indian energy leader will acquire an interest in Atlas Energy's Marcellus Shale position equal to 120,000 net acres.
Reliance will pay around $340 million in cash upon closing the deal and an additional $1.36 billion in the form of a drilling carry, Atlas Energy said in a release today.
Atlas will be the development operator for the joint venture while Reliance will have the option to operate in certain project areas outside of Atlas' core operating areas of Fayette, Greene, Washington, and Westmoreland Counties in southwestern Pennsylvania in the coming years.
Reliance will acquire a 40 per cent undivided interest in approximately 300,000 net acres (120,000 net to Reliance) of undeveloped leasehold held by Atlas, and Atlas will retain a 60 per cent undivided interest in the acreage.
In addition to funding its own 40 per cent of drilling obligations, Reliance has agreed to fund 75 per cent of Atlas' respective portion of drilling and completion costs until the $1.36 billion drilling carry is fully utilized.
Atlas has 5-1/2 years to utilise the drilling carry, subject to a two-year extension under certain conditions.
