Atlas Energy Inc. partnered up with a wholly owned affiliate of Reliance Industries Ltd. today in a joint venture that will give Reliance a 40% interest in roughly 300,000 net acres of Atlas’ undeveloped leased acreage in the Marcellus Shale. The transaction is valued at $1.7 billion and will partially be paid in cash, $340 million, and the remaining $1.36 billion will be paid in form of a drilling carry. The terms of the drilling carry are that Reliance pays 75% of Atlas’ 60% of drilling and completion costs in addition to their own 40% until the carry is fully utilized. The plan is for the companies to drill 45 horizontal wells in the Marcellus in 2010, 108 in 2011, 178 in 2012 and 300 wells in 2013 and 2014.
According to their latest operational update, as of the end of 2009 Atlas holds 584,000 acres in the Appalachian basin with 314,000 acres in areas of active Marcellus development. They estimate approximately 13 Tcfe of net incremental recoverable resources from 3,150 horizontal net drilling locations on the 314,000 acres.
This JV is the latest of a continuing trend of operators partnering up or buying assets of other operators in the Marcellus Shale play. To name a few, last month CONSOL Energy announced plans to buy Dominion’s Appalachian E&P business. In February, Anadarko entered into a JV with Mitsui E&P in the Marcellus and Sumitomo Corp. was considering purchasing stakes in Carrizo Oil & Gas Marcellus gas assets. And to go back further to 2009, Chesapeake’s JV with Statoil and Rex Energy’s partnering up with Williams.
To learn more visit the Acquisition and Divestitures folder in DI’s DNA.
Anne Leonard
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