Atlas Energy in $1.7 billion Marcellus venture with India’s Reliance

PITTSBURGH - Atlas Energy, Inc. (NASDAQ: ATLS) on April 9 announced its entry into a joint venture with a wholly owned affiliate of Reliance Industries, the largest private sector company in India and a global energy leader,
In the deal, Atlas will transfer an interest in its Marcellus Shale position equal to 120,000 net acres in a transaction valued at $1.7 billion.
Reliance will pay approximately $340 million in cash upon closing and an additional $1.36 billion in the form of a drilling carry.
Atlas will serve as the development operator for the joint venture. Reliance will have the option to operate in certain project areas in the coming years outside of Atlas’ core operating areas of Fayette, Greene, Washington, and Westmoreland Counties in southwestern Pennsylvania.
Reliance will acquire a 40 percent undivided interest in some 300,000 net acres (120,000 net to Reliance) of undeveloped leasehold held by Atlas, and Atlas will retain a 60 percent undivided interest in the acreage.
In addition to funding its own 40 percent of drilling obligations, Reliance has agreed to fund 75 percent of Atlas’ portion of drilling and completion costs until the $1.36 billion drilling carry is fully utilized. Atlas has 5 1/2 years to utilize the drilling carry, subject to a two-year extension under certain conditions.