RELIANCE Industries, the largest private-sector company in India, is ploughing $1.7billion into the US shale-gas bonanza via a deal with American company Atlas Energy.
Reliance is paying $340million in cash initially and a further $1.36billion in the form of a carry to fund drilling operations.
It is a measure of the massive interest now growing in US shale gas and the sums of money that outsiders are now prepared to stump up to get a piece of the action. Atlas will remain development operator, although Reliance will have the option to operate in certain project areas at some point in the future outwith Atlas’s core operating areas of Fayette, Greene, Washington, and Westmoreland Counties in the Appalachians.
Atlas and Reliance have agreed on a five-year development plan that calls for the drilling of 45 horizontal Marcellus Shale wells for the joint venture during the remainder of 2010, increasing to 108 wells in 2011, 178 wells in 2012 and 300 wells in 2013 and 2014.
Atlas chairman and CEO Edward E. Cohen said in a statement: “This transaction will enable us to accelerate sharply our development of the Marcellus while further reducing our already low finding and development costs, and our capital structure will immediately benefit from reduced leverage and enhanced liquidity. As a result of this joint venture, we anticipate creating a significant number of new, well-paying Pennsylvania jobs. Pennsylvania will also benefit from our strong commitment to the highest environmental and safety standards.”
Atlas controls a total of 584,000 net acres in the Marcellus Shale.