Atlas Energy announces $1.7 billion Marcellus Shale joint venture with Reliance Industries, India's largest private sector company
Clients Atlas Energy LLC
Jones Day represented Atlas Energy, Inc. and Atlas Energy Resources, LLC (collectively, "Atlas") in a $1.7 billion joint venture transaction with a wholly-owned subsidiary of Reliance Industries Limited ("Reliance"), the largest private sector company in India and a global energy leader. As a result of the transaction, Reliance will acquire a 40% undivided interest in approximately 300,000 gross acres in the Marcellus shale region of southwestern Pennsylvania and West Virginia. Atlas will serve as development operator for the joint venture.
Reliance will pay approximately $340 million at closing, with the balance of $1.36 billion to be paid in the form of a drilling carry. Reliance is obligated to pay 75% of Atlas's qualified costs of drilling and operating natural gas wells until the $1.36 billion drilling carry is fully utilized. Atlas has 5.5 years to utilize the drilling carry (subject to extension under certain circumstances) and the parties established a 12-year area of mutual interest for joint development of the acreage.
The purchase and sale were subject to certain closing conditions, including the consent of participating lenders under Atlas's senior secured credit facility. The transaction closed on April 21, 2010.