2010-04-22-2010-04-21-2010-04-21

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
192MM
Description

Acquired 42,344 acres in Fayette, Washington, Indiana, Westmoreland, Armstrong & Clarion counties, PA, prospective for Marcellus shale.

Pittsburgh-based Atlas Energy Inc. (Nasdaq: ATLS) and India-headquartered joint-venture partner Reliance Industries Ltd. have expanded their footprint in the Marcellus shale of Pennsylvania with the acquisition of an additional 42,344 acres for approximately $192 million.

The two companies completed their Marcellus shale joint venture on the same day.

The additional acreage is in Fayette, Washington, Indiana, Westmoreland, Armstrong and Clarion counties and was acquired for an average purchase price of $4,532 per acre. It is within the area of mutual interest established in the joint-venture agreement. Reliance has agreed to exercise its right to acquire its 40% interest in the new acreage.

Substantially all of the acreage to be acquired is held by production and is either contiguous with the joint venture's existing acreage or is in concentrated blocks of acreage. Atlas has identified more than 450 horizontal drilling locations assuming 1,000-foot spacing between lateral wells.

Atlas and Reliance now control approximately 343,000 Marcellus shale acres, of which approximately 206,000 acres are net to Atlas. Atlas controls an additional 280,000 acres that are prospective for the Marcellus shale outside of the AMI.

"These transactions reflect the desire of both Atlas and Reliance to add highly prospective acreage that will enable our joint venture to accelerate development," says Richard Weber, Atlas president. "The contiguous nature of this acreage will enable us to concentrate our development and we intend to develop a large percentage of this acreage in the next five years."

KeyBanc Capital Markets Inc. senior analyst Jack Aydin believes the bulk of the acreage to be in Fayette County where Atlas is having impressive horizontal well results. "Thus, based on previously announced metrics and assuming a 4 billion cubic feet equivalent gross EUR per well, this acreage could potentially have more than 1.8 Tcfe of gross resource upside potential, or around 900 Bcfe net to Atlas after royalty (assumed 13% to 15%)."