Reliance to pay US$1.7 bln for 40% stake in Atlas Energy acreage

12-Apr-10

Indian energy giant Reliance Industries is to pay US$1.7 bln to form a joint venture in the U.S. with Atlas Energy operations in the booming Marcellus Shale. US$340 mln will be paid in cash, while US$1.36 bln will be for JV development. Marcellus Shale is a gas project that spans parts of Pennsylvania, West Virginia and New York, and which, according to some geologists, could hold enough natural gas to satisfy US demand for a decade. With this move it joins a number of international oil companies including BP Plc, Total, Statoil and Mitsui & Co who have bought into shales, rock formations that could hold vast amounts of natural gas. Though the shale formations have proven to be lucrative, they are also very expensive to develop and are environmentally sensitive. The joint ventures have given the independent oil companies who own much of the acreage in these areas access to capital and should allow foreign oil companies to pick up expertise in new drilling techniques developed for the shales.