ID :
115930
Sat, 04/10/2010 - 14:00
Auther :

RIL takes 40% stake in US gas project for $1.7 bn

RIL-ATLAS

New Delhi, Apr 9 (PTI) Making a breakthrough in the US,
Reliance Industries Friday said it will invest USD 1.7 billion
in a joint venture with Atlas Energy Inc to produce gas from
shale, sedimentary rocks, in Marcellus region.
The investment would be scaled up to USD 3.5 billion over
the next 10 years, RIL CFO Alok Agarwal said.
Reliance will take 40 per cent stake in the about 300,000
acres Marcellus shale gas project, which spans parts of
Pennsylvania, West Virginia and New York and could hold enough
natural gas to satisfy US demand for a decade.
Nasdaq-listed Atlas will hold the remaining 60 per cent
and also the operatorship. RIL had earlier unsuccessfully bid
for acquiring controlling stake in bankrupt chemical maker
LyondellBassel.
It bid USD 14.5 billion for Lyondell but the offer was
vetoed by creditors who filed a rival revival plan.
Flush with revenues from its eastern offshore KG-D6 gas
field back home, the Mukesh Ambani-run firm has been on the
lookout of acquisitions in the United States. Separately, its
twin refineries at Jamnagar in Gujarat are looking at directly
selling fuel into the US.
"Reliance Marcellus LLC (a subsidiary of RIL) has
executed definitive agreements to enter into a joint venture
with US based Atlas Energy Inc... under which Reliance will
acquire a 40 per cent interest in Atlas' core Marcellus Shale
acreage position," the company said in a statement.
The Indian firm will pay USD 339 million in cash to close
the deal and foot Atlas' drilling cost of up to USD 1.36
billion.
"The (300,000 acres) acreage will support the drilling of
over 3,000 wells with a net resource potential of about 13.3
trillion cubic feet gas equivalent," the RIL statement said,
adding that the deal is expected to be closed by the month
end.
Shale gas is natural gas stored in organic-rich
sedimentary rocks. It is considered an unconventional source
as the gas may be attached to or "adsorbed" onto organic
matter. The gas is contained in difficult-to-produce
reservoirs that require special completion, stimulation and/or
production techniques to achieve economic production.
In addition to funding its own 40 per cent of drilling
obligations, Reliance has agreed to fund 75 per cent of Atlas'
respective portion of drilling and completion costs until the
USD 1.36 billion drilling carry is fully utilized, Atlas said
in a separate statement.
"Under the framework of the joint venture, Atlas will
continue acquiring leasehold in the Marcellus region and
Reliance will have the option to acquire 40 per cent share in
all new acreages," Reliance said. "Reliance also obtains the
right of first offer with respect to potential future sales by
Atlas of around 280,000 additional Appalachian acres currently
controlled by Atlas (not included in the present joint
venture)." PTI ANZ
RBT


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