Atlas Energy (ATLS) held a conference call to discuss the company’s earnings report for the first quarter of 2010, and made comments on its operations in the Marcellus Shale.
The company recently signed a joint venture with Reliance Industries to develop acreage in the Marcellus Shale.
“As a result of the Reliance joint venture, however, for each future Marcellus horizontal well we will pay only 15% of the total costs but we will receive 60% of the revenues. Now that is a real enhancement and what downside protection as some analysts have pointed out.”
“Through our JV with Reliance we control over 345,000 locked up net acres in part of the proven Marcellus Shale play having over 3,600 horizontal locations using conservative spacing assumptions. With Reliance’s commitment to fund up to $2.8 billion of drilling costs in the Marcellus Shale over the next 5.5 years including 75% of our 60% well costs up to $1.4 billion and their own proportion share of well costs for their 40% of the joint venture we are embarking on a massive but deliberate ramp up in our operations.”
“On behalf of the joint venture we are on track to drill 45 horizontal Marcellus Shale wells in 2010, 108 wells in 2011, 171 wells in 2012 and 300 wells per year thereafter. This development plan will have a dramatic effect on our net production which we expect will top 500 Mmcf per day net to our interests in five years and approach 1 Bcf per day in 10 years.”
“We have already purchased a further 42,000 acres of strategic in-fill acreage on behalf of the Marcellus joint venture and we did that at an average price per acre only about 1/3 of the acreage value that we ourselves received in last month’s $3 billion Reliance joint venture.”
Source: Seeking Alpha
