Chevron Buys Atlas after Mukesh Ambani Invests

Atlas Energy Inc. which has recently entered into a joint venture with India’s Reliance Industries, will soon be majority-owned by California oil giant, Chevron Corp. Reliance, headed by billionaire Indian business magnate, Mukesh Ambani acquired a 40 percent interest in Atlas last April to develop the Marcellus Shale acreage located in southwestern Pennsylvania. The Marcellus shale natural gas reserve is said to be one of the most promising areas for exploitation of natural gas resources using new technology to harvest natural gas from shale, which was previously very difficult to obtain.

Mukesh Ambani, billionaire controller of Reliance Industries, India’s largest company, spent $339 million to gain the forty percent share, which amounts to a bit over $14,000 per share. Reliance Industries, currently holding $6.5 billion in cash reserves, has expressed interest in additional purchases of shale gas assets in the United States. Mukesh Ambani’s group of companies entered into an agreement with Atlas which would allow them to take over any or all development activities, should control at Atlas change. Additionally, Reliance Industries has agreed to fund 75 percent of the costs incurred by Atlas for the development of the Marcellus Shale reserve.

The 60 percent stake in the 300,000 acres encompassed by the project will cost Chevron $3.2 billion in payments, as well as a pro-forma debt assumption of $1.1 billion. The purchase puts Chevron back in partnership with billionaire Mukesh Ambani after it sold its 5 percent stake in Reliance Petroleum Ltd. to Reliance Industries, effectively completing its merger with the Mukesh D. Ambani group in 2007. At that time, Chevron failed to exercise its option to gain a 25 percent stake in the Indian refinery.

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