Mumbai, Nov. 9: Chevron Corp and Reliance Industries Ltd have become partners again — and this time it’s in a shale gas venture in the US.

Chevron today announced that it would acquire Pittsburgh-based Atlas Energy Inc in a $4.3-billion deal.

The San Ramon, California-based oil and refining giant will pay $3.2 billion in cash for a 60 per cent participating interest in the 300,000 acre Marcellus shale gas prospect in southwestern Pennsylvania. It will also assume a pro-forma debt of $1.1 billion.

In April, Atlas Energy had signed a deal with Reliance Industries Ltd under which a US subsidiary of the Mukesh Ambani-owned oil and refining behemoth acquired a 40 per cent interest in the Marcellus shale for $339 million — or a little over $14,000 an acre, which was considered steep at that time.

Reliance had agreed to pay an additional $1.36 billion under a carry arrangement by funding 75 per cent of Atlas’ capital costs over the development programme.

The Marcellus shale gas reserve is one of the natural gas reserves in the US with the brightest potential after companies decided to harness new fracking technology to exploit a gas resource, which was difficult to exploit commercially.

Chevron said it would assume Atlas Energy’s role as an operator of the Marcellus shale acreage under the terms of the agreement reached today.

The Chevron statement said RIL would continue to fund 75 per cent of the operator’s drilling costs, up to $1.4 billion.

The Reliance spokesperson couldn’t be reached to obtain the group’s response to the sudden development.

Chevron explained that the acquisition would provide it with an attractive natural gas resource position primarily located in southwestern Pennsylvania’s Marcellus Shale.

“This acquisition is the right opportunity for Chevron,” said George L. Kirkland, Chevron vice-chairman.

According to Chevron, the deal will entitle it to almost 9 trillion cubic feet of natural gas resource, which includes approximately 850 billion cubic feet of proved natural gas reserves with approximately 80 million cubic feet of daily natural gas production.

The sudden deal left a few questions unanswered. Reliance — which is sitting on a cash mountain of $6.5 billion — has indicated its interest in buying more shale gas assets in the US.

It is not known if Atlas Energy had approached Reliance before inking the deal with Chevron. RIL had held the right of first offer with respect to potential future sales by Atlas of around 280,000 additional Appalachian acres that were not included in the joint venture agreement.

The participation and development agreement that RIL signed with Atlas Energy also had a proviso under which the Ambani group company could “assume the role of development operator for any or all of the joint interests” in the event of a change in control at Atlas Energy.

If RIL decides to exercise this right, it must give a notice within 10 days of the public announcement.

Old friends

Chevron had picked up a 5 per cent stake in Reliance Petroleum Ltd — the second refinery in Jamnagar — in 2007 and had the option to pick up another 25 per cent. This was never exercised, and it sold its stake in RPL to RIL after which RPL was merged with the flagship company of the Mukesh D. Ambani group.