(Source: Datamonitor)
The Williams Companies has signed a participation and exploration agreement to develop natural gas wells in the Marcellus Shale with Rex Energy. Pursuant to the agreement, Williams is acquiring a 50% interest in approximately 44,000 net acres in Pennsylvania's Westmoreland, Clearfield and Centre counties for $33 million in a drill-to-earn structure.
Williams will drill to earn its 50% interest by incurring 90% of costs and expenses associated with drilling and completion of wells in the area of mutual interest until it has invested $33 million on behalf of Rex Energy and $41 million in its own costs and expenses. Williams has until the end of 2011 to fulfill its funding obligations and earn its 50% interest.
Once Williams earns its 50% interest, the companies will share all costs of joint venture operations in accordance with their participating interests, which are expected to be equal. Rex Energy is currently operating the assets in the project areas and will continue to do so through the end of 2009, when Williams will assume operations.
Steve Malcolm, chairman, president and CEO of Williams, said: "This initial entry of our exploration and production business into the Marcellus is an ideal growth opportunity, given our long experience in developing non-conventional natural gas reserves, such as tight sands, coal-bed methane and shale."
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