Atlas Resource Partners, L.P. has entered into an agreement with subsidiaries of Equal Energy, Ltd. to acquire a 50 percent interest in Equal's approximately 14,500 net undeveloped acres in the core of the oil & liquids rich Mississippi Lime play in northwestern Oklahoma for approximately $18 million. The acreage position is located in Alfalfa, Garfield and Grant Counties, Oklahoma and is almost entirely held by Equal's existing production from the Hunton formation. Atlas will finance this transaction with available borrowings under its revolving credit facility. The transaction is expected to close in late April 2012, subject to customary closing conditions.
Matthew A. Jones, President and Chief Operating Officer of ARP, commented, "We are very pleased to enter into the Mississippi Lime, one of the highest returning U.S. oil & gas plays. We expect our future development of the Mississippi Lime with Equal will add valuable oil & liquids reserves to ARP's production profile. This new position also provides potential future drilling locations for our partnership management business. This transaction further strengthens the breadth of our E&P operations, and complements our already expanding presence in some of the highest returning basins in the U.S."
Concurrent with the closing of the acquisition, Atlas and Equal will enter into a participation and development agreement, whereby Atlas and Equal will drill continuously with one rig in the Mississippi Lime for the first 18 months following the transaction's closing. Atlas will operate the drilling and completion activities, and Equal will undertake production operations, including water disposal. Atlas also has the option to drill an additional four net wells to its account in the 12 months following closing. After the initial 18 months, additional rigs may be added. Each party can contribute acreage to the venture through the establishment of an area of mutual interest closely surrounding Equal's existing acreage position.
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