Don Klapko, President and Chief Executive Officer commented, "I am pleased to have been able to reach this agreement with Atlas. This joint venture fulfills our promise to find a way to accelerate development of our Mississippian play. Atlas is an accomplished oil and gas operator with extensive drilling and completion experience over a number of horizontal plays in the U.S. The evolving Mississippian oil play in northern Oklahoma has garnered significant industry attention and has demonstrated strong results. We are excited to begin an aggressive drilling program with Atlas, deploying the proceeds from the acreage sale at the drill bit, while funding our remaining capital program within the Company's cash flow."
The sale of the Mississippian interests is expected to close on or about April 25, 2012. In addition to the sale agreement, Atlas and Equal (the "Parties") will enter into a Production and Development Agreement ("PDA") which will govern the terms under which the Parties will conduct their joint venture activities. The key terms of the PDA are:
- An initial 12 well drilling program has been agreed.
- Drilling is expected to commence early in Q3 2012.
- A joint Development Committee has been created with representatives from both Parties to establish drilling, completion and production strategy.
- Atlas will conduct drilling and completion activities.
- Equal will operate the production once the wells are completed.
- It is expected many of the wells will make use of Equal's existing Hunton water handling infrastructure in Grant, Garfield and Alfalfa counties thus minimizing infrastructure costs and improving project economics.