India's energy giant Reliance Industries said Friday it had signed a joint venture with Atlas Energy for a $1.7 billion stake in a U.S.-based natural gas field.
India's largest private firm has now gained an overseas foothold through the Marcellus Shale deal, in what it calls one of "the most exciting" upstream markets of the world.
As part of the deal Reliance will pay $339 million in cash and a further $1.36 billion to fund part of Atlas's drilling expenses and develop the project, the companies said.
The gas project spreads across parts of Pennsylvania, West Virginia and New York in the United States.
Reliance will acquire 40% -- or 120,000 acres -- of the total 300,000 acres in Atlas's core Marcellus position.
Pennsylvania-based Atlas will be the development operator of the joint venture, with a 60% stake.
"This is significant value creation for Reliance," said Alok Agarwal, chief financial officer of Reliance Industries in a short press briefing Friday.
Reliance, controlled by India's richest man, Mukesh Ambani, has been on the lookout for foreign takeovers as it seeks to expand outside the Indian market, where 97% of its assets are based.
The deal is set to be completed by the end of April.
Reliance will also invest an estimated $3.4 billion for its share of the development costs over the next 10 years, Agrawal said.
Reliance has built up a war chest for acquisitions, generating $2 billion through stock sales since last September, and has cash reserves of over 250 billion rupees (US$5.5 billion).
In February, Reliance bid $2 billion for a stake in Canadian oil producer Value Creation Inc. but lost out to Britain's BP.
Last month, Reliance also failed in its $14.5-billion bid for bankrupt chemicals group LyondellBasell, a Netherlands-based group with substantial operations in the United States.
Copyright Agence France-Presse, 2010