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April 9, 2010 1:05 PM

Vinson, Wachtell, Jones Day on Latest Marcellus Shale Deal

Posted by Zach Lowe

The energy industry continues to be ripe for consolidation, especially when it comes to the Marcellus Shale in Pennsylvania and West Virginia, which has been the subject of at least three-billion-dollar deals in the last year. 

The latest: India's Reliance Industries has struck a $1.7 billion joint venture with Pennsylvania-based Atlas Energy to develop a 300,000-acre portion of the shale, which in total may hold enough natural gas to supply the U.S. for a decade, according to Reuters and The New York Times.

Wachtell, Lipton, Rosen & Katz and Jones Day advised Atlas, which is itself the product of a merger struck about a year ago between two companies that already had ties, according to our prior reporting. Interestingly, Jones Day and Wachtell were on opposite sides of the table on that deal, so their joint presence advising Atlas on today's deal with Reliance indicates they have both retained key M&A roles with Atlas. Lawyers at the firms declined to comment, citing Atlas-imposed restrictions.

Jones Day partners Jeffrey Schlegel and James Vallee led the firm's team on the deal. Corporate partner David Lam led the Wachtell team along with litigation partner Jonathan Moses, finance partner Joshua Feltman, and tax partner Joshua Holmes, the firm said.

A team from Vinson & Elkins advised Reliance, which has been seeking a merger partner in North America for the past year, according to sources familiar with the deal. Douglas Bland, one of the lead Vinson lawyers on the matter, did not immediately return a message seeking comment. Reliance made a $14.5 billion bid to acquire the bankrupt petrochemicals company LyondellBasell earlier this year and lost out in its bid to acquire the Canadian oil exploration company Value Creation, according to Reuters. 

Under terms of the deal, Reliance will contribute $340 million in cash upon closing and will contribute another $1.36 billion to the shale project in the future, Reuters reports. In return, Reliance will receive a 40 percent stake in the 300,000-acre Atlas-controlled chunk of the shale. Just last month, Consol Energy purchased Dominion Resources for $3.48 billion in order to grab a larger interest in the Marcellus Shale, according to our prior reporting. Wachtell advised Consol in that deal.

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