OilVoice - Atmos Energy Announces Agreement on Fort Necessity Storage Project

Atmos Energy Announces Agreement on Fort Necessity Storage Project

Saturday, March 20, 2010

Atmos Energy Corporation announces that its subsidiaries, Atmos Pipeline and Storage, LLC ("APS") and Fort Necessity Gas Storage, LLC ("Ft. Necessity"), have entered into an option and acquisition agreement and related agreements with Delhi Gas Storage, LLC ("Delhi"), a subsidiary of Icon NGS, LLC, to provide Delhi the exclusive option to develop the proposed Fort Necessity salt-dome natural gas storage project in Franklin Parish, Louisiana. Atmos Energy had previously announced a development in connection with the Project in February 2008.

Under the Agreement, Delhi has been granted the right to drill a brine disposal well on the site of the Project and undertake certain tests in order to better define the characteristics of the brine disposal formation. If Delhi completes the well and wishes to proceed with the development of the Project, it has the right to exercise its option, contribute the brine well test results and acquire a controlling interest in Ft. Necessity, which will own all of the Project assets. APS will retain a capital position in Ft. Necessity and will share in a variable percentage of the profits, based on the amount of further investments by Delhi. Upon its exercise of the option, Delhi will have the sole responsibility and discretion for managing Ft. Necessity and will provide funding for all future development costs of the Project. Further, Delhi will have the option to purchase APS's interest in Ft. Necessity at varying stages of development at predetermined prices (which would be no less than Atmos Energy's capital position), depending on the stage of development at the time of purchase. In addition, should the Project be developed, Atmos Energy Marketing LLC, which is wholly-owned by Atmos Energy, has agreed to purchase firm storage service on commercially reasonable terms for a portion of the first cavern when it is placed into service.

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