Atlas Resource Partners LP (ARP) has entered into a joint venture (JV) agreement with subsidiaries of Canada’s Equal Energy Ltd. in the core area of the Mississippian Lime, a formation in Oklahoma and Kansas rich in oil and natural gas liquids (NGL).

Under the terms of the JV, ARP agreed to pay about $18 million for a half-stake in Equal’s undeveloped 14,500 net acres in Alfalfa, Garfield and Grant counties in northwestern Oklahoma. The transaction is expected to close by the end of the month after which the partners plan to launch an 18-month period of continuous exploration and production (E&P) in the Mississippian Lime, with ARP operating the drilling and completion activities while Equal performs production operations, including water disposal.

The JV also gives ARP the option of drilling an additional four net wells and adding them to its account within a year of the transaction’s closing. Once the initial 18-month period has expired, additional rigs may be added, and either ARP or Equal may decide to contribute additional acreage to the JV through the establishment of an area of mutual interest, provided the acreage closely surrounds Equal’s existing acreage position.

“We expect our future development of the Mississippi Lime with Equal will add valuable oil and liquids reserves to [our] production profile,” said ARP President Matthew Jones. “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.”

ARP plans to finance the deal with its available credit. Equal’s acreage position currently is mostly held by production from its existing Hunton formation.

Activity has been brisk recently in the Mississippian, or Mississippi, Lime. In February Plains All American Pipeline announced plans to build a 170-mile crude oil pipeline in the region, one month after CenterPoint Energy Field Services LLC began assessing the route for a proposed natural gas gathering and processing system (see Shale Daily, Feb. 10; Jan. 31). Meanwhile, Caballo Energy LLC also plans to target the Mississippian Lime, as does SandRidge Energy Inc., which has separate JVs with Spain’s Repsol YPF SA and South Korean investment firm Atinum Partners Co. (see Shale Daily, Jan. 20; Dec. 27, 2011; Aug. 8, 2011).

According to company reports, the top five acreage holders in the Mississippian Lime are SandRidge with 1.5 million net acres, followed by Chesapeake Energy Corp. with 1.4 million net acres, Repsol with 363,636 net acres, Chapparal Energy with 250,000 net acres and Devon Energy Corp. with 230,000 net acres.