Williams has signed a participation and exploration agreement to develop natural gas wells in the Marcellus Shale with Rex Energy Corporation.

Under the agreement, Williams is acquiring a 50-percent interest in approximately 44,000 net acres in Pennsylvania's Westmoreland, Clearfield and Centre counties for $33 million in a "drill to earn" structure.

Williams will drill to earn its 50-percent interest by incurring 90 percent of costs and expenses associated with drilling and completion of wells in the area of mutual interest until it has invested $33 million on behalf of Rex Energy and $41 million in its own costs and expenses. Williams has until the end of 2011 to fulfill its funding obligations and earn its 50-percent interest.

"This initial entry of our exploration and production business into the Marcellus is an ideal growth opportunity, given our long experience in developing non-conventional natural gas reserves, such as tight sands, coal-bed methane and shale," said Steve Malcolm, Williams' chairman, president and chief executive officer.

Ralph Hill, who leads Williams' exploration and production business, said the company's engineers, geologists and geophysicists have extensively studied the Marcellus Shale.

"We're excited about the opportunity from a technical perspective, especially with being able to leverage our knowledge and expertise in ramping up activity in other unconventional gas plays," Hill said.

Tags: Rex Energy Corporation, Williams