Reliance Industries on Friday said it has sold its US-based shale assets in north-eastern and central Pennsylvania, Marcellus Shale, to BKV Chelsea, an affiliate of Kalnin Ventures, for $126 million, seven years after it had bought those for $392 million. RIL may receive contingent payments of up to $11.25 million in aggregate based on natural gas prices exceeding certain thresholds over the next three years, the company said.
US shale assets were badly hit after oil prices had dropped to less than $30 per barrel in the last three years, making many of these projects unviable. Reliance invested close to $9 billion in three US shale projects over the last seven years. The company said in March without disclosing the value that they might have to take an impairment hit on shale assets over the next five years due to fall in crude oil prices.
Walter Van de Vijver, president and CEO of Reliance Holding USA, said: “This transaction represents an opportunistic sale of developed upstream Marcellus assets and ends a successful partnership of seven years with Carrizo in a joint sale. We will continue to actively manage the remainder of our US shale resources.”
The Carrizo-operated acreage was one of the three upstream assets in the USA, owned by Reliance. RIL remains invested in the Marcellus shale play via its non-operated position with Chevron in southwestern Pennsylvania, and in the Eagle Ford via its non-operated position with Pioneer in Texas.
The transaction is anticipated to close by the end of the third quarter of FY2018 with an effective date of April 1, 2017. Citigroup Global Markets acted as the financial advisor to Reliance, while Haynes and Boone served as its legal counsel.