Reliance Industries completes 49.9% stake sale in US pipeline venture for $1bn

By: | Published: July 8, 2015 10:03 PM

Reliance Industries today said it has closed the deal to sell its entire 49.9 per cent interest in a US shale oil and gas pipeline joint venture to New York -listed Enterprise Products Partners for US dollar 1.073 billion.

Reliance Industries stake saleReliance Industries holds 45 per cent interest in the Eagle Ford upstream joint venture and the rest 9 per cent is with Newpek LLC. (PTI)

Reliance Industries today said it has closed the deal to sell its entire 49.9 per cent interest in a US shale oil and gas pipeline joint venture to New York -listed Enterprise Products Partners for US dollar 1.073 billion.

“Reliance Holding USA, Inc, a subsidiary of RIL, has announced the closing of the recently announced sale of its interest in EFS Midstream LLC to an affiliate of Enterprise Products Partners L.P.,” the company said in a statement.

The company along with its partner Pioneer Natural Resources Company had on May 31 agreed to sell their respective ownership interests (of 49.9% and 50.1%) in EFS to an affiliate of Enterprise Product Partners L.P. for an aggregate consideration of USD 2.15 billion.

“The transaction closed today with the effective date being July 1, 2015,” the statement said.

Under the terms of the definitive agreements, Reliance Industries received gross cash consideration of USD 574 million towards the first tranche of sale proceeds.

Following retirement of debt at EFS level and other adjustments customary for similar transactions, RIL received net proceeds of USD 528 million at the closing today.

The final tranche of payment of USD 499 million in cash is expected to be received on or before the first anniversary of the closing date, it said.

EFS Midstream venture was formed in 2010 to construct, own and operate facilities providing gas gathering, treating, and transportation services in the Eagle Ford Shale in South Texas.

The Midstream system consists of 10 gathering plants and about 460 miles of pipelines. The system gathers and separates produced condensate from produced gas.

It also stabilises the condensate, where necessary, and treats the gas produced from the Eagle Ford upstream joint? venture operated by Pioneer with stake of 46 per cent.

RIL holds 45 per cent interest in the Eagle Ford upstream joint venture and the rest 9 per cent is with Newpek LLC.

It is being speculated that RIL may be looking at selling this stake as well. RIL bought 45 per cent interest in Pioneer Natural Resources Co’s Eagle Ford shale formation of south Texas for USD 1.3 billion.

The company statement, however, did not say anything on the upstream venture. The Eagle Ford assets, spread over 230,000 acres, have become more attractive after the US Commerce Department, in June last year, gave Pioneer permission to export a type of ultralight oil known as condensate produced from the region.

Besides Eagle Ford, RIL has two more shale ventures in the US — 40 per cent stake in Chevron’s Marcellus shale acreage and a 60 per cent interest in Carrizo Oil and Gas Inc’s Marcellus shale acreage in Central and Northeast Pennsylvania.

Under the terms of the agreements, the Pioneer and Reliance can use the EFS Midstream for moving condensate and gas for 20 year on fee-based arrangement.

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