RIL plans to divest its 49.9% in US shale JV

By: |
November 06, 2014 4:21 AM

Partner Pioneer to redeploy capital in core, oil-rich assets of West Texas.

Mukesh Ambani-promoted Reliance Industries on Wednesday said it was targeting to sell its 49.9% stake in the US-based Eagle Ford Shale Midstream (EFS Midstream) business, a joint venture with Dallas-based Pioneer Natural Resources Company.

“Reliance Holding USA, Inc owns the remaining 49.9% of the EFS Midstream business and also plans to pursue the divestment of its share in a joint process with Pioneer,” Pioneer said in a statement on Wednesday. Pioneer holds the remaining 50.1% in the EFS Midstream business.

On October 10, Reuters had reported that RIL was seeking a buyer for its stake in the Eagle Ford Basin oil and natural gas joint venture that could raise up to $4.5 billion. Pioneer, which has about 230,000 acres in the Eagle Ford Basin according to its website, sold 45% interest
in the property to the Ambani firm for $1.2 billion in 2010.

However, the latest announcement by the explorer does not disclose any plans to sell stake in the upstream business.

Pioneer’s cash flow from EFS Midstream is forecasted at over $100 million in 2015, the statement added. The EFS Midstream business was formed in 2010 to construct facilities to provide gathering and handling services for condensate and natural gas produced from wells on dedicated acreage in the Eagle Ford Shale.

These services are provided for the Eagle Ford Shale upstream joint venture operated by Pioneer (Pioneer 46%, Reliance 45% and Newpek LLC 9%) and for various third parties. The EFS Midstream system consists of 10 central gathering plants and nearly 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.

The sale would allow us to strategically redeploy capital to our core, oil-rich Spraberry/Wolfcamp assets in the Permian Basin of West Texas, Pioneer chairman and chief executive officer Scott Sheffield said.

RIL has reportedly invested close to $4 billion in the Eagle Ford Basin project since 2010. Currently, about 472 wells have been drilled and average output hovers around 676 million standard cubic feet per day.

The Ambani firm has also invested in two more unconventional assets in the US — 40% in Chevron’s Marcellus acreage and 60% in Carrizo Oil and Gas Inc’s Marcellus shale project.

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