Pushing further its interest in shale gas resources, the Mukesh Ambani-controlled Reliance Industries Ltd is set to sign a joint venture deal with US-based Pioneer Natural Resources Co to develop shale gas assets in the Eagle Ford gas field in Texas.
Under the agreement, Pioneer will sell a 45 per cent interest in approximately 212,000 net acres leased by the company in the highly prospective Eagle Ford Shale play for a total price of $1.15 billion.
Reliance will pay $266 million in cash to Pioneer at closing and will pay an additional $879 million to carry Pioneer's share of future drilling costs. Reliance will also participate with Pioneer in the development of midstream assets in the Eagle Ford Shale as a 49.9 per cent partner.
After drilling another highly productive well in the Eagle Ford Shale acreage early last month, Scott Sheffield, chairman and CEO of Pioneer had said that in order to further accelerate Eagle Ford Shale development, the company was actively pursuing a joint venture, with an announcement expected by the end of the second quarter of 2010.
Since then it had been in talks with RIL to buy a stake in its shale gas assets. (See: Reliance Industries plans second shale gas JV in US)
While RIL was still tight-lipped about the transaction, saying it could not comment at this point, Pioneer has gone ahead and announced the deal on Wednesday.