Reliance seeks to exit Eagle Ford shale venture: report
11 October 2014
Reliance Industries Ltd is planning to exit the Eagle Ford Basin oil and natural gas joint venture with Pioneer Natural Resources Co and is looking for a buyer for its 45 per cent stake, which could fetch the Mukesh Ambani-led firm around $4.5 billion.
The Eagle Ford shale asset is a three-way joint venture between Reliance, Texas-based Pioneer and a division of Mexico's Alpha SAB de CV, where the three hold stakes of 45 per cent, 46 per cent and 9 per cent, respectively.
Reliance acquired the 45 per cent stake in the shale property from Pioneer for $1.2 billion in 2010. Pioneer, which owned about 230,000 acres in the Eagle Ford Shale, opted to retain 46 per cent in the oil and gas asset.
Reliance currently has a share of 115,000 barrels of oil equivalent per day, with 60 per cent of the production in liquid form rather than gas, according to a presentation made by Reliance in July.
Reliance is pushing forward with the sale of its stake in the South Texas oil field, Bloomberg News reports.
''Reliance, a Mumbai-based energy and chemicals conglomerate, is working with Citigroup Inc to find buyers for the 45 per cent stake which it acquired for $1.15 billion in 2010, the people said, asking not to be identified discussing private information. The assets are operated by Pioneer Natural Resources Co.
''The venture has a total value of at least $4 billion, the people said. Another investor in the venture, Alfa SAB's Newpek LLC unit is also exploring a sale of its share and being advised by Tudor Pickering Holt & Co.''
Pioneer is incidentally the first Eagle Ford operator to get permission from the commerce department to export the ultralight oil condensate from South Texas. It's also the largest operator in the Permian Basin in West Texas.
Reliance is reported to have appointed Citigroup Inc and Bank of America Merrill Lynch as agents for the sale of its 45 per cent stake.
Reliance will also sell its investment in EFS Midstream LLC, an oil and gas gathering treatment and transportation network, a mid-stream joint venture that was initially funded by Pioneer and Reliance in June 2010.
EFS Midstream operates 11 central gathering plants in south Texas.