Reliance completes sale of its Marcellus shale assets to BVK Chelsea

Reliance Industries Ltd (RIL) on Friday announced the closure of the sale of its interest in some of its upstream assets in Marcellus shale in north-eastern and central Pennisylvania, USA to BVK Chelsea for $126 million.

Reliance Marcellus II, LLC, a subsidiary of Reliance Holding USA, Inc, and Reliance Industries Limited, had recently announced the sale of its interest in certain upstream assets, which were operated by Carrizo Oil and Gas, Inc to BKV Chelsea LLC, an affiliate of Kalnin Ventures.

In the transaction, announced on 6 October 2017, Reliance agreed to sell its entire working interest in these upstream assets to BKV Chelsea for a purchase consideration of $126 million with an effective date of 1 April 2017.

Additionally, under the definitive documents, a contingent amount of up to $11.25 million may be paid to Reliance between years 2018 to 2020 based on certain gas price thresholds being achieved.

Reliance said the transaction closed on 21 November 2017 and the company received the purchase consideration subject to usual and customary purchase price adjustments.

RIL held stakes in three US shale gas ventures - 45 per cent with Pioneer Natural Resources in Eagle Ford asset, 40 per cent with Chevron and 60 per cent with Carrizo Oil & Gas in Marcellus Shale.

The sale amount came at a discount to the price paid by RIL to acquire the stake around seven years ago.

RIL had spent $392 million, or over Rs 1,800 crore, for the asset. Its total investment in shale gas then stood at over $3 billion.

However, weaker prices affected its ambitious plans in the segment.

Shares of RIL ended with gains of 0.46 per cent at Rs 949.50 on the BSE on a day the benchmark index gained over 91 points.