RIL announces shale buy, to pay $263 mn upfront | business | Hindustan Times
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RIL announces shale buy, to pay $263 mn upfront

business Updated: Jun 24, 2010 23:33 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Reliance Industries Ltd (RIL) on Thursday formally announced its $1.3 billion (Rs 5,980 crore) deal to acquire a 45 per cent stake in Pioneer Natural Resources’ shale gas assets south of Texas — its second US shale gas buy in less than three months.

RIL said in a statement on Thursday that it will pay $1.315 billion to Pioneer and its partner Newpek for 45 per cent of the 263,000-acre Eagle Ford Shale.

Pioneer had 84 per cent interest in Eagle Ford Shale, while Newpek held the balance. After this deal, Pioneer would hold 46 per cent and Newpek 9 per cent.

“This represents another significant milestone in RIL’s efforts to grow its North American shale gas operations,” company Executive Director P.M.S. Prasad said.

Pioneer, which operates the Eagle Shale Ford property, said the site has 10 trillion cubic feet of resource potential.

RIL said it will pay $263 million up front and fund $1.1 billion of Pioneer and Newpek's future drilling costs over four years.

Additionally, RIL and Pioneer have executed definitive agreements to form a midstream joint venture that will service the needs of the upstream joint venture.

RIL’s subsidiary, Reliance Eagleford Midstream, will pay $46 million for a 49.9 per cent interest in the joint venture. “Pioneer and Reliance will have equal governing rights in the joint venture and Pioneer will serve as operator,” the statement said.

In April, RIL had bought 40 per cent interest in Atlas Energy’s Marcellus shale-gas assets in Pennsylvania for $1.7 billion.