Mukesh Ambani-led Reliance Industries Ltd (RIL), which has struck three shale gas joint ventures with US firms this year, may make a full buyout next as the cash-rich firm builds the knowledge it needs to run such operations.
RIL has received about 20 to 25 pitches from investment bankers for shale assets, RIL Chief Financial Officer Alok Agarwal said recently.
Bankers say potential targets include Fort Worth, Texas-headquartered Quicksilver Resources Inc, Denver, Colorado-based Enduring Resources and companies with assets in the Horn River shale formation in Canada.
Another firm on RIL's radar may be Houston, Texas-based EOG Resources, which said in early August it plans to sell about 180,000 acres in US shale plays — underground rock formations that hold reserves of oil and natural gas.
Shale gas accounts for between 15 per cent and 20 per cent of US gas production, but is expected to quadruple in coming years, touching off a scramble among producers large and small for access to resources.
RIL could face competition from other firms, including Royal Dutch Shell, Total and Mitsui, which have done shale gas deals previously, and those that have not bought a shale asset yet such as Chevron and Encana.
"They would love to do a large deal, a $3 to $5 billion type deal somewhere," said one US investment banker familiar with the company's thinking. "They've only really had to put a few hundred million dollars to work right now. They've got tonnes of cash on the balance sheet."
"They've been very aggressive. They are seriously intent in building up a gas business here," said the banker.