RIL buys U.S. shale gas assets for $1.3 Billion
Friday, 25 June 2010, 00:21 IST   |    3 Comments
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RIL buys U.S. shale gas assets for $1.3 Billion
Mumbai: Reliance Industries (RIL) Thursday said it will pay $1.3 billion for a 45 percent stake in US-based Pioneer Natural Resources' Shale gas assets. 'Reliance will acquire a 45 percent interest in Pioneer's core Eagle Ford Shale acreage position in two separate transactions. Reliance will pay $1.315 billion for its implied share of 118,000 net acres,' the company said in a statement. Shale gas is natural gas produced from shale (rock) formations. Pioneer currently produces about 28 million cubic feet per day from five wells in the 212,000 acres Eagle Ford Shale property. Pioneer will now hold 46 percent stake, while the remainder nine percent will be with Newpek -- a subsidiary of Mexican firm ALFA, which has major interests in the petrochemical business. The deal was executed though RIL subsidiary, Reliance Eagleford Upstream LP. RIL will make an upfront cash payment of $263 million to Pioneer and bear an additional $1.05 billion in drilling costs for Pioneer and Newpek for over four years. Reliance Industries will net about 4.5 trillion cubic feet equivalent (tcfe) of gas, from the the field which has a total potential of producing 10 tcfe. Also included in the transaction is current production of 28 million cubic feet equivalent per day (mmcfe/d) from five currently active horizontal wells. In another transaction, Reliance Industries paid $46 million for a 49.9 percent stake in a midstream joint venture, which will cater to the service needs of the upstream joint venture. 'This transaction represents another significant milestone in Reliance's efforts to grow its North American shale gas operations,' said P.M.S Prasad, executive director at Reliance Industries. This is the second shale gas assets acquisition by India's largest private sector company, the first being in April when it bought 300,000 acres of shale gas property from US-based Atlas Energy. At the Bombay Stock Exchange, the Reliance Industries stock climbed to an intra-day high of 1,065 before slipping into the red in afternoon trade.
Source: IANS
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