Reliance Industries Ltd (RIL) has signed a $1.3 billion joint venture with Texas-based Pioneer Natural Resources Co. to develop shale gas assets in the Eagle Ford gas field in Texas. Reliance subsidiary Reliance Eagleford Upstream LP will pay $263 million upfront for a 45 percent interest in Pioneer’s Eagle Ford shale acreage in south Texas, representing 118,000 acres of the 263,000 acre field, which Reliance says holds about 10 trillion cubic feet of gas equivalent.
Reliance will also participate with Pioneer in the development of midstream assets in the Eagle Ford Shale as a 49.9% partner. In April, Reliance had bought stake worth $1.7 billion in the Atlas shale-gas assets in Pennsylvania. RIL has joined Royal Dutch Shell, BP, Statoil and Exxon Mobil Corp in buying US unconventional gas reserves.
At the annual general meeting (AGM) of shareholders last week, RIL’s Chairman Mukesh Ambani had said that, “Shale gas is the most promising development in the energy area in North America. It is likely to overtake both conventional gas as well as liquid fuel as a source of energy within the next decade. RIL aspires to build a significant position in the shale gas business.”
Reliance Industries signed USD 1.15 billion joint venture with Pioneer Natural Resources. The latter sells 45% interest in Eagle Ford Shale. RIL will pay USD 266 million in cash to Pioneer Natural and additional USD 879 million for future drilling cost. RIL has also signed joint venture with Newpek LLC for USD 210 million. RIL agreement is effective from June 1 2010.
Pioneer, which produces about 28 million cubic feet per day from five wells in the 212,000 acres Eagle Ford Shale property, also released a statment on RIL’s acquisition of PNR stake.
At closing RIL will pay Pioneer 266 million dollars in cash. Besides this, RIL pay an additional 879 million dollars to carry Pioneer’s share of future drilling costs.
Following the acquisition, RIL will own 95,300 acres of the property.
