RIL exits shale business in US
09 Nov 2021
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Reliance Industries Ltd (RIL) is selling off its upstream assets in Eagleford in Texas, USA, the last of its shale gas acrage, marking the company's exit from the shale gas business in North America, the Mukesh Ambani-led company said late on Monday.
Reliance Eagleford Upstream Holding, LP, a wholly owned step-down subsidiary of Reliance Industries Limited (RIL), on Monday announced the signing of agreements with Ensign Operating III, LLC, a Delaware limited liability company, to divest its interest in certain upstream assets in the Eagleford shale play of Texas, USA.
With this transaction, Reliance has divested all its shale gas assets and has exited from the shale gas business in North America.
RIL held 49.3 per cent stake in the business; it did not reveal the financial consideration for the deal. “The sale is at a consideration higher than the current carrying value of the assets,” the RIL statement stated.
Reliance and Ensign had, on 5 November, signed a sale-purchase agreement which priced the asset higher than the current carrying value.
Citigroup Global Markets Inc acted as financial advisor to Reliance and Gibson, Dunn & Crutcher LLP served as its legal counsel.
RIL acquired shale gas assets through joint ventures in the US between 2010 and 2013, as part of its global energy portfolio diversification plan. But, as shale gas prices corrected and the viability of these projects became challenging, the company started divesting these assets.
Pioneer Natural Resources Co sold its entire working interest in the joint venture to Ensign Operating with effect from 1 January 2019. Subsequently, all the rights, title and interest in and under the operating agreement for the asset was acquired by Ensign.
“With this transaction, Reliance has divested all its shale gas assets and has exited from the shale gas business in North America,” RIL said.
