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Reliance exits shale gas business in US
As Reliance Industries Ltd (RIL) aims for a net-zero carbon emissions future by 2035, the company is exiting its conventional oil and gas businesses.
While RIL sold all its conventional oil and gas exploration blocks outside India in 2017, on Monday it sold the last shale gas asset that it held for nearly 11 years.
Reliance Eagleford Upstream Holding, LP (REUHLP), a step-down subsidiary of Reliance Industries Ltd (RIL), has divested its interest in certain upstream assets in the Eagleford shale business in Texas, US, to Ensign Operating III, LLC (Ensign), a Delaware limited liability company.
“With this transaction, Reliance has divested all its shale gas assets and has exited from the shale gas business in North America,” RIL said in a press statement.
The agreement was signed between REUHLP and Ensign on 5 November for this sale. The sale is at a consideration “higher than the current carrying value of the assets”, RIL said.
This February RIL sold its entire stake in the Marcellus shale gas asset in south-western Pennsylvania for $250 million.
The assets, controlled by RIL’s unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a US energy company, were sold to Northern Oil and Gas (NOG) Inc.
RIL had bought stakes in three upstream oil exploration joint ventures with Chevron, Pioneer Natural Resource and Carrizo Oil and Gas, and a midstream joint venture with Pioneer between 2010 and 2013, as the company was bullish on shale gas.
However, the drop in crude oil prices since late 2014 hit valuations of oil and gas assets, and shale gas blocks suffered far more than conventional oil and gas as they are economically viable only when prices are above a certain threshold.
In June 2015, the company sold its Eagle Ford midstream joint venture with Pioneer Natural Resources in the US for $1 billion. RIL had spent $46 million in acquiring a 49.9% stake in Eagle Ford and invested a further $208 million.
In 2017, RIL sold the first of its shale gas businesses, upstream Marcellus shale gas assets in north-eastern and central Pennsylvania, for $126 million. The Mumbai-based firm had in 2010 bought a 60% stake in the assets for $392 million.
This February, the company sold its entire stake in the Marcellus shale gas asset in south-western Pennsylvania in the US for $250 million. The assets, controlled by RIL’s wholly-owned unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a US-based energy company engaged in hydrocarbon exploration and pipeline transport, was sold to Northern Oil and Gas (NOG) Inc.
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