Daily Management Review

Reliance to sell stake in US JV for $1.07 billion


Indian energy giant Reliance Industries has sold its 49.9 percent stake in a US joint venture to Enterprise Products Partners for $1.07 billion.
The JV called Eagle Ford (EFS) Midstream, co-owned by Pioneer Natural Resources Co, owns a 460 miles pipeline network to exclusively transport shale oil and gas. Enterprise is planning to buy the pipeline in a combination of debt and cash. According to the new agreement made by the buyer and sellers, both Pioneer and Reliance could use EFS Midstream for moving condensate and gas for 20 year on fee-based arrangement even after the buyout.
The JV was made in 2010 by Reliance Holding USA to construct facilities and provide gathering and handling services for gas in both condensed and natural forms from the nearby Eagle Ford reservoir. The high-tech pipeline can not only separate produced condensate from produced gas, it can also stabilize the condensate and treat the gas. RIL holds 45 percent interest in the JV while the rest 9 per cent is with Newpek LLC.
The company is currently working with both Citigroup Inc and Bank of America Merill Lynch to find buyer for another Eagle Ford shale formation explored in the South of Texas and it is rumored that the sell could be intended to finance this interest. The US government has allowed export of condensate from the Eagle Ford assets which is spread over 230,000 acres, piquing the interest of many oil and energy players in the region. RIL has till date made an investment of USD 208 million in EFS and received USD 75 million since 2013. The transaction is subject to regulatory approvals and is expected to close in the third quarter of 2015.
RIL, under Reliance Holdings USA, has two more shale ventures in the US. The company has 40 percent stake in Chevron's Marcellus shale acreage and a 60 percent interest in Carrizo Oil and Gas Inc's Marcellus shale acreage in Pennsylvania state.