Reliance Industries Ltd (RIL) has sold its stake in a shale gas asset in the US to Northern Oil and Gas Inc for $250 million. RIL, which was once bullish on shale gas, has been divesting these assets over the past five years as the business has been adversely affected by falling crude prices.
“Reliance Marcellus LLC (RMLLC) a wholly owned subsidiary of RIL announced the signing of agreements to divest all of its interest in certain upstream assets in the Marcellus shale play of south-western Pennsylvania,” RIL said in a regulatory filing today.
Reliance said the the assets were operated by various affiliates of EQT Corporation. Besides receiving $250 million in cash, the Mukesh Ambani company has got warrants to purchase 3.25 million common shares of Northern Oil and Gas at an exercise price of $14 per common share in the next seven years.
“A purchase and sale agreement (PSA) has been signed between RMLLC and Northern Oil and Gas on February 3 for this sale and the transaction is subject to customary terms and conditions of closing,” RIL added.
Reliance had invested $8.2 billion in the assets in the last decade. It held stakes in three US shale gas ventures : two at Marcellus and one at Eagle Ford in Texas.
Reliance held a 45 per cent stake in a joint venture with Pioneer Natural Resourcesat Eagle Ford. It held 40 per cent in a joint venture with Chevron in one asset at Marcellus, while it held 60 per cent in the other asset there with Carrizo Oil & Gas the partner.
In 2017, Reliance Marcellus II LLC, a subsidiary of Reliance Holding USA, and RIL closed the stake sale in the Marcellus shale gas asset operated by Carrizo Oil and Gas. Next year, its subsidiary Reliance Eagleford Upstream Holding LP sold certain assets in Eagle Ford shale to Sundance Energy Inc for $100 million. These assets were located at Atascosa, La Salle, Live Oak and McMullen Counties, Texas.
During the announcement of its third-quarter results, RIL had said the shale ventures had optimised their costs in the weak macro conditions in the economy that had impacted prices.
It had added that due to the adverse changes in market environment, the shale gas arms have impaired their assets totalling Rs 15,691 crore.
