Thursday, June 24, 2010

RIL acquired 45% interest of Eagle Ford shale acreage from Pioneer Natural Resources

On June 24, 2010, Reliance Industries Limited (RIL), one of the top private companies of India, announced that it acquired 45% interest in the Eagle Ford shale acreage in Texas controlled by Pioneer Natural Resources. In April, the company acquired 40% interest in the Marcellus shale gas acreage of Atlas Energy, located near the east coast of Texas, of Atlas Energy.

The deal is valued $1.3 billion (Rs. 60 billion). It has been done through Reliance Eagle Upstream, a subsidiary of RIL. As per the deal, Reliance will have 45% share in the acreage, Pioneer 46% and Newpek holding 9%.

Pioneer has about 310,000 acres in Eagle Ford region. The company has 84% controlling interest while its partner, Newpek LLC, has 16% interest. Post the deal, both the companies will release 45% of their interests in the acreage to RIL.

Reliance will have to make an upfront payment of $266 million in cash to Pioneer and approximately $210 million to Newpek for acquiring their stakes. Reliance would also have to pay an additional $879 million to carry the Pioneer’s share of future drilling costs and $173 to carry Newpek’s share of future drilling costs. The money for drilling costs would have to be paid in the next four to six years.

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