Reliance Industries will sell its 49.9 per cent stake in a US joint venture that owns a pipeline network for transportation of shale oil and gas to New York-listed Enterprise Products Partners for $1.07 billion.
Pioneer Natural Resources Company and Reliance Holding USA, an RIL subsidiary, will sell their Eagle Ford Shale Midstream business (EFS Midstream) for $2.15 billion to an affiliate of Enterprise Products Partners LP.
Pioneer owns 50.1 per cent of EFS Midstream and Reliance owns the remaining 49.9 per cent.
EFS Midstream is in the business of treating, compression and condensate processing of shale gas at the Eagle Ford sedimentary rock formation located at South Texas.
The purchase price will be paid in two instalments — $1.15 billion up front and the remaining $1 billion latest within a year from the closure of the deal. The deal is likely to be closed by the third quarter of 2015.
Enterprise will pay Reliance approximately $574 million in cash at closing and make the final payment of $499 million in cash on or before the first anniversary of the closing date.
Walter Van de Vijver, President and CEO of Reliance Holding USA, said “EFS has now transitioned from a ‘development’ mode to ‘stable operations’ mode, generating free cash flows since 2013. EFS’ monetisation thus provides a significant opportunity for unlocking value for our shareholders. We are excited about the long-term relationship with Enterprise, which is among the largest integrated midstream energy companies in North America.”
The Eagle Ford assets, spread over 230,000 acres, have become more attractive after the US Commerce Department, in June last year, gave Pioneer permission to export a type of ultralight oil known as condensate produced from the region.
Besides Eagle Ford, RIL has two more shale ventures in the US — a 40 per cent stake in Chevron’s Marcellus shale acreage and a 60 per cent interest in Carrizo Oil and Gas Inc’s Marcellus shale acreage in Central and Northeast Pennsylvania.