RIL in $1.07-bn shale biz sale deal

US VCs invested $240.7 m in the country last financial year

In line with the company’s vision of moderating activity levels and reducing costs in the shale gas business, Reliance Industries (RIL) has signed an agreement to sell 49.9 per cent stake in the midstream joint venture EFS Midstream to a joint venture of Enterprise Products Partners for nearly $1.07 billion.

The company has made 4x return on investment in the midstream business through the sale, sources told Deccan Herald.

Under the terms of the definitive agreements, 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. The proposed transaction is subject to regulatory approvals and other closing conditions, RIL said.

In a presentation to analysts post its fourth quarter results, RIL had said that it is trimming capex on shale gas by 30 per cent to $860 million. It had also said that the shale gas business is focused on capital preservation by moderating activity levels, reducing service costs, and improving efficiencies.

EFS is jointly owned by an affiliate of Reliance and an affiliate of Pioneer Natural  Resources Company, with their respective ownership interests being 49.9 per cent  and 50.1 per cent. EFS provides gathering, treating and compression services and condensate  stabilisation operations in the Eagle Ford Shale for the Reliance-Pioneer upstream joint development and to third parties.

Both partners to sell stake

Reliance’s agreement to sell its interest in EFS is part of a joint transaction, wherein both Reliance and Pioneer have agreed to sell their entire respective holdings in EFS, for an  aggregate consideration of $2.1 billion. In addition to the aggregate acquisition consideration being paid to Reliance and Pioneer proportionate to their respective  ownership interests in EFS, Enterprise has agreed to spend $270 million over the next ten years on new facilities, connections and expansion projects, RIL said.

Reliance has also concluded certain long-term agreements with Enterprise for continued  provision of gathering, treating and compression services and condensate stabilisation services for its Eagle Ford upstream joint development. Certain additional long-term arrangements have also been agreed with affiliates of Enterprise for processing and transportation of natural gas, crude oil, and condensate. The long-term relationship with  Enterprise for hydrocarbon gathering, processing and transportation will provide  meaningful economic benefits, further improving cost competitiveness of the Eagle Ford upstream joint development operations, RIL said.